Having changed the breeding landscape in America, Spendthrift’s Australian arm has turned its attention to assisting Aussie breeders by minimizing the cashflow risks associated with producing quality stock.
Spendthrift’s purple and orange colors are instantly recognizable to US racing fans, but it’s the company’s significant investment in the Australian breeding industry that has been grabbing headlines of late.
The industry has welcomed the investment, which includes the sponsorship of Werribee racecourse, a commitment to spend up at local yearling sales and the significant development of Spendthrift’s farm at Romsey (Victoria).
But it is the vision of American billionaire B. Wayne Hughes to innovate with programs to assist breeders that may provide the greatest long-term benefit here.
One such initiative is the Breed Secure program, in which service fees to Spendthrift stallions are taken out of the proceeds of the sale of yearlings at auctions, eliminating any cashflow risk for broodmare owners.
Similar thought went into Hughes’s Share The Upside strategy, whereby breeders pay their stud fee upon the birth of a live foal and then are entitled to a lifetime breeding rights with the stallion.
It’s an approach which has already reaped significant reward for breeders in America, where Share The Upside stallion Into Mischief has changed the lives of many US breeders with a lifetime breeding right, following him from a $US12,500 fee in 2010 to a $US150,000 fee in 2019.
This is the philosophy on which Spendthrift was founded and one which Hughes believes has the potential to benefit both Spendthrift and the broader breeding industry.
“We are going to do what is best for ourselves and for the industry,” said Hughes. “It’s not something we are doing as a favor. The reality is, for us it is good, and for the breeders it is good.
“A lot of breeders are going out of business and that’s sad. We cannot, and must not, leave the breeder out.
“We are all gambling here. If we lose the breeders we won’t have any farms or stallions. We’re all in this together.
“Nobody is standing alone in this business and that’s something we all need to bear in mind.”
The operation signaled its intent with the purchase of Overshare as a yearling in 2016. The son of I Am Invincible now shares a barn at Spendthrift in Romsey with several other sons of champion sires, including Sebring’s 2017 Stan Fox Stakes (1500m) winning son Gold Standard.
Purchasing yearlings by champion sires has been a specific focus for the Spendthrift team, combining with its Share The Upside strategy to provide breeders an opportunity-of-a-lifetime breeding right to a blue-blood stallion.
“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,” Hughes said.
Spendthrift’s support will extend to Caulfield on Saturday, where the operation sponsors the Spendthrift Australia VOBIS Gold Sprint (1200m) on Victorian Owners and Breeders Race Day — fitting given Spendthrift’s growing influence on the Victorian industry.
B Wayne Hughes established Spendthrift in Kentucky with strong principles anchoring his decision-making processes. Never one to shy away from new ideas and innovations, Hughes formulated an approach aimed at keeping costs down and looking after the broodmare owner.
“With his experiences early on in the game, Mr Hughes learned a lot as a small breeder,” Spendthrift Australian General Manager Garry Cuddy explained. “He might’ve had a few difficulties along the way which helped open his eyes to these game-changing moves.”
Following on from this first-hand experience and putting his money where his mouth is, Hughes initiated two innovative breeding schemes: Breed Secure and Share The Upside.
Spendthrift Australia have also implemented the same bold strategies, which become even more important as we look toward the 2020 breeding season in a world of COVID-19 which is presenting enormous economic challenges to businesses.
“We have to take care of the breeders, and I think sometimes that is overlooked,” said Mr Hughes. “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.”
Hughes views his programs as creative ways to try and improve the industry across the board while also helping his stallions get better books.
“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 favor. 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.”
One of Hughes’ first bold strategies is called Breed Secure, in which the service fee of a stallion is taken out of the proceeds once the foal sells at auction, with protections for the broodmare owner.
This risk-free option provides breeders with a mechanism to continue breeding their mares, even in times when cash-flow is a major challenge.
“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,” commented Hughes.
“The focus of the Breed Secure program is on relieving breeders of risk and cashflow issues. All while still allowing them to realize the upside we all hope for when breeding.”
For more information about Spendthrift Australia and to see their roster of stallions visit https://www.spendthrift.com.au
Thoroughbred Breeders Victoria/Spendthrift Australia Release