Indiana Standardbred Breed Development Advisory Committee Meeting Notes

Date: August 10, 2007

Please note: These are NOT official minutes of the Breed Development meeting.  They are notes developed by our representative attending the meeting.

The Indiana Standardbred Breed Development Advisory Committee met on Friday, August 10, 2007, at Indiana Downs.  Committee Chairman Michael Christner called the meeting to order at 1:00 p.m.

The first item on the agenda was approval of the minutes from the July 20, 2007, meeting.  These were approved unanimously by the committee, as written.  The meeting then progressed to the other items included on the agenda.

Continuing with their quest to garner input from other leaders in the industry, two guest speakers were scheduled for the meeting.  Having been unable to attend the last meeting, Hugh Mitchell (Ontario) was one of the speakers invited.  The other guest, Joe McLead (Winbak Farms), was not able to attend this meeting.

Mitchell began by providing those present with some information about his background and role in the industry today.  He explained he is with Western Fair Raceway in Ontario, Canada.  This is a “Level B” track, which also hosts a fair.  In addition, he has also worked with the Woodbine Entertainment Group (WEG) in Canada.

When discussing the Canadian racing program, he said the current program, which began in 1974, had been tweaked several times.  It is currently being reviewed for additional changes as well.  A member of Canada’s advisory board, he and his colleagues are responsible for offering suggestions of items for their racing commission to review.

Throughout Mitchell’s presentation, he stressed the need to establish objectives or goals to keep in mind when striving to create a racing program.  He went on to share some of the objectives driving his group in Canada.

The first objective he mentioned was improving the quality of racing stock.  When considering ways to accomplish this, he noted the fact there are vast differences among the stakeholders in the industry.  Further, he said diversity among the stakeholders is great, but it is important to realize they all have different goals.  In the end, it ends up being a balancing act to try to address the needs of all those involved to some degree.  In order for a program to work long term, there must be some give and take among those involved.  This kind of compromise is crucial when making decisions.

Another objective of Mitchell’s group is promoting.  This includes promoting Ontario bred horses, general horse ownership, and boosting purses.  The funds for promotional ventures in Ontario come from the provincial levy.  This is a percentage of all wagering, including Triactor dollars.  The revenue allocated for purses goes to overnight purses, stakes, etc.

In 1998, slots were introduced in the province of Ontario.  A portion of the revenue generated from the slot machines goes to the racetracks, with another part going into the purse account.  Any money beyond those paid out in purses is used to sustain the program through any “highs and lows” along the way.  Mitchell said his group looks to long term planning to make an effective program.  He said they want to have a “slush fund” to cover the lean times, attempting to keep things consistent each year.  They want to be able to forecast with reasonable certainty a 3-5 year plan of purse estimates.

With what will soon be up to $30 million dollars available, their problem is not how much money goes into the program, but how it is spent.  Although he clearly stated it is his personal view, Mitchell said not having enough revenue is not an issue in Ontario.

Mitchell went on to state a new objective of their racing jurisdiction is a horse improvement program.  He said, “The overriding objective should be to improve the horse.”  In Mitchell’s opinion, the industry has lost its way over time.  The improvement objective is not aimed at the racing program.  Instead, it is directed at the breeding program to improve the quality of bloodstock being bred.  This modification will then carry over to the racing side of the industry.  Higher quality horses lead to an increase in exports.  Mitchell said Ontario would be out of business if they relied solely on activity within the province and not other places (like the states).

Another objective for Ontario in the new world of racing is encouraging quality stallions and mares to come there.  In the past, Ontario has had good stallions, but their breeders have fallen behind in the quality of mares they are breeding there.  Mitchell feels this is the reason they have failed to produce a “great horse” to date.

One possibility for increasing participation in their program is paying premiums on Ontario sired horses, if they win.  This concept promotes their products, but allows outside participation.  Mitchell noted restrictions are not a new concept to the racing industry and can play an important role.

A challenge for Ontario has been creating enough of a gap in the purse structure for claiming races vs. the other classes.  Since the claimers go for good purses, there is no incentive to upgrade to a higher level of racing stock.  With this in mind, Mitchell said he feels the current purse structure is flawed, as it does nothing to encourage people to buy yearlings.  Further, he said improving the breeding situation requires getting money to the breeders, so the sale of yearlings is very important.

