Thoroughbreds: Freshman Sire Stud Fees

The Thoroughbred industry has historically made decisions based on instinct and experience. Compared to other industries, minimal statistical evidence exists to support these decisions, particularly in regards to setting freshman sire stud fees. However, the University of Kentucky College of Agriculture's agricultural economics program is helping provide state-of-the-art financial tools to the industry.

In a recent study published in the Journal of Agribusiness, authors C. Jill Stowe, PhD, an assistant professor in Agricultural Economics at UK, and Billy Ajello, a former undergraduate student in Agricultural Economics and recent Darley Flying Start graduate, analyzed the factors that determine freshman sire stud fees in the Thoroughbred industry to better inform owners and breeders about the decisions made on a daily basis and the impact they have on the industry.

Data on more than 600 incoming (freshman) sires from 1999–2009 were obtained from the Blood-Horse MarketWatch, the Blood-Horse Stallion Registry, and the 2009 American Produce Records. Stowe and Ajello found that different measures of a freshman sire's own racing career, such as winning percentage and number of Grade 1 stakes wins, are significant in determining stud fees, even though according to previous studies, these attributes are only marginally heritable (passed from one generation to the next). In addition, certain individual characteristics (such as age entering the breeding shed and where the sire stands at stud) and sire and dam quality measures are factors that help predict freshman sire stud fees.

Once these attributes were identified, Stowe and Ajello estimated the market values of each characteristic. The table below provides a general overview of the main results.

Compared to freshman sire A, if freshman sire B... B's first-year stud fee exceeds A's by...
...earns $100,000 more on the track $487.50
...wins 10% more of his races $668.85
...wins a 2-year-old Grade I stakes race $3,890.48
...wins the Kentucky Derby $8,843.31
...wins any other Grade I stakes race $2,269.63
...stands in the state of Kentucky $6,080.96
...enters stud one year earlier $896.26
...has a dam that is a stakes winner $765.80
...has a sire whose stud fee is $10,000 higher $115.67

Finally, there is a small upward trend in stud fees over time; freshman stud fees increased an average of about $175 in each of the 11 years.

With the exception of Kentucky Derby winners, the market places the highest value on standing at stud in the state of Kentucky. In other words, freshman sires standing in the state of Kentucky command a premium over (statistically) similar freshman sires in other states. Based on these estimates, this premium is worth more than $600,000 in a year's stud fee revenue for a sire that covers 100 mares in a season.

The results in this study serve as a useful guide to Thoroughbred owners and breeders in their daily decision making. It is important to remember, however, the data was from the time period just prior to changes the industry experienced as it adjusted to a significant market correction exacerbated by the economic recession of 2008 and 2009. As the market stabilizes, researchers should re-estimate the results to accommodate any relevant changes.

The complete version of this article can be found in the Journal of Agribusiness (Spring 2010, vol. 28, issue 1, pages 19-30). For a copy of the entire study, contact Jill Stowe at

Jill Stowe, PhD, is an assistant professor in agricultural economics at the University of Kentucky.

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