Breeding 101: Why It’s The End Game!

From Bob Hutt:

Bob Hutt, Owner and President of Uptowncharlybrown Stud LLC, Inc.

I had forgotten we have some very new partners that are totally unfamiliar with stallions, broodmares, and breeding. Let me start by advising, that in the thoroughbred racing industry, this is where all the money is! It’s the end game for every owner in the business. It’s why the good three-year old’s disappear after their Triple Crown year to be retired to stud. The reason is, the money they will earn in the breeding shed is far greater than any money they can ever earn on the racetrack.
The opportunity we presented you with yesterday to buy into Its My Town for only $300 for a 1.8% interest wasn’t just a good investment (no guarantees mind you) but rather a GREAT opportunity.  Here’s why!  Simply put over the next 4 years, if all goes right, you will own ITS MY TOWN and 3 racehorses by Uptowncharlybrown at an average price of $550 annually including everything.
That’s a PA Bred Broodmare and 3 PA Bred racehorses racing for 40% PA racing bonuses and 40% PA breeding bonuses. And in Year 4 when the first Foal is a 2 YO, you’ll have an opportunity to sell 50% taking $625 back off the table while retaining your 100% breeding bonus.
And you will have the opportunity to continue to take money off the table with future foals. Once the horses are racing all it takes is one horse to take care of all expenses going forward as the investment becomes a self sustaining annuity.  This is why breeding is the end game in the thoroughbred industry. The chance to participate in this exciting opportunity is an absolute no brainer.  If you’re lucky enough to develop a good racehorse who then becomes a stallion, your cost after retiring him from the racetrack, is between $500,000 and a million dollars. In addition, you need to support your stallion by acquiring about 25 to 50 broodmares at a cost of about another $5 million dollars.
This is what’s typically done with good colts who retire to become stallions. Add to that, the boarding expense of all the new foals (mouths to feed). With a top commercial stallion you’re looking at nearly $10 million dollars with advertising costs and need to wait 6 to 7 years before you actually know what you have.
When we retired Uptowncharlybrown I advised our partners it would cost us upwards of $500,000 and we would need to wait 6 to 7 years to find out what we had. UTCB is not made up of wealthy owners. We did not have the funds to go out and buy the most expensive broodmares. So if you put what we tried to do in actual percentages as breeders, our chances at success were the proverbial slim to none!
Nonetheless, we did it because we believed with all our hearts that the late Alan Seewald was correct in stating that Uptowncharlybrown may have been the best of his generation. We started in 2012 and have waited 5 long years.  Our faith has been rewarded ten fold as Uptowncharlybrown is off to an unbelievable career as a stallion. If only we had more broodmares? Often I’m asked, if everything is equal do I prefer a good colt or filly at the 2YO auctions. I always answer the same as I learned from Alan. The answer without hesitation is… always I prefer a filly. The reason is most colts usually become geldings and stallions are a dime a dozen. With a filly, they don’t run as hard against their sex, thereby staying sounder longer, and they a;ways have residual value as a potential broodmare.  It’s one of the reasons we claimed R Shade of Gray back as she has an outstanding body and was very, very talented before she got hurt. She held her own working with stake horses last year.
So let’s say we had a filly we had to retire but did not own Uptowncharlybrown who has burst upon the scene with three convincing winners, all by double digit margins from only 5 starters, four if you don’t count Against All Odds, who never had a chance.  What Uptowncharlybrown has accomplished from his first crop (6) with so little broodmares to work with is simply unheard of. Usually it’s the mare who stamps the foals. In Charly’s case its him stamping his progeny. He’s the real deal. His third crop, now yearlings (8) are in Ocala and even the breeders in Florida are shipping broodmares to him after seeing that class.
So let’s say Uptowncharlybrown did not exist as a stallion as you have been offered his services for free with Its My Town. If we had retired her to become a broodmare we would have to pay a stud fee of about $25,000 without any guarantees to have a chance of success.  We would have to pay stud fees every year hoping that one of her foals would turn out well. With Its My Town Broodmare Partnership there are NO STUD FEE’s as we have Uptowncharlybrown for free. He throws runners as Its My Town’s body matches up great with Charly’s. She was exactly what we were looking for.  It doesn’t cost you one penny to buy her as I gifted her to all of you. There are no commission.
• The expenses over the next 4 years are estimated annually as follows.
• 2017: $300;
• 2018: $400;
• 2019: $750 &
• 2020: $1,000
After that, the first foal starts racing as you have the opportunity to sell a 50% interest recouping about $625. Keep in mind that, the PA Bred Racing Bonus is 40%; not to mention the double dip 40% Breeding Bonus. That means in a MSW of $50,000 when you win you get back $42,000 (60% of $70,000 including the 40% racing bonus as the winners share; plus another $16,800 (40% breeders bonus) for a grand total of $58,800. That’s the equivalent of winning a $100,000 overnight stake race.