Recently, there has been a reduction in the number of stallions in Ontario.  This is an indication that things are wrong and could be better.  They have lost some solid breeding operations (Glengate Farm & Armstrong Brothers).  According to Mitchell, “Despite all of the money available, changes need to be made to the program to encourage investing in stallions and purchasing yearlings to race.”

The goal of a breeding program should be to produce stock capable of competing in major stake events like the Hambletonian, Little Brown Jug, Breeders Crown, etc.  Such a goal is a benchmark for measuring success.  Considering this, Mitchell said he does not think Ontario has faired very well compared to other racing jurisdictions.

Another objective of the Ontario program is contributing to equine research.  Revenue from slots at the tracks funds 20-25% of the total research done on equines.

Mitchell also noted Ontario does have breeder awards.  Moreover, he feels they need to be revisited for modification.

Ontario is also experiencing a push by some within the industry for mare residency requirements.  Those for such rules believe the concept helps create an economic driver if they mares must be there for a specific number of days.  Mitchell said he thinks it would only create a small degree of economic stimulation.  Those on the other side argue residency requirements halt the ability to improve the bloodstock and compete on the world stage.  Currently, semen can be shipped from Ontario.  As long as it is harvested there, it can be sent anywhere requested.

Mitchell cautioned the committee about implementing too many restrictions in the early stages of a program.  He said he worries such restrictions may halt the growth of the gene pool needed to produce a super horse.

The track operators, according to Mitchell, must be part of the solution in a horse improvement program.  To make it all work, compromise is needed.  One possible compromise is the concept of open races with a premium paid to Ontario horses.  Some races are written as restrictive, but filling such events is dependent on horse supply at a given point in time.  Those with the tracks must write conditions suiting what is available to race.  Track operators must always keep an eye on the wagering on various types of races.  The goal is to see an increase in the money bet on Ontario horses.  This allows the program to focus on the long term, hopefully becoming less dependent on slots.

As Mitchell concluded his comments, he said, “It takes a real balancing act to work together.”  He encouraged the committee to set 3-4 goals for the program purpose and accomplishment.  The program should be written around those goals and monitored each year.  He cautioned the group not to set too many goals, instead focusing on a few good ones.

Finally, Mitchell complemented Indiana on conducting an open-style meeting to allow a public viewing of the group at work.  He said it shows transparency, accountability, etc. and speaks highly of the program.

As Mitchell ended his comments, Chairman Christner thanked him for sharing his insight.  He noted Mitchell had touched on some of the issues we are facing in Indiana.  For example, there has been some recent discussion of mare residency requirements.

When the floor was open for questions, Christner asked Mitchell where his group was on the issue of mare based requirements.  Mitchell responded by saying they had been working 3-4 months on the information coming to his advisory board from outside groups.  He said they will make recommendations to the Ontario commission toward the end of the year.  Mitchell added any decisions made will be staged to come into effect in 2009.  Based on this timeframe, Mitchell estimated they are 50-75% through the recommendations received.  He added it is currently carrying a fair bit of weight with those based in Ontario.  Mitchell offered his personal view, saying he likes the idea of a mare residency requirement on the breeder award side.  In his opinion, Ontario bred or foaled are basically one in the same because the mare lives there.

Committee member Don Eash then asked for a clarification on the concept of residency being discussed.  He asked if it was considered as an add-on for the breeders.  If adopted, Mitchell said they will still have the Ontario sired program as the flagship.  Moreover, this would be an additional opportunity for the breeders residing in Ontario.

Christner asked about the reason Ontario is considering mare residency.  He asked if it was the result of pressure from the breeders and industry participants, or simply a decision made by the advisory board.  Mitchell said it was mainly from the outside.  He added it is unclear whether the breeders or racetracks have a preference.

Mitchell reminded everyone of the need to not lose sight of improving the quality of stock.  If yearling prices climb, breeders are going to be more viable.  To get these prices up, there must be enhanced purses to increase the earning potential of the yearlings.  He said, “Try to challenge the breeders to put out a superior product, if the purse money is there.”

Committee member Gordon Tabor asked if there is anything about a restrictive mare program that enhances the genetic pool or improves the breed.  In other words, can any arguments be made for it?  Mitchell responded by saying discouraging people from outside the jurisdiction from breeding mares or giving them access to less of the money (if it is there) retards the growth and decreases the odds a “good horse” is produced.

