Breeding Drain or Racing Gain? A half-time reflection on an industry at the crossroads

Cover image courtesy of The Image Is Everything

In recent weeks, the team at The Thoroughbred Report have pushed out a series called 'Breeding Drain or Racing Gain', with a clear purpose: to offer a fact-based assessment of where the thoroughbred industry stands today, and where it’s going if nothing changes.

It's stemmed from the consistent feedback we've been getting from breeders, owners, and trainers around the country the last six months rueing that costs are out of control, and the viability of the industry is under more pressure than ever.

We’re seeing the consequences in ways that cannot be ignored, through a declining foal crop - with no sign of bottoming out - and farms quietly being listed for sale as smaller breeders exit the industry at a rate that feels impossible to ignore.

So we set out to follow the data, and to listen. To trace where prizemoney is actually flowing. To understand the scale of import expenditure and investment leakage. To examine programming and its role in shaping the horses we breed. And most importantly, to ask: what could we do differently?

What we do know, is this:

In Part 1: Is Australia’s costly obsession with imports paying off?, we tracked the surge in European imports. They’ve doubled in the past eight years, and dominate key staying races.

As Coolmore’s Colm Santry put it:

“It is hard to quantify but hundreds of millions of dollars have been lost to our breeding industry… we are not only losing investment - we’re exporting jobs.”

The leakage is real, and it’s costing us more than just money.

In Part 2: The $100 million question, we looked closer at the numbers. European stayers now cost an average of $500,000–$700,000 landed. With over 170 imported each year, that’s between $95 million and $114 million leaving the local economy annually.

Meanwhile, imports bypass our local breeding system. They don’t generate the agistment, vet, farrier, or early education revenue of a young horse started domestically. And when their careers end, they stay here, adding pressure to an already strained rehoming and aftercare system.

However, there are signs that economics are stepping in and the European stayer is pricing itself out of further growth.

“We’ve had some amazing private purchases at around the $100,000 mark,” said Jamie Lovett, “but I’d say those days are gone.”

And yet, the way programming and prizemoney are structured continues to discourage the production of middle-distance horses.

In Part 3: How do we encourage buying local?, we explored what other jurisdictions are doing to support their domestic industries - like Japan’s tariffs, France’s race incentives, and the UK’s investment in grassroots series to retain talent.

In Part 4: Who is really benefiting from recent prizemoney raises?, we pulled apart the headline-grabbing stakes in Australia to reveal the realities behind the gloss.

Last year in NSW:

Yes, average prizemoney has gone up. But it’s being funnelled into a handful of races for a handful of horses. The median return to owners sits around $20,659, after deductions, less than half the cost of keeping a horse in work.

And yet, The Everest jumped from $15 million to $20 million. The King Charles III was born as a $5 million race.

What’s the return on that investment? And who is really benefitting?

No pathway for stamina to develop

Part 5: Get with the program laid bare a fundamental issue: you can’t develop middle-distance horses when there’s no foundation to build from.

In Victoria in June and July, just three of 23 2-year-old races went beyond 1400 metres. In NSW, only 11 of 36 juvenile races were beyond 1200 metres.

With programming not encouraging a structured development for young horses, there is no reason for most trainers to target a Derby or Oaks unless they inherit an outlier.

As Nic Ashman pointed out:

“There’s plenty of incentive at the elite level. But the problem is on an everyday level.”

This is where top analytical and technology innovator Byron Rogers offered one of the most constructive ideas we’ve heard. He believes the solution is already sitting in front of us: apply modern machine learning to our programming data.

Byron’s suggestion is to build a recommendation system that analyses stable returns, horse prep patterns, pedigree distance preferences, and trainer habits to optimise race programming and fill fields with suitable horses.

“It’s a simple, solvable problem,” he says. “Just like Netflix recommends your next show, we can build a system that recommends races to ensure 12-horse fields and real pathways for horses to progress.”

This isn’t abstract future-talk: the data exists and the technology is ready. This solution wouldn’t just make racing more strategic, it would make it more sustainable.

Ideas to consider

Among the most consistent ideas raised in reader feedback throughout this series is the introduction of a locally bred middle-distance series for 3-year-olds and 4-year-olds. Run over progressive distances and properly incentivised, it would offer a much-needed platform for the types of horses our system currently misses; those that mature later and excel over ground.

To genuinely shift the dial, we also need to look earlier in the cycle. That means adjusting our late-season 2-year-old programming to allow slower-developing horses to build a base of fitness and confidence.

