Northview Develops Successful Model

The start of the breeding season is fast approaching, and the scramble is on. Stallion owners need mares for their new stallions. Breeders have a lot of choices when it comes to selecting stallions for their mares. Competition is high.

The result? A breeder’s market, as stallion owners have gotten creative, offering a variety of incentives to get numbers. Shares, discounts and extra seasons have been the standard enticements. Northview Stallion Station, which stands stallions at its original base in Maryland and also in Pennsylvania, has perfected a model to create added interest in its new stallions, which allows breeders a chance, at limited cost, to invest in a horse for the horse’s entire stud career.

The Northview incentive is titled Lifetime Breeding Rights, and is being offered for the third year in a row on a new Northview stallion. “Madefromlucky will be the third horse we’ve done using this model,” said Northview general manager David Wade. “People used to be very interested in buying stallion shares. But it’s kind of swung over to Lifetime Breeding Rights because you can get in below a share cost, and you don’t have any expenses associated with owning a share.”

Northview had previously offered a limited number of Lifetime Breeding Rights for Golden Lad, who entered stud at the Chesapeake City farm in Maryland in 2016, and Uncle Lino, based at Northview PA in Peach Bottom, in 2017. For an investment of what amounts to two “stand and nurses” stud fees, a breeder purchasing a Lifetime Breeding Right has four years to pay, and gets to breed two mares per year for the first four years. Starting with year five, the breeder gets one breeding a year at no cost.

Syndicate shares in a stallion allows a person to have a vested interest in the horse by owning a part of him, but along with the ownership comes expenses, such as board, veterinary care and advertising. With the Lifetime Breeding Rights, breeders are only paying for the right to breed to the horse.

“We value a breeding right at twice the stands and nurses fee,” noted Wade. Madefromlucky is standing for $5,000 live foal, thus those purchasing a Lifetime Breeding Right will pay $10,000 in four $2,500 installments over the first four years, interest free. When a breeder purchases into Madefromlucky, a millionaire and multiple graded stakes winner by classic-winning champion Lookin At Lucky out of a full sister to leading sire Tapit, they are not only breeding to an exciting stallion prospect from an incredible sire family at a discount, they are making an investment and looking ahead to possible gains in the future.

Betsy and Ronnie Houghton operate one of Pennsylvania’s top breeding farms, Sylmar Farm, in Christiana, and have two Lifetime Breeding Rights each to Golden Lad and Uncle Lino. “We had never been in a syndicate or anything like that, bought shares or anything,” said Betsy Houghton. “When I talked to David Wade about it with Golden Lad he said ‘you really can’t go wrong if you like the horse and wanted to breed to him.’ ” Her reaction was, “This is too good to be true.”

“You have to really like the horse,” Houghton added. “I don’t see how you can go wrong.”

Bob Manfuso, Maryland’s 2016 Breeder of the Year, has also invested in the young Northview stallions, first with Golden Lad and now Madefromlucky. “I think it’s for a breeder in Maryland with several mares and they want to have Maryland-sired as well as Maryland-bred,” said Manfuso. “It’s a great opportunity as it locks you in on a horse you like and, going forward, if the stallion happens to make it, it’s a heck of a good deal. I’ve always thought it’s an incredibly creative program.”

Manfuso had previously participated in a similar program, Spendthrift Farm‘s “Share the Upside,” which was introduced by the Kentucky farm in the late 2000s. “For the right horse, it makes all the sense in the world,” added Manfuso. “You’ve got an up-tick potential – you’re locked in on a fee and if the horse hits you’re doing quite well. And not having expenses doesn’t hurt.”

Breeders may also sell their seasons or the Lifetime Breeding Right per the terms of the contract. The Houghtons have already taken advantage of the option, having sold two of their four seasons to Uncle Lino for this year. They have approximately 50 mares on the farm, 14 of their own, and assist their clients with breeding plans. The Houghtons knew they would have the mares to use the breedings.

Lifetime Breeding Rights help fuel the stallion’s book size, which helps to get foals on the ground, which translates into a large number of runners at the races in his first crops. If those first foals come out running, those invested in the horse will be rewarded.

“What we want to see happen is the stallion becomes successful,” said Wade. “This is not a vehicle that we use to try to recuperate the cost for buying the stallion prospect. This is something we use to try to get a large book of mares to the horse each of his first four years.

“So it’s not an upfront money-making deal – in order to make a stallion you’ve got to have large books in his first several years at stud. This is one way we can do it – then it’s up to the stallion to prove whether or not he’s going to be a valuable commodity at stud. If he does [prove successful], that’s where we’ll make our money in the future, because he’ll have a higher stud fee. And when we get a higher stud fee later on, then the value also increases for those with Lifetime Breeding Rights because people can use those seasons, or sell them.”

Nearly half of the mares booked to Golden Lad and Uncle Lino in their first seasons were from Lifetime Breeding Rights – both stallions covered 100-plus mares (Golden Lad-104; Uncle Lino-103). In Golden Lad’s second season, the numbers remained strong with 91 mares bred. The goal is the same for Madefromlucky.

“When you are able to get those kind of books, it gives confidence to the people buying Lifetime Breeding Rights, because they know they are buying into a horse that’s getting off to a good start,” said Wade.

“When they buy the breeding right, they understand that they are not just making an investment with the foal, but they are also investing in the stallion and looking for future value there. They want to keep supporting the horse. If the progeny perform as well as we hope they do, the stud fee will go up and that can provide a nice return to our breeders who have supported the program.”

The preceding article was sponsored by Northview Stallion Station. 

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