With Ambling Rose our first broodmare we went thru the same thing. Then the partners that sold got healthy fast as they sold Roosevelt Lane, had Amblin Man earn $77,000 racing and they did not pay a single penny expenses in over two years. This is the way it works. Now they have other foals coming up behind them.  Even if you sell a half interest in the foal you still retain 100% of the breeding bonus as you are forever the breeder. Let’s take a worse case scenario in that the foal becomes a claimer and is claimed away. The training expenses stop, but the 100% breeding bonus goes on for as long as the horse races in PA.
Now let’s go the other way. The first foal turns out to be very nice. This increases the value of the upcoming foals in which they become commercial property in which we can sell them as yearlings or as 2YO’s in training. From that point on the value of the broodmare Its My Town goes up significantly.  For example have any of you ever seen California Chrome up close? One of the greatest racehorses ever to peer thru a bridal is as crooked as a jay bird. We’ve know this from the first day he burst upon scene. If you breed to a crooked horse, the likelihood is, you will get a foal who is crooked. California Chrome came from a mare Love the Chase who was a total bust as a racehorse. She won one race in her career and earned the grand total of $7,000.  They bred her to Lucky Pulpit who stands for $2,000 and wound up with the $10 million dollar two time horse of the year, California Chrome. What did that do for her? She was just sold in the November Fasig-Tipton broodmare sale for $1,950,000 in foal to Tapit.
Speaking of Tapit I bred to Tapit for $12,500 when no one had ever heard of him. I got “Tapit Who?” emails from our partners. Today he stands for $300,000 per live foal. California Chrome at Gulfstream Park last week compliments of Dr. Martin Asinari
The bottom line is the breeding game is where all the money is. The cost to become involved in which there is no purchase price for the broodmare, no stud fees, with a chance at an annuity after 4 years at a minimal annual cost is just too good to pass up.
There are 50 equal shares in this new broodmare partnership. This way we keep keep expenses down. It’s just $300 for a 1.8% Interest. This is a great opportunity. First come first serve as you can purchase as many shares as you wish until the 50 is gone. You’re on the clock.
Please take the time to read below “Why A PA Bred” and then you’ll understand that Its My Town broodmare partnership is an absolute “no brainer”.
• No Purchase Price for the mare!
• No Stud Fees!
• No commissions!
• $300 for a 1.8% Interest (50 Equal Shares)
Here are some frequently asked questions regarding
Pennsylvania’s Breeding Fund Program.
1. How does a horse become eligible to participate in the PA-Bred Program?
All registered Pennsylvania-Breds are eligible to participate. Any Thoroughbred foaled in Pennsylvania is automatically a PA-Bred. However, a registered Pennsylvania-Bred is one who is registered with the PHBA and all horses must be registered in order to be eligible for the PA Breeding Program’s awards and purses.
2. What makes a horse eligible for PA-Bred registration?
A Thoroughbred foal born in the state of Pennsylvania and registered as such with the Jockey Club is eligible for Pennsylvania-Bred registration with the PHBA if one of the following conditions is met:
A) For foals of 2008 and thereafter, the dam of the foal resided continuously in Pennsylvania since November 1 of the year of conception through foaling.
B) The dam of the foal was purchased at a public sale after November 1 of the year of conception and brought into Pennsylvania within 14 days of the date of purchase and remained continuously through foaling. During the year of foaling, the foal or its dam spent at least ninety (90) days in the state. (Note: Must be a completed public sale – not a RNA or a private transaction after the public sale.)
C) The dam of the foal was bred to a stallion standing in Pennsylvania which was registered with the Pennsylvania Horse Breeders Association as a Pennsylvania stallion during the breeding season of the year of foaling, and said dam of the foal resided in the state for at least ninety (90) consecutive days during which foaling occurred.
3. What is the procedure for registering a PA-Bred?
Fill out the online PA-Bred Registration Application (go to PA-Bred Horses on form completely and accurately, including the signature of the breeder of record. Return the form, along with the correct fee, a copy of The Jockey Club (JC) Foal Certificate and Breeder’s W-9 to the PHBA. Or, contact the PHBA to request forms. The registration will remain in effect for the rest of the horse’s life. Please note that the Breeder of Record on the PHBA Registration and the W-9 must be an identical match to the Breeder on the Jockey Club papers. For example, if the JC certificate states “Mark McDermott Stables LLC” as Breeder, “Mark McDermott Stables LLC” must be stated on the PHBA Registration and the W-9. No exceptions are permitted.