Mitchell added that, within the industry, there is a great deal of diversity of how horses are treated, as well as semen for transport.  There is really no uniformity from facility to facility.  He said he feels the more rules put into any program (not only racing) makes it harder to enforce them.  He cautioned, “Don’t create rules you are not prepared to enforce.”

Tabor asked if Ontario was looking at the residency requirement for breeder awards or the sires stake program itself.  Mitchell explained there are various camps which look at it from different viewpoints.  Some think it should be all mare residency, some think no residency, and some think both could coexist.  In an attempt to benefit the most people, it will likely end up being a balancing act.  Tabor clarified his understanding of the information discussed earlier by Mitchell by saying, “So there is more of a focus on it for the breeder awards, and not the actual race eligibility.”

Tabor then took the opportunity to pose another question.  He said, “With the increase coming in money from slots, we have a need to improve mares and stallions.  Given that and history, would you recommend a restrictive program?”  Since Indiana is just starting and needs to produce a better quality of stock, Mitchell said the goal should be on creating a good sires stake program in the early stages.  He feels it should focus on Indiana sired, but contain some element of open races with premiums paid to Indiana sired horses in open competition.  Later, if quality horse supply is not an issue, a restrictive program could possibly work, he added.  Tabor then made sure he was clear in his understanding that Mitchell meant restrictive in writing various races, not eligibility to the whole program.

Using his previous experience, Mitchell offered another caution to the group.  He urged them to prioritize and not get the program too watered down.  Trying to spread the money too much will encourage people to breed mediocrity and race mediocrity.  Mitchell said, “You don’t want a horse improvement program to be just another overnight program.”  He said he thinks Ontario, in an attempt to get money to people who cannot afford to pay top prices for horses, has watered down their program.  In many ways, he thinks this has hurt their growth.  The situation has resulted in not enough money getting to the breeders hands to upgrade to produce horses capable of competing on the world stage.

Tabor then asked what is best for the breeders, a mare restrictive or non-restrictive program.  Mitchell said in states with more restrictions (like mare, stallion, and foal must be there), it is not working.  He said he still thinks it restricts access to the gene pool.  This is especially true in the early stages.  Tabor’s legal background was evident when he reworded Mitchell’s response by saying, “The bottom line is less risk if the program is open in the beginning.”  Mitchell added there is a need to encourage breeders to improve the quality of their stock.  They often do not invest enough of their income back into improving their stock.

Tom Crouch stated Ontario currently stands some very good studs.  In fact, their stallion ranks have produced Hambletonian and Little Brown Jug winners.  Moreover, the fact those particular horses were breed in the states speaks about the breeders in Ontario.

Crouch also took the opportunity to pat Mitchell on the back for the good job he has done in Ontario to clean up racing.  He added Woodbine Entertainment Group has done a great job in supporting Mitchell to allow this to occur.

As with Eash, Crouch clarified Mitchell is talking about a program giving breeder awards for residency.  It does NOT involve eligibility to the program itself.  Crouch added becoming too concerned with a residency program will allow breeders to not worry too much about improving their stock.

Since Ontario currently has an open program, Eash asked why they have not seen the big growth expected.  Mitchell noted the competition from other open state programs with higher purses.  There is really no draw to move to Ontario or even participate in the open program in place.

Crouch added there was not enough money given back in the Ontario sired program.  Their mistake was giving all the money to claimers, etc.  Not enough was used to boost the Ontario sired races.

Mitchell explained the situation they are facing.  He said Ontario has 16 racetracks, so it is a lot harder to spread the money around.  As a racetrack person, he is concerned about the quality of horses he gets to his track.  The supply of good horses available means there are limits.  He believes when the money from slots begins flowing into other racing jurisdictions there will be less horses available at each of the 16 venues.  He predicts seeing less Americans racing in Canada this year.

Crouch stressed the fact the horse business is not a welfare program.  He said he feels one of the worst things that happened in Ontario was the Grassroots program.  In his opinion, it kept a lot of bad mares in production because there was a place to race the horses produced.  He added the stallions in Ontario are world class and could stand anywhere.  He feels the mares are the problem.  The Grassroots program kept some people in the business who should have upgraded or gotten out.

