140-A Useful Restriction?A Straw in the Wind?

At a time when people are complaining about lockdowns and restrictions, the Jockey Club of North America has introduced what could be an intelligent and helpful restriction. Limiting book sizes to 140 for stallions born during or after 2020 is a first step in regulating the market. It is surprising that the ultra-capitalist USA has intervened in the free market, whereas European countries don’t act. US racing is no exemplar having failed utterly to deal with its drug problem and it has serious welfare issues but this is welcome example of intelligent leadership coming from Trump’s America. Alternatively, maybe there is a secondary motive that is in line with Trump’s protectionist policies. It might not be a coincidence that ‘foreign’ owned Coolmore is likely to be most impacted by this change…..

Gradual Introduction:

The new rules only apply to foals born in 2020. That means it is unlikely to affect any new stallions until the 2024 breeding season.

To see its potential impact, I looked at the 2019 covering figures in the US. IN 2019, 46 sires in the US covered 140 or more mares (see table at end of this article) . If the 140 mare limit was imposed on all of those stallions then 1397 mares would have gone to alternative stallions . However, under the terms of the phased introduction it would have applied to just 4 stallions (Justify, Mendellsohn, Bolt d’Oro and Good Magic) who collectively covered 322 mares over the cap. If the logic is to help improve diversity in the gene pool, then it’s not going to transform the landscape dramatically. It is a small step in the right direction and the impact will increase over time.

Implications for Stallion Values

A decrease from 252 to 140 equates to a 44% reduction in mares covered for Justify and Mendellsohn. In absolute terms, had the cap been in force there would have been a notional loss of over $20 million to Coolmore (assuming these mares didn’t switch to alternative Coolmore stallions). Justify was standing for $150000, and based on 112 mares this equates to $16.8 million and for Mendelssohn at $35000 the loss would have been $3.9 million. The excess over the cap equates to $1.8 million for Bolt D’Oro (74 mares at €25000) and €840000 for Good Magic (24 @$35000).

It doesn’t automatically follow that their values or purchase prices would have dropped by 44%. They can still shuttle to the Southern Hemisphere where their earning potential will not be impacted. Stallions are typically less popular after their first season so the impact will be reduced in those years. Most stallions can only dream of attracting more than 140 mares so for the majority of stallions it will have no implications.

Coolmore’s Modus Operandi

In the past Coolmore could outbid rivals for stallions but still recoup the higher price through greater utilisation of those stallions (ie more mares covered). Coolmore usually recoup the majority of their investment in the initial years before the first runners arrive.

They can still outbid rivals but the ‘stack ’em high’ advantage will be gone, at least in the US (shuttle coverings won’t be impacted). The phased introduction of the cap, lessens the threat to Coolmore and they have time to adjust their purchasing decisions and pricing strategies for new recruits. I suspect, they would prefer if the cap wasn’t introduced but they will adapt to it’s introduction.

Implication for Genetic Diversity

The stated reason for the rule is to improve genetic diversity and to avoid the narrowing of bloodlines that we have witnessed in recent decades.

I think quotas are to be welcomed and the intervention is warranted. For 200 years, the unwritten cap on stallion books was 40 mares. It is only since the 1980’s that we have seen the relentless rise in what is considered acceptable. Given the multiple variables at play it is hard to definitively prove that larger books have damaged the soundness of the breed, as measured by starts per runner.

However, the lack of definitive proof doesn’t mean that nothing should be done. It is reasonable to suggest that a more prudent and precautionary approach should have been adopted. To me it makes sense to avoid situations whereby 1% of all US mares are bred to a single unproven stallion (as was the case with both Justify and Mendellsohn).

The Situation in Europe

The European regulatory environment is complicated by differing national laws and possible the need to comply with EU competition law. Changes could be implemented by industry agreement and self-regulation. Hopefully this US initiative may prompt debate and action on the issue.

In the National Hunt sphere there are some ridiculous book sizes, particularly amongst unproven sons of Galileo (see http://www.montjeu.com/1122/ for a full discussion on that issue). Ireland’s National Hunt breeding environment would benefit most from book size restrictions.

Conclusion

If this change was in effect in 2019 only 322 mares out of c.20,000 would have been redirected to other stallions. It is a modest initial intervention but a significant ideological shift and an acknowledgment that the market isn’t always right. It will hopefully spur other countries to act and follow the US example…

List of stallions covering more than 140 mares in 2019

StallionMares BredMares over capYear born
Justify2521122015
Mendelssohn2521122015
Into Mischief2411012005
Uncle Mo2411012008
Goldencents239992010
Bolt d’Oro214742015
Munnings202622006
Practical Joke200602014
Sharp Azteca195552013
Cross Traffic188482009
Klimt187472014
American Pharoah178382012
Mor Spirit176362013
Cloud Computing171312014
Kantharos171312008
Violence171312010
West Coast168282014
Accelerate167272013
Gun Runner166262013
Always Dreaming165252014
Good Magic164242015
Good Samaritan162222014
Candy Ride (ARG)161211999
Collected156162013
Nyquist156162013
Hard Spun155152004
Union Rags155152009
Quality Road154142006
Tapwrit154142014
Twirling Candy154142007
Cairo Prince152122011
Arrogate14992013
Girvin14992014
Kitten’s Joy14992001
Stay Thirsty14772008
Street Sense14772004
Uncaptured14772010
City of Light14662014
Frosted14442012
Mo Town14442014
California Chrome14332011
Mastery14332014
Speightstown14221998




Total74171397

1 thought on “140-A Useful Restriction?A Straw in the Wind?

  1. I guess it would mean slighter higher fees to offset some of the loss using basic if not always accurate supply and demand. i.e. 252 would buy at 150K 140 might buy at 200K or more or less…

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