Bloodstock breeders face most unprofitable year, warns accountants James Cowper
The UK’s bloodstock industry is facing its most unprofitable year for more than a decade, with fees charged for covering stallions increasing at a faster rate than the prices achieved for the yearlings produced when subsequently sold at market two years later, warns equine and bloodstock accountants James Cowper.
The James Cowper Bloodstock Price Index charts the cost of fees associated with covering stallions and the prices achieved by yearlings when sold. The Index also tracks the relationship between the stallion cover costs and the subsequent sale of yearlings when they come onto the market two years later.
The Index is based upon a basket of the world 10, 25 and 50 most expensive stallions, with an value based upon the averaged cost of having a mare covered with each of the stallions in that basket. The yearling sale figures are again based on the average price achieved from a basket of the world’s top 200, 500 and 1,000 yearlings.
Philip Freedman, a consultant to James Cowper’s Equine and Bloodstock team and former chairman of the Thoroughbred Breeders Association, said: “The cost of covering a mare at the very top of the market has increased by 92 per cent over the last 15 years. By comparison, the price achieved at the sales by the top yearlings has increased by just 29 per cent over the same period, and actually dropped by 12 per cent in the last three years.”
In 1995, the average cost for a breeder of covering a mare with one of the leading stallions would have been £38,920; by 2010 the cost had increased to £73,700. In 1997, when yearlings conceived in 1995 were sold, the average yearling at the top of the market achieved £210,002; in 2009 the average price achieved for the top 200 yearlings was £270,310 and a drop from £309,969 in 2007.
Philip adds: “If prices follow the downward trend seen at the top of the market at Deauville breeders will be facing their most unprofitable year for at least the last 14 years.”
The James Cowper Bloodstock Price Index also includes the number of yearlings sold in Europe that exceed £500,000, £200,000 and £100,000 and the figures make interesting and perhaps more encouraging reading.
Philip says: “In 1997, just eight yearlings topped £500,000, increasing to 19 in 2007 and dropping to 12 in 2009. Sixty eight yearlings sold for more than £200,000 in 1997, increasing to 123 in 2009. In the £100,000 bracket, 212 were sold in 1997, increasing to 408 in 2009. Contrary to perceived wisdom, it has not been demand at the very top of the market which has driven prices, but demand for horses in the £100,000 to £200,000 bracket.”
Philip Freedman, Consultant, James Cowper LLP, Tel +44 (0)1635 35255 or email pfreedman@jamescowper.co.uk
27.08.2010