Tabor then asked how Indiana can avoid the pitfalls experienced in Ontario.  Mitchell suggested keeping enough money in the sires stake program to make it worth their while to keep improving.  To do this, the purses must be a step up from the overnight program.  The stakes must go for big purses to keep the breeders striving to get to the top.

Mitchell said this scenario would not necessarily force the “little guys” out of business.  He said, “I know a lot of ‘little guys’ and they can compete.  People with small stables and small broodmare bands can survive.  It is not about the size, but the quality of what they have.  The ‘little guy’ does not have to be put out of business.  There are just as many big guys getting out of the business.”  Crouch added the “little guy” is not a little operation, but a little thinker.

Tabor asked Mitchell if he agreed with Crouch, in that too much money goes into the Grassroots program.  Mitchell responded by stating he likes a 2-tier program.  However, he urged the group to be careful how much money goes to the second level program.  He said, “Don’t create a venue to encourage keeping the lower level horses.”

Dwayne Rhule explained a big difference between Indiana and Ontario.  Indiana has only 2 racetracks, not 16.  He said he worries that if the Indiana people do not have a benefit from slots, they will not exist.  He fears they will have no place to race.  Mitchell’s reply indicated those people would not be wiped out.  They would just not have horses capable of competing in the sires stake program.  As Indiana sired horses, there would still be a nice overnight program available for them.

Rhule said he is very concerned about those particular people.  He urged the group to not forget them when structuring the future program.  Further, he said he wants reasonableness in whatever is decided.  Mitchell noted he was talking about balance, as was mentioned earlier.  However, he offered the thought that it is still a competition.  In reality, the economics of horse ownership are not good.

Tabor then asked Rhule if he had any concrete suggestions of how to help those included in his concerns.  Rhule said he worries the racetracks will mold to simply make money and not wok on the breeders needs for funding to continue running their operations.  Tabor assured Rhule the committee is aware of the issue he is presenting and will not lose sight of that.  He said, “We have no intention of cutting anyone off at the knees.”

Crouch added he was a part of getting pari-mutuel racing in Indiana in the first place, so he understands there is a lot of work involved.  He said there should be a way to help the program in overnight purse structure, while also having high quality horses in the sires stake events.

After a short break, Stacey Ruddick offered a quick thought.  Attempting to convey something many of the breeders in Indiana may not have considered, she said not everyone would breed in Indiana for the purpose of racing in the sires stake program.  For example, if Tom were to move Yankee Glide to Indiana and Hanover moved Western Hanover, there are people who would breed to them for the purpose of producing a horse for major stake events.  Those individuals would not have intentions of bringing the offspring to the sires stake events to kick your butt each week.  That is a backup plan.  They do not plan on racing at the fairs.  They want a stake caliber horse.  Crouch commended Ruddick by saying that was a very good statement.  Further, he said he hopes there is not one breeder whose only goal is to breed an Indiana Sires Stake Champion.  He stated New York gets a lot of interest from this group of breeders.  With the number of half-mile tracks, many breed for a stake horse and never worry about the sires stake program.

Mike Bowen then asked a question.  He wanted to know how a mare residency requirement would be policed, if implemented.  Mitchell reiterated his earlier stance by saying, “Again, be careful about making rules you cannot enforce.  It is problem in jurisdictions where residency is required.  In all walks of life, there will be people who push and break the rules.”

Eash said there could be inspectors whose job would be going out into the field to make sure the rules were being followed.  Jessica Barnes said there is currently a similar program in place for Thoroughbred.  If some type of residency requirement is instituted, there would have to be an expansion in the current IHRC department policing the other breeds.

Barnes asked how Ontario has measured the economic impact of slots.  Mitchell said it is not as easy as it should be.  He believes it should really be part of the bench marks established with a program.  In his opinion, Ontario has not done a good job of measuring the economic impact and setting future goals.  He thinks Ontario has been short-sighted on this.  They have focused on spending the money and faltered when it comes to measuring impact.  He added it should be included.

While on the subject of economic impact, Gary Wilcox said he thinks economic impact study is important, but the environmental impact of the horse industry is missed.  Pastures and hay fields do not get the chemicals applied to row crops.  Having these areas stops erosion and eliminates the cost to the government to keep borders on the fields.

