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Claiborne farm, the 93-year-old breeding company that housed Triple-Crown winner Secretariat, slashed mating fees this month, a move that may signal the start of the thoroughbred industry's biggest slump in two decades.
"We decided to show some concern and cut where we can,'' said Bernie Sams, who oversees Claiborne's stallion operation in Paris, Kentucky. Sams lowered fees on five of the farm's 13 sires by an average of 30 percent for the 2009 breeding season.
The global financial crisis that has erased trillions of dollars in stock market value is curtailing demand for thoroughbreds in auctions across the US and Europe as breeders flood the market with record numbers of horses.
As auction prices plunge from near-record highs, so do the fees of up to $300,000- per-mating that breeders can charge.
"That discretionary income just isn't there for horses anymore,'' University of Louisville basketball coach Rick Pitino, who owns thoroughbreds in a racing partnership, said in an interview in New York. "It's difficult.''
13 yearlings, or one-year-old horses, fetched more than $1m at a sale last month at Lexington, Kentucky-based Keeneland Association Inc, the world's biggest thoroughbred market. Last year, 24 horses topped that price.
Demand was also weak for the cheapest horses. The average price on the sale's final day was $7621, down 16 percent from 2007.
Keeneland catalogued a record 5555 yearlings this year as a 15-year sales boom fuelled in part by purchases by HH Sheikh Mohammed Bin Rashid Al Maktoum, the ruler of Dubai, prompted breeders to ramp up production.
"We are plagued by a vast oversupply,'' James Squires, a 65-year-old breeder, said in a telephone interview from his farm in Versailles, Kentucky. He managed to sell one of the seven yearlings he took to auctions this year.
"You can't give them away. We're going to have to ride them or eat them.''
Squires, who bred 2001 Kentucky Derby winner Monarchos, said he's pared his operation to stem losses. He and his wife have full or partial stakes in 10 broodmares - female horses used for breeding. Three years ago, they had 20.
Claiborne's stud fee reductions will set a precedent as broodmare owners such as Squires scale back, Baden "Buzz'' Chace, a 67-year-old bloodstock agent who buys thoroughbreds for clients, said in an interview on his way to Monmouth Park Racetrack in Oceanport, New Jersey.
"There are too many bad horses out there,'' said Chace, whose clients include Barry K Schwartz, co-founder of Calvin Klein Inc, and Norma Hess, the widow of Leon Hess, former chairman of the oil company now known as Hess Corp.