For a middle-distance pipeline to work, it must be scaffolded by a broader structural rethink. Other jurisdictions have a protocol that fosters this talent. Japan and France build stamina into their national calendars and reward long-term development. The UK and Ireland support later-maturing horses by offering time between runs and patient progression. These systems are producing the horses we pay hundreds of thousands to import.

Will Johnson’s letter in Monday's TTR AusNZ presented an alternative option to slow the investment leakage: a strategic import levy on racing prospects, similar to the fee arrangement the Japanese have in place.

Collected via Stud Book registration, Johnson proposes the levy could raise $1.9–$11.4 million per year, without legislation or political interference. The money could then support welfare and rehoming, local bonus schemes and national programming infrastructure.

People often roll their eyes at the idea of tariffs and view them as contrary to the spirit of an open racing jurisdiction. But in reality, they’re a standard tool used across countless industries to support and sustain local production. Tariffs are currently in global headlines, with Donald Trump doubling down on them as a key policy to boost domestic US industries and reduce reliance on imports.

Naturally, Nick Williams, who has won more Melbourne Cups with imported horses than anyone, has pushed back. That’s no surprise, given the impact it would have on the Williams Racing business model, which is built on European imports and has less investment in the domestic breeding industry that bears the brunt of the flow-on effects. We’d like to hear more from those who survive on this business model to get the rounded perspective.

Others have pointed out that Racing Australia has shown little to warrant confidence in the form of additional funding to manage, having failed to resolve core structural issues like the years-long stalemate over the Pattern.

But whether or not you agree with Will's specific levy suggestion, he is doing what many others aren’t: acknowledging there's an issue and looking for a solution. He realises the system is under pressure, and presented one consideration to assist with addressing it.

Realities of breeding challenges

Over the next few weeks, The Thoroughbred Report will continue to dig into the economic realities shaping our industry, turning a closer focus to the challenges facing the breeding sector. Because while things may look rosy at the top with strong yearling averages and million-dollar yearlings, the broader base tells a different story. Who’s actually making money? And why are so many breeders walking away altogether?

To do that properly, we’ve made direct requests for industry data to help quantify the number of active breeders over time and how mare ownership is distributed. This is fundamental information for understanding the health of the breeding industry and finding solutions to curb the foal crop decline. Unfortunately, Racing Australia - which owns the Stud Book - has declined to release it. A disappointing response, especially given the pressing need for leadership on the challenges facing the industry; putting your head in the sand isn’t a solution.

So we’re looking at alternative ways to quantify the shift: speaking with stallion farms and breeders, reviewing trends and costs, hearing from small breeders directly.

But we also want this to be a two-way conversation. We’ve had a flood of reader emails in response to this series offering thoughtful solutions - from a locally bred middle-distance series for 3-year-olds and 4-year-olds, to changing juvenile programming to build stamina foundations, to suggestions for redirecting levy revenue into aftercare and rehoming.

It isn’t about landing on one perfect fix. It’s about discussing and pressure-testing ideas to work out what could realistically shift the dial, and ensure our leaders are taking the steps the industry needs to secure its future.

Why is this conversation important?

I’ve been asked why we’re bothering to raise uncomfortable truths when it would be easier for TTR AusNZ to stick to sale reviews and feature winners?

Like Will, I’m in my thirties and I want another thirty years working in a thriving industry that I love. And I know that if we don’t have the hard conversations now, if we don’t start approaching problems with clear eyes and practical solutions, the decline we’re seeing will only accelerate.

Yes, Australia’s prizemoney levels are the envy of many global racing jurisdictions. But when you look closer, the foundations are showing major cracks.

The concentration of prizemoney in a handful of $1 million pop-up races may be great for marketing, but it does little to strengthen the everyday reality of our sport. The Everest is an outstanding event, as is the Melbourne Cup, but no single race can prop up an entire industry - that requires a strong and sustainable base.

The proposal to sell Rosehill Racecourse was put forward under the logic that the industry is in decline, and that this is the best deal we’ll ever get. That alone should be a wake-up call. Because if selling a primary racecourse is the best we can do, leadership has failed to do the real work - and we, the participants in the industry, have failed to keep them accountable.

We do that by assessing the real long-term health of the system, not just the highlights, and by properly discussing solutions.

If you would like to contribute to this series, send your thoughts or ideas to vicky@ttrausnz.com.au.