Tabor thanked Mitchell for his comments on restrictive breeding for a sires stake program.  He felt it was good information for the problems and issues Indiana is currently facing.

Tabor then asked Mitchell to focus on another topic.  He said, “We are talking about an increase in purse money from slots.  What do you think about an aged sires stake program?”

Mitchell said he thinks there is a lot of merit to aged racing.  The trend is to push young horses hard, when some horses bloom later.  However, in the places he has seen aged programs, it has not really worked.  The good horses end up in the breeding shed and the bad ones end up in overnight races.  Mitchell believes there will only be a limited number of horses available to fill the aged sires stake races.  The economics are not there to fill a program for aged horses.  He added it is part of deciding priorities.  According to Mitchell, the funding will only allow a jurisdictions to do and do well 2 & 3 year old programs.  He thinks 4 & 5 year old programs will be tough to produce.

Tabor then asked, “How does someone with a good 4, 5, 6 year old get money out of the horse?”  Mitchell suggested racing the horse in overnights, preferred, late closers, claimers, etc.  He said slots have created an environment to allow overnight events to race for enough money to benefit these horses.  With the miles required to compete today, many horses are not durable enough to go on in aged events.  Mitchell stated, “It is a shame to see horses leave the track at 3, but that is the economics of racing.”  Further he said for aged events to become popular, it would have to be North America wide.  One jurisdiction cannot make it happen alone.

Eash added there is a desire for people to see old, class horses compete.  There are often fans of a particular horse.  Crouch used the Classic Series as an example.  If it generates fans to come see the horses, it is worth it.  However, he does not want breed development money to go to them.

Tabor asked Crouch for his thoughts on a venue for horses who are late bloomers.  Crouch indicated there are opportunities to let people earn money in overnight events for good money.  He just does not want to see decisions made to blow the Indiana breeders and Indiana yearling buyers money on an aged program.

As a final thought, Mitchell mentioned the fact Ontario used to have a Trillium program.  It was designed to get people to buy outside mares, race them, and breed them to improve the broodmare ranks in the province.  In place for several years, it did not accomplish this goal.  Indiana’s Genesis Series, which has also been discontinued, was modeled after the Trillium in Canada.

Chairman Christner ended the discussion by thanking Mitchell for his insight.  He then opened the floor to a few Indiana breeders who wanted to address the committee.

Jeff King, with Victory Hill Farm, addressed the committee.  King indicated there is currently a lot of discussion among breeders about what is happening in the industry.  He then proceeded to give the committee an idea of what each type of program being considered would do to his operation.

First, he mentioned a completely open program.  This would be having a mare in Indiana, bred to any stallion in the country.  If this occurs, King predicts his farm would be out of the stallion business.  Instead, the farm would become a boarding farm.  The focus would be on soliciting those with stallion shares to stay at his farm.

Next, he discussed the possibility of enacting a residency requirement.  If this occurs, he would likely keep the same stock.  It would be virtually impossible to upgrade to syndicated stallions because of limited potential.  In addition, owners unwilling to keep horses in Indiana could cost him business.

Finally, he spoke about an open program for breeding to stallions based in Indiana.  This scenario would increase the possibility of getting a syndicated horse into Indiana.  King has talked with many people from the surrounding states who are very optimistic about what is happening in Indiana.  For his operation, King would like to have access to good stallions for breeding.

Also a practicing veterinarian, King said he had talked with many of his clients to get a feel of what they would like to see happen to the program.  He indicated most would like to see the last option mentioned.  He said, “Overwhelmingly, they want to get better stallions in Indiana to attract buyers with more money.”  In fact, the decision was almost unanimous among those King had contacted.  The scenario would fit buying better mares to breed to the stallions available in Indiana.  King said he will be much more inclined to improve the quality of his broodmare band if he is able to breed to better stallions.

Tabor then asked King two quick questions.  He said, “Bottom line…mare based…do you view this as a negative or positive on the program?”  King replied it is negative.  He then asked the same of an open breeding program.  King said this would be seen as positive.

Tabor also asked when a farm would have to work on acquiring a stallion to have everything in place for next year’s breeding season.  King said it really needs to be addressed now.  Many nice stallions are being bought up and going other places, so they will not be available.

