Reinvesting in a Downturn

Steve Kemp admits it was worrisome improving his breeding stock in a seller’s market, but the prospect of not following the advice of his close friend and mentor Dr. Mike Colterjohn was even more daunting. “Mike just encouraged me and said, “There’s going to be a lull in this industry” and he was like a mind reader. He could see the future,” Kemp said of the veterinarian and breeding expert who lost his battle with brain cancer in March of 2012 at the age of 55. “(Colterjohn) said, “If you can hang on and get through it, you’re going to be the one laughing at the end.”

It is a few days after Kemp’s Ballycroy Training Centre of Ballycroy, ON, sold a yearling colt by Old Forester out of Miss Blakely for $145,000 to Full House Stable at the Selected Session of the Canadian Premier Yearling Sale. The bid was the second highest of the sale behind the $325,000 Paradox Farm Inc. fetched for the Philanthropist —Uproar full brother to $1.6 million earner Pender Harbour.

Paradox, the farm Colterjohn ran with his wife, Dr. Moira Gunn, also bred this year’s Queen’s Plate winner, Lexie Lou. Last year, Ballycroy took home five of its yearlings in a “very disappointing” sale. “We were getting very discouraged and it was tough to try to see that we were going to get through it,” Kemp said. “That’s why we turned around last year and the year before and bred the majority of our mares in the States. We just couldn’t take the risk. We know we have quality mares, but if we breed to the top stallions in Ontario and we can’t turn around and at least break even, you can’t survive. You have to get food on the table.”

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This year, Ballycroy sold six of its own yearlings — three in the selected session, three in the open — for a total of $195,000. They took home only one yearling.

Selling a yearling for $145,000 less than 15 years after Kemp and his wife, Kathleen, opened the farm, is an indication they may be rising stars in Ontario’s breeding scene, particularly after spending the last five years or so upgrading mares. “They’re on the right track,” Gunn said of Ballycroy. “They’re buying nice pedigrees, they’re raising a nice horse. They’re breeding them to appropriate stallions. Theirs is a farm on the up and coming and they have success written all over them.”

Ballycroy even continued to upgrade after the breeding industry was thrown into turmoil when the provincial government cancelled the successful Slots at Racetracks Program (SARP). “I think we just had to get some quality stock that was going to light people’s eyes up again and get that buzz going,” Steve said.

Miss Blakely’s yearling colt certainly did the trick. “He was very athletic, very racy looking. We had a lot of interest in him. I know his x-rays were pulled six or seven times and he was scoped three or four times. He had clean x-rays and clean scopes, so we were very excited about him that way.

Some of the higher-end trainers were quite keen on him, so it was nice to see them come back for second and third looks. We just felt confident that he was a strong individual,” Steve said.

Colterjohn’s Impact That it was Colterjohn who bred Old Forester to Miss Blakely to produce that individual, made the sale particularly poignant for the Kemps.

Gunn said she couldn’t be happier for the couple.“The Kemps are great people. They’re good friends. They live up the road. They have a beautiful farm and they keep it lovely and they raise a nice horse,” Gunn said. “Mike was a regular visitor to their farm both professionally and socially, often on his way home. There’s just a long-standing relationship.”

Eight months after Colterjohn’s death, Steve purchased Miss Blakely, in foal, for $37,000 in a dispersal at the 2012 Keeneland November Breeding Stock Sale. “I just loved the pedigree,” Steve said of Miss Blakely. “She’s a Smart Strike mare out of Rahy dam and that’s two exceptional broodmare stallions. When she went through it was a mare that my wife and I had picked right from the beginning of the catalogue and one that we said we would love to try and own. It worked out for us. I think she was a great racehorse. She’s a great bodied mare and we’re very excited about the future for that mare.”

Though not a true Paradox mare, Miss Blakely was owned by Colterjohn and some partners. “We’re thrilled that the Kemps have that mare and have done so well with it. We couldn’t be happier for them,” Gunn said.

Believing in Ontario Apart from Colterjohn’s encouragement, Steve said he was spurred to invest in better stock because he has a strong belief in the Woodbine racing product and is relatively confident the Ontario industry was too big to fail. He’s even more buoyant with recent improvements in breeders’ awards and promises the Ontario Lottery and Gaming (OLG) corporation will integrate with the horse racing industry on new gaming products. “We’re trying to build the stock in Ontario,” Steve said. “The mare that had the Old Forester colt that we sold very well has a wonderful Uncle Mo colt and is back in foal to Pioneerof the Nile. He’s doing fantastic. But, we’re considering maybe breeding back to the Ontario program with her the following year.

“Last year, we bred about 60 per cent down in Kentucky and about 40 per cent in Ontario. Next year we’ll probably be about 70-30, with more mares bred in Ontario. Of our 10 or 12 mares we’ll probably only be sending three down south. We’re going to take the quality mares that we’ve been breeding in Kentucky and put them to a decent stallion in the Ontario program.”

Ballycroy Beginnings Steve and Kathleen bought the farm that would become Ballycroy in 1992. “My wife’s job kind of came to an end. Her company was moving to the States and she didn’t want to move down there, so she took a package and we said we wanted to get into the horse industry,” Steve said.

They built their first barn on the property in 1997. The original plan was to be a farm for show horses, but that only lasted a couple of years before they switched exclusively to thoroughbreds after buying a 10 per cent share of a racehorse named Igeta Kickoutofyou with trainer Terry Brooker. “It kind of blossomed from there,” Steve said. “Then we bought a couple of broodmares and started getting into the breeding industry.”

About 10 years ago, the Kemps put in a track to supplement their income. “We have an indoor arena and we have an indoor equicizer and round pens and everything for doing the breaking and a separate broodmare barn and weanling barn. We have another property on the next line over that we’re hoping to put another broodmare barn up next year. So, we’re growing the establishment and just trying to keep things going,” he said.

Steve said the training part of the operation has suffered in recent years due to declines in numbers caused by the end of SARP. “In the wintertime we always fill up, but trying to maintain a full barn throughout the summer has been slow for ourselves and other people I speak to in the industry just because the number of horses at Woodbine is down. There’s not that overflow of stock out there. I’m hoping it’s going to come around, but we’re trying to sustain a good number and keep up the quality of the horses to sell and be able to keep us surviving through these slow times.”

Given the decline in income from the training centre and a few years of poor sales results due to the industry’s unstable climate, Steve admitted it wasn’t easy investing in a down cycle. “There’s definitely that emotional stress when it comes to the financial end of it. Are we going to get through this? Are we going to see a light at the end of the tunnel? I think we are now,” Steve said. “It’s been tough, absolutely, because we haven’t had the number of horses in the (training) barn to keep that cash flow going to keep the staff going and keep the operation going, but we’re managing, so that’s the important thing.

“It was something my wife and I were just trying to concentrate on being smart with what we were buying, and, on the other hand, trying to keep a positive outlook that it’s going to pay off in the end. It’s going to come through and hopefully we, along with the other ones that stuck it out, are going to be smiling at the end.”