Five years ago, Spendthrift introduced the innovative Breed Secure and Share The Upside breeding schemes to aid broodmare owners and to keep a lid on all the associated breeding costs.
Under Breed Secure, service fees to resident Spendthrift stallions only become payable when the resulting foal is sold at auction. Under Share The Upside, the fee is payable on the birth of a live foal with the breeder entitled to a lifetime breeding right for the stallion.
The schemes were the brainchild of owner B. Wayne Hughes, who established parent company Spendthrift in Kentucky, and introduced at the Victorian arm of his operation under General Manager Garry Cuddy in 2015.
B. Wayne Hughes | Image courtesy of Spendthrift
“I think Breed Secure has been a game-changer and it goes to another level in circumstances like this,” Cuddy said. “We’ve had great support for the program throughout our time in Australia and Share The Upside is another program that’s been supported.
“Obviously, we’ve got three young horses with Swear having his first crop of 2-year-olds running this year and Overshare and Gold Standard will have their first yearlings sell next year.
“I think Breed Secure has been a game-changer and it goes to another level in circumstances like this.” – Garry Cuddy
“There are quite a lot of people who currently have Share The Upside breeding rights in those horses. In times like this, it’s a great opportunity for them to utilise their breeding rights, they’ve already paid their service fees so they can use it for free with those three horses.
“For people who aren’t lucky enough to have a Share The Upside in those horses, they have the opportunity to breed to our roster on Breed Secure, where there’s no service paid until you sell your resulting foal as a weanling or yearling. Plus the service fee payment only comes after expense provisions have been paid to the breeder, with the profit also going back to the breeder.
Garry Cuddy
"This arrangement essentially removes all the risk elements that come with a standard foal share agreement," Cuddy said.
"If you don't make enough to cover your costs then you don't pay the service fee, and if you breed an absolute beauty then you keep your profit from the sale ring, without having to split it with us, the stallion farm."
Hughes noted the thinking behind the innovative concepts was anchored in an equal sharing of risk between all parties.
“I have long believed that if one of our stallions does not produce a profitable foal in a particular mating, we should bear our fair share of the responsibility for it. Not just the mare owner, said Hughes.
“The focus of the Breed Secure program is on relieving breeders of risk and cash flow issues. All while still allowing them to realise the upside we all hope for when breeding.”
Lifetime learnings applied
“With his experiences early on in the game, Mr Hughes learned a lot as a small breeder,” Cuddy said. “He might’ve had a few difficulties along the way which helped open his eyes to these game-changing moves.”
Hughes established Spendthrift in Kentucky with strong principles anchoring his decision-making processes. Never one to shy away from new ideas and innovations, he formulated an approach aimed with the broodmare owner in mind and has since applied to his Australian business.
“We have to take care of the breeders and I think sometimes that is overlooked,” Hughes said. “If we don’t have a breeder, then we can’t get a mare, so we don’t have a foal and our stallion is worthless. You have to think about that.”
“We have to take care of the breeders and I think sometimes that is overlooked.” – B. Wayne Hughes
Hughes views his programs as creative ways to try and improve the industry across the board while also helping his stallions get better books and a win-win situation for all concerned.
“We are going to do what is best for ourselves and for the industry,” he said. “It’s not something we are doing as a favour. The reality is, for us it is good and for the breeders it is good.
“If we lose the breeders, we won’t have any farms or stallions. We are all in this together. The whole industry needs each other. Nobody is standing alone in this business, and that’s something we all need to bear in mind. "
Home run
Similar thought went into Hughes’s Share The Upside strategy and for Spendthrift’s American clients who embraced the scheme early with Into Mischief (USA), in particular, results have been spectacular. His 2010 service fee was US$12,500 (AU$19,800) and since soared to US$150,000 (AU$238,000) last year.
Into Mischief (USA) | Standing at Spendthrift Farm
“I want to give breeders a chance. It’s crazy with Into Mischief and all the things that have happened. For a small breeder, holding a lifetime breeding right to him is a home run and it is one they probably couldn’t get any other way.
"A lot of breeders are going out of business and that’s sad. We cannot, and must not, leave the breeder out,” Hughes said. “We are all gambling here. If we lose the breeders we won’t have any farms or stallions. We’re all in this together.
With the current economic climate presenting many unknowns for all areas of the industry as the breeding season nears, Hughes' words are more pertinent than ever before.