4. How much does PA-Bred Registration cost?
PHBA members pay $50 for complete applications postmarked within one calendar year from the date of foaling; $100 for applications postmarked by 12/31 of the yearling year. Non-PHBA member fees are $125 and $250, respectively. Applications beyond 12/31 of the yearling year are considered Late Registration Applications and there is a non-refundable $500 registration fee paid by certified check or money order with a mandatory 30-day waiting period. Complete applications include: 1) fully completed and signed application PHBA Registration, 2) appropriate fee, 3) signed and dated W-9 exactly matching the Breeder’s name, 4) and a copy of The Jockey Club Certificate.
5. Does the location of the sire affect a horse’s status as a registered PA-Bred?
Unlike some states, Pennsylvania has no “breed-back” requirement or similar rule relating to a covering stallion. However, PA-Breds sired by registered Pennsylvania stallions earn significantly larger bonuses for their breeders (as explained in the next item).
6. How are Breeder Awards calculated?
The Breeder of a registered PA-Bred receives an Award whenever that PA-Bred finishes first, second or third in any pari-mutuel race in the state. For PA-Breds sired by registered Pennsylvania stallions, the Award (PA-Sired Breeder Award) amounts to 40 percent of purse share earned. For those sired by out-of-state stallions, the Award (non-PA-Sired Breeder Award) is 20 percent.
7. What about the “Owner Bonus” program?
The Pennsylvania-Bred “Owner Bonus” program rewards the owners of PA-Breds finishing first, second and third in designated overnight races at PARX, Penn National and Presque Isle Downs. Bonuses are a designated percentage of purse share, and are considered part of a horse’s official earnings. Bonuses are deposited directly into owners’ accounts when purses are released. The sum of the bonus and the original purse share provides the basis for Breeder, Stallion, and Owners awards earned. The “Owner Bonus” varies at each track and may be adjusted at the discretion of the respective Horsemen’s organization and the PHBA.
8. Do Pennsylvania-based stallions earn Awards also?
When a registered PA-Bred, by a registered Pennsylvania stallion, finishes first, second or third in any pari-mutuel race in the state, an amount equal to 10 percent of the purse share earned (Stallion Award) is paid to the owner of the stallion at the time of conception.
9. What is the definition of a “registered Pennsylvania stallion”?
A registered Pennsylvania stallion is a Thoroughbred stallion who stands regularly in Pennsylvania and is registered as a Pennsylvania stallion with the PHBA.
10. How does one register a Pennsylvania stallion?
PHBA provides applications to be completed by the stallion’s owner and returned to the PHBA along with the $500 registration fee by February 15th of the breeding season or before he breeds his first mare. Late registrations will be accepted until December 31st for $1,000.
11. Is the stallion then registered for life, or must this process be repeated annually?
PHBA solicits stallion information via an annual stallion questionnaire which must be completed by the stallion owner. Re-registration is necessary if: 1) the stallion leaves Pennsylvania to stand in another state and subsequently returns; or 2) more than 50 percent of his ownership changes. For example, if “Mark McDermott” personally owns the stallion and then wants to change the ownership/payments to “Mark McDermott Stables LLC” the stallion must be re-registered.  If a stallion moves to the Southern Hemisphere breeding season and then returns for the subsequent Pennsylvania breeding season, no new application and registration is required. Registration is effective for the breeding season of the year in which the stallion was registered, and remains valid for life.
12. If a stallion is relocated from Pennsylvania to stand elsewhere, are awards still paid?
Yes. The stallion owner will be paid awards earned by any registered PA-Breds conceived during the stallion’s effective registration term.
13. How and when are Awards paid?
Breeder and Stallion Awards are processed monthly by the PHBA. Recipients are notified of their pending Award usually within 30 days after the end of the month in which it was earned; payment should be received within another 60 days. PA-Bred “Owner Bonuses” are paid at the time of purse release, and are deposited directly into owners’ accounts at the particular track.
14. When ownership of a PA-Bred or a Pennsylvania sire changes, who receives the awards?
The breeder of record remains the same, no matter who subsequently owns the horse. Thus, the breeder continues to receive any applicable Breeder Awards. PA-Bred “Owner Bonuses” are paid to the horse’s licensed owner at the time the bonus was earned. A stallion owner receives awards earned by eligible PA-Breds conceived during his tenure as owner, and continues to do so if the stallion is sold, and even if the stallion is no longer at stud in Pennsylvania.
15. Can out-of-state residents participate in the Pennsylvania breeding program?
Yes. There are no residency requirements for owners and/or breeders.
With kind regards,
732-241-6606 {mobile}