ECONOMICS OF THE AMERICAN JOCKEY CLUB 140-MARE LIMIT by ROBERT L. LOSEY, PH.D.

On May 7, 2020, the Jockey Club issued a rule limiting stallions under its jurisdiction born after 2019 to breeding a maximum of 140 mares annually in North America.  The limits placed on mares bred for stallions born 2020 and later put them at a financial disadvantage relative to stallions born before 2020 and will lead to at least four significant changes in the economics of stallion markets.

  • Very popular stallion prospects born in the United States after 2019 will be worth less in North America.
  • Very popular new stallions will be increasingly likely to be exported or shuttled.
  • Potential stallion prospects born before 2020 and young stallions now at stud are now worth more.
  • Upper-end stallion seasons prices will trend higher starting in mid-decade.  Mid-level stallion seasons will trend upward to a lesser extent.

Before and After Stallions

While stallions born before 2020 will face no limits on mares bred, U.S. stallions born after 2019 will be limited to 140 mares throughout their careers.  An extremely popular stallion born in 2020 that is retired to stud in mid-decade may have bred 252 mares (as Triple Crown champion Justify did in 2019) in the absence of the 140-mare limit, but will find that 112 mares he might have previously bred will be displaced to other stallions.  That future version of Justify will logically command a higher stud fee in light of the Jockey club limit on mares bred, but the lower number of mares bred will cause a decline in his breeding revenues. 

The 112 mares redirected to other stallions from future stallions like Justify born after 2019 will increase demand for other stallions.  The increased demand will be absorbed by multiple replacement stallions, and will initially result in very modest, perhaps even no perceptible increases in posted prices for replacement stallions.  But each passing year will find more new stallions subject to the 140-limit being retired, and the rising demand for alternative stallions generated by the increasing number of displaced mares will cause prices of stallion seasons to rise, most especially for elite stallions.  By 2040, stallion season prices at the upper levels will be higher than they otherwise would have been by 20% or so, with mid-level season prices rising relative to where prices would have been absent a limit on mares bred.

More Exported and Shuttle Stallions

Popular new stallions subject to the 140 limit that appeal to European and Japanese markets will be more likely to be in play for export.  Being able to breed 200 or more mares overseas rather than 140 in the U.S. during the early years at stud may significantly increase the now rare phenomenon of popular new U.S. stallions being exported at the start of their breeding careers; and a less stressful Northern Hemisphere breeding environment for new stallions subject to the 140-limit, coupled with increased financial pressures, may increase the likelihood of new U.S.-based stallions being shuttled.

Price Adjustments for Stallions and for Racing Prospects

Had the September 2019 Jockey Club proposal on breeding limits been implemented without change for 2021, most stallion season prices for commercial stallions would have experienced substantial immediate increases.  But because the May 2020 Jockey Club rule phases in mare limits gradually, price changes arising from the phase-in of the 140-mare limit will occur gradually over the next 15 years or so, though with one significant “break point.”

Fertile stallions born before 2020 that face no limits on mares bred will be worth significantly more than similar quality stallions born in 2020 or later. Other things equal though, a stallion born in 2019 will be worth a bit more than a stallion born in 2018.  In the early part of this decade, we should expect to see newly retired stallions born before 2020 be worth more each successive year.  This is because these younger stallions will not be subject to the 140-mare limit that can potentially decrease revenues.  Stallions born after 2019 will find that their values will be substantially diminished because of the 140-mare limit.

An extensive discussion of this topic can be accessed at https://ir.library.louisville.edu/faculty/445/

Robert L. Losey can be contacted at rllosey@gmail.com

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