Friday, April 23, 2010

Racing for their lives

Horse breeders, owners shut down or leave New York as purses and awards dwindle.

The Business Review (Albany) -
by Robin K. Cooper

Richard Simon saw an opportunity to expand his Florida horse breeding business by investing more than $3 million to buy and renovate a 265-acre farm in Stillwater, outside Saratoga Springs.

The decision to open Sez Who Thoroughbreds North in 2001 to capitalize on New York’s thoroughbred breeder awards program and sell horses in a growing market paid off after just a few years.

By 2005, Sez Who grew to 350 mares, producing 300 foals a year. The farm and its 100 employees turned out a stock of young race horses that was good enough to help Simon win the New York Thoroughbred Breeders Inc.’s Breeder of the Year award three times, from 2005 to 2007.

Three years later, Simon is out of business. His farm is on the market. And New York’s once-thriving thoroughbred breeding and racing industry is in peril.

New York racing showed much promise over the early part of the last decade. In 2001, state lawmakers agreed to re-fuel the industry by permitting 4,500 slot machines at Aqueduct. The plan was to create a new revenue stream to support tracks and breeding and racing awards.

Horse owners and breeders wagered heavily on the belief that slots would help New York racing thrive.

Thoroughbred foal production gained momentum, growing 32 percent from 2000 to 2004. Funny Cide, a horse born at McMahon of Saratoga Thoroughbreds, lured new players to the sport after it won the 2003 Kentucky Derby and Preakness Stakes. State breeder awards increased 31 percent to $7.9 million from 2000 to 2006.

But nine years after Aqueduct was authorized to receive slot machines, the state has failed to settle on a vendor to install and operate the slots. That delay has left the New York Racing Association—which runs Aqueduct, Belmont and Saratoga Race Course—strapped for cash.

Investors are getting harder to find. Breeding awards are shrinking. And racing purses are getting smaller. That combination is forcing breeders and thoroughbred owners out of the business.

Some of the industry’s most successful players have left the state searching for more vibrant markets. Among those to leave was Becky Thomas, the 2008 Breeder of the Year, who put her Columbia County Sequel Stallions farm on the market last fall after deciding to focus on a new business model in Florida.

Others have drastically cut operating expenses, hoping to hang on until the state Legislature and governor resolve two issues that have crippled the industry: the slot machine delay and the ongoing financial turmoil surrounding the state’s off-track betting system.

‘Crisis situation’
“I had to shut it down,” Simon said of his Sez Who farm. He sold the last of his mares late last year. “I was going bankrupt. I lost everything I own.”

Today, Simon is living in Florida. His 265-acre farm in Stillwater, which stabled close to 1,000 horses three years ago, sits idle.

Sez Who was listed for sale last summer with Shane Newell, founding member and associate broker at Select Sotheby’s International Realty of Saratoga Springs. The list price is $2.95 million.

“We are dealing with a crisis situation,” said Barry Ostrager, president of the New York Thoroughbred Breeders Inc. in Saratoga Springs.

“People call me every week asking me if I’ll take their mares for nothing,” he said.

Joe McMahon, who has run McMahon of Saratoga Thoroughbreds in Saratoga for the past 40 years, said foal production on the farm is down almost 40 percent this year.

The farm produced 130 thoroughbred foals in 2009. This year the number will be closer to 80.

“If I’m any indication, I think the entire state will be down 30 or 40 percent this year,” McMahon said.

“If we don’t see improvement here in New York, I don’t think our industry can survive,” he said. “The number of horses bred in New York will be decimated.”

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