North America and How the Rich are Getting Richer: Paulick Report

Americans are in the middle of our once-every-four-years presidential campaign, and one of the issues raised during this year’s debate is how the rich are getting richer. Socialist Senator Bernie Sanders from Vermont, running for the Democratic presidential nomination against former Secretary of State Hillary Clinton, repeatedly has talked about how the top one-tenth of one per cent of the population owns 90 per cent of the country’s wealth. Horse racing also has a top-heavy profile among trainers, though it’s not nearly as pronounced as the tilt in the overall economy. In 2015, according to Equibase, there were 5,909 trainers in North America who saddled at least one starter.

At the top of the earnings list, for the sixth consecutive year, was Todd Pletcher, whose runners earned $26,278,647 from 1,124 starts. That’s just over three runners a day, every day of the year, and each runner earned an average of $23,380 per start. His 269 wins were second only to the 420 victories by Karl Broberg, a claiming trainer who started 1,393 runners.

Pletcher’s earnings represented 2.2 per cent of the $1,164,600,000 total purse money available in North America in 2015.

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But Todd Pletcher is not the only trainer whose horses are earning millions of dollars each year. The aggregate earnings of the top 25 trainers in North America totals $223,371,946. That represents 19.2 per cent all purse money. So 25 trainers have horses in their barns winning roughly one in every $5 paid out in purses. That leaves the other 5,884 trainers to fight over the remaining 75 per cent.

Closer examination shows that the top 10 trainers, with $136,886,980 in 2015 earnings, won 11.8 per cent of the total purse pool.

That’s a significant amount of money and share of market concentrated on a small number of trainers.

The rich in horse racing are getting richer over time – at least that’s what the numbers suggest.

Go back 15 years to 2000 when Bob Baffert was leading North American trainer by money won. His $11,793,355 in earnings represented 1.0 per cent of the $1,184,600,000 total purse money available – less than half the share won by Pletcher in 2015. The top 10 trainers won $77,718,727, or 6.5 per cent of the total purses. The top 25 trainers of 2000 won $139,204,227, 11.7 per cent of the total. The concentration of success has moved to the top in the last 15 years.

It is having an effect. In 2000, there were 9,885 trainers with at least one North American starter. There were just 5,909 trainers in 2015, a drop of 40 per cent over 15 years.

Winning begets more winning. When a trainer does well, his owners reward him with more, sometimes better horses. Other owners take notice, dump their own trainer, and jump on the bandwagon.

In short, it’s tough out there for many proven and knowledgeable trainers to keep up with the competition.

The Year In Sales
A similar trend emerged in 2015 North American yearling auctions. As foal crops have declined since 2007, so, too, has the number of horses offered at yearling sales. In 2015, according to the U.S. Jockey Club, 6,674 yearlings sold in North America for a total of $437,755,657. The gross was up by 2 per cent despite 6.5 percent fewer yearlings being sold. As a result, the average increased by a healthy 9.2 per cent, from $60,091 in 2014 to $65,951 in 2015.

However, the median price – the number for which half sold for more and half for less – fell from $25,000 to $22,542, a year-to-year drop of 9.8 per cent.

That’s a sign the commercial breeding business is seeing buyers spend more money on fewer horses, bringing up the average but causing the median to fall. It’s a similar concentration of wealth at the top, and it’s not good news for middle-market breeders struggling to survive.

The Stallion Biz
Why do so many commercial breeders embrace first-year stallions? Simple. It’s because of the exuberance – dare I call it irrational? – that yearling buyers have for colts and fillies by unproven stallions.

It’s never made sense to me. Buyers pay a substantial premium for the offspring of first-year stallions, and all they have to bank on is hope. Their emphasis on those new stallions makes it exceedingly difficult to fill the second- and third-year books of horses that preceded them at stud.