In an attempt to see how pressed for time they are, Tabor asked what is the very latest King could wait to attract a class stallion for 2008.  Crouch offered his thoughts on the timeline.  He said stallions need to be lined up by just after the fall meet in Lexington, Kentucky.  The Europeans (and others) are there, so many of the top horses will be gone if you wait too late.  In Crouch’s opinion, the very latest would be October 15.

King requested a quick clarification, asking if anything would change in 2008.  Barnes indicated nothing will be different until 2009, if changes are made.

King stated it would be hard to put a valuable horse in Indiana if it may only be here for one year.  In other words, if residency requirements become a reality, the syndicate members would like want to move the horse to another jurisdiction.  Crouch interjected, “You need to get your ducks in a row NOW.  Otherwise, the stallion owners get hurt.”  King added it is not fair to change the rules midway on anyone.  They deserve to know what to expect.

Trying to address the time-sensitive needs presented, Tabor asked if there is any reason the committee cannot give the industry an answer by October 1.

Breeder/stallion owner Jeff Stanley added that around 40% of his business is semen shipped out-of-state.  He knows of other farms, like Schwartz Boarding Farm, who do closer to 60% of their business to non-Indiana residents.

Tabor asked Stanley if he had been told by any Indiana breeder that it is beneficial to have a restricted program.  Stanley indicated no breeders had expressed that opinion.

Eash then mentioned breeder awards.  Stanley said he felt those should be a benefit for those who have been keeping their horses within the state lines.  Tabor suggested rewarding them with either breeder awards or a special race.

Tabor threw out a question to all those at the meeting.  He asked if knowing the purses down the road will impact the ability to attract good horses to Indiana.  Crouch responded by suggesting the prudent thing to do is work with an accounting firm to help establish accurate projections.

As discussion of the future program was ending, Scott Snyder offered some thoughts.  He suggested looking closely at the base of mares within the state and considering what it can support.  With the Genesis Series, we didn’t see the expansion of Indiana people going out to get mares.  It was basically the same group of people who would have already bought horses anyway.  In Snyder’s view, people in Indiana are not likely going to get new mares with the purse money available with the coming of slots.  He stressed the fact the out-of-state players are a major part of Indiana’s current breeding program.  Snyder said, “Much like a tree, you don’t want to cut off a major branch.”

Recognizing a decision about residency requirements needs to be made as soon as possible, Tabor made a motion to schedule a meeting after the industry input deadline of September 15, but before the September 27 IHRC meeting to have the committee address the mare based issue.  He stressed the fact the subject would be this one issue.  The motion was seconded and passed unanimously.

Next on the agenda was review of the Indiana Sires Stakes (ISS) and Indiana Sired Fair Circuit (ISFC) to date.  Since the meeting was running late, Barnes gave a quick review of the documents provided to all those attending the meeting.

Barnes began by explaining the documents covering the ISS events.  She said a worry is often how much money will be spent for legs, supplement for large fields, and non-wagering events.  Currently, the numbers are under budget.  She then broke down the spreadsheet and gave predictions for the future, revealing they are a good deal under budget.  Barnes also gave an update on the projected expense for boosting the ISS finals at Indiana Downs.  In addition, she shared the numbers for the aged events, with and without eliminations.

Next, Barnes reviewed the ISFC documents.  She explained the Breed Development money at the fairs is broken down into 3 categories.  The first category was the ISFC program.  The original proposal included the provision for boosting the finals to $15,000, if the funds were available.  Since the program was under budget, this increase would be made for the finals at the Indiana State Fair.  The second category was the “Elite” Trot and Pace.  Budgeted at $30,000, only $24,300 was spent because of one rained out event at Portland.  The third category was Elkhart County.  This includes the Elkhart County Classic and Maple City Trot.  As with the others, this was under budget for the year.

Under new business, the yearling sale coming up on August 24 & 25 was mentioned.  Eash asked if it would be possible to schedule a meeting with the breeders to discuss input for the future program.  The committee decided not to schedule an actual meeting, but be available to take input at the venue.  Barnes was asked to work on establishing a time and place for this to occur.  She will be contacting Steve Cross with the Hoosier Classic Yearling Sale to see when it would be the most convenient and useful.

With no further business to discuss, the meeting was adjourned.  The next meeting will be Thursday, September 6 at 1:00 p.m. at the Indiana State Library.