As Derby looms, Thoroughbred industry suffers

As the Thoroughbred industry approaches its crowning event, Saturday's Kentucky Derby, it has a grim outlook. Over the past two years The Jockey Club reports the number of mares bred nationally is down 20 percent and the number of stallions standing stud has dropped 25 percent, racing writer Joe Drape of The New York Times reports. (NYT graphic) The industry's troubles are particularly evident in Kentucky, where 265 farms of over 20 acres in the leading Thoroughbred counties of Bourbon, Fayette, Woodford and Scott are for sale, up from 199 last year.

"Kentucky is also the heart and soul of the nation’s thoroughbred industry, and when it hurts, so do farms across the country," Drape writes. The upcoming Triple Crown events won't be spared from the trouble. Early favorite Eskendereya, who was pulled from the Derby this week because of a swollen leg, is owned by a bankrupt stable. The owners of Pimlico Race Course, host of the Preakness Stakes, are going through bankruptcy, and the New York Racing Association is looking for a loan from the state government after saying it would run out of money around June, the same month as the crown's final leg, the Belmont Stakes.

The problems in the thoroughbred industry aren't that different than those that brought about the housing crisis, Drape writes: "no-money-down lending and a breeding market based on the assumption of ever-rising prices." Arnold Kirkpatrick, a horseman and president of the Lexington real estate firm Kirkpatrick & Co., explained, "We ignored the notion of supply and demand. We bred too many horses, overborrowed to do it, and are now caught trying to sell them to people who don’t want them." (Read more)