Thoroughbred Breeder Ivan Dalos' Solution to Fix Horse Racing in Ontario

The Thoroughbred breeding industry in Ontario is a disaster. Nobody is breeding, nobody is buying, and since there are no provisions for breeders in the horse racing long-term funding nobody is willing to invest in an uncertain future.

Tall Oaks is an international business now, but it started as a hobby. I spent years reading every book on theories I could find and learning from others and deciding what was right for me. If you are willing to put the effort into it anybody can learn it. With limited funding I was able to get started by using local stallions and farms, but it’s unfortunate that even with hard work you couldn’t repeat what I did in Ontario today. Maybe someplace else, but not here. Why? Breeders just don’t make enough to pay the bills.

Aside from the critical drop in purses after the end of the Slots-At-Racetrack-Program, it is the reduction in the number of restricted races in Ontario that has put enormous pressure on the province’s breeders. By suppressing the demand for their product, a diseconomy has been created that can only be addressed by the tracks who write the races. If they were to once again offer races where Ontario-sired horses could compete and earn their keep they would create incentive for people to buy them. When there are more buyers, people will start to breed. It’s a chain reaction that starts from the top.

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Thoroughbred Breeding Economics

As a larger breeder I have no problem competing against the big guys in the open races, but if you want to keep the Canadian agricultural jobs and the Canadian horses in the races, then we have to create a system where the smaller breeders can compete. Without a local racing program to support local breeders, there has been a decreased demand for Ontario-sired horses. This has made the economics of the breeding industry – from stallions, to mares, to yearling sales – impossible. The entire process is far too expensive.

To have a healthy breeding business there needs to be a number of quality stallions to choose from. Bold Ruckus and Vice Regent were the last really great stallions to stand in the province getting $20-$30,000 stud fees 20 years ago. Today the top fee is $10,000 while the average is much lower, about $3,000. I don’t have a farm (I never wanted to be a farmer), so I board my stallions which costs about $40-50,000/stallion every year. Since stallion owners only get paid for a live foal and the average live foal rate is about 60 per cent, the average stallion needs to cover 21 mares to get about 13 foals to stand and nurse (when the stallion owners gets paid) just to break even (13 x 3000 = $39,000).

The stallions must be supported by a decent mare population, but the pool here is pretty small. According to the Jockey Club there were 50 active stallions in Ontario that bred 908 mares in 2017. The top 10 of those will cover about 55 per cent of the mares while the bottom 30 will average just five and half mares each. To add to the problem, the number of available mares is decreasing significantly every year as more of them are either retired or sent to the U.S. to be bred into more lucrative programs.

Then there is the cost to raise a foal which is about $30,000/year, plus the stud fee. Ontario’s yearling sale average was $18,000 last year while the median was just $10,000 – how can breeders afford to do this? Even if you factor in the average $10,000 in breeder awards, the average breeder is still operating at a loss five years after making the initial investment. You can’t run a business selling your product at a loss. The numbers just don’t add up.

If there aren’t enough mares to support stallions then the studs leave the province or stop breeding. If there are no stallions here then there won’t be enough local horses to fill the races. Though some horses may come up from the US, the horse population at the track will continue to decline as there won’t be enough to fill the gap left by a dwindling local population. Eventually, the tracks won’t have enough horses to support as many days of racing so there will be fewer race dates and trainers and breeders will have less opportunity to make a living. If that happens the industry will slowly die and eventually all but the very wealthy will get out of the business.

The Solution to Thoroughbred Breeding Challenges

Ideally, Ontario Racing should start working more closely with the breeders to make these changes, but since the government is giving money to the industry they could mandate change. They could require that a larger percentage of industry money goes to the breeders and they could also require that the racetracks offer a good percentage of Ontario-sired restricted races with decent purses as is done in other racing jurisdictions close-by.

When evaluating the success of the program, the key performance indicator I would use is the number of people employed. What’s the value of the racing industry if it doesn’t support jobs?

If the breeding industry does fall apart, racing will probably continue. After all, you don’t have to have a Canadian horse to hold a race. It’s just that most of the horses won’t be bred in Canada so a huge number of jobs in rural Ontario will be lost.

This is a farming industry and the real question is whether the government is willing to lose those tens of thousands of related jobs by not supporting the breeders. The actual jobs at the racetrack are minimal. It’s the five-year cycle of breeding and raising horses to get them to the track that gives you the jobs. Growing the hay and the grain to feed them, plus the vet and the farrier and the extensive labour to care for them. That’s what’s at stake.

In the U.S., there are several states where the breeders are thriving with the support of government. Pennsylvania, New York, Maryland, Kentucky, and Florida and all have governments that recognize that the real value of the racing industry lies in the labour intensive business of breeding that supports their rural areas. Unless Ontario follows suit and commits funds in support of a restricted program, we aren’t going to have a breeding business to support.

Racetracks control the type of breeding by controlling the type of racing. They can choose to regularly write races that are conducive to Ontario-sired horses which will positively impact the breeders. It has to start with them. The racetracks have to run races so that an Ontario-sired horse can compete. That will encourage people to buy the horses and breeders to invest in them