Why Horse Trainers Are Quitting The Game

April 1, 2020

Kiaran McLaughlin

Photo Credit: NYRA

Amid all the rest of the chaos in racing over the past few weeks, two of New York’s leading trainers, Kiaran McLaughlin and Gary Contessa, announced that they’re closing their barns and leaving the work that each of them has done for more than 20 years. They’re not leaving racing entirely – McLaughlin has become a jockey agent, and Contessa is hoping to join racetrack management – but they each concluded that it’s impossible to make a living as a trainer, especially as a trainer based in New York, in the current economic environment.

McLaughlin and Contessa aren’t exactly low-profile horsemen. McLaughlin, who trains for Shadwell and other prominent owners, is the trainer of 2006 Horse of the Year Invasor, as well as Belmont Stakes winner Jazil, Met Mile winner and hot new sire Frosted, and Woodward winner Alpha. In his career, he’s won 1,577 races from 7,707 starts – a 20% success rate – and his horses have earned $120 million. And Contessa was for many years the king of the New York claiming circuit, with 17 race-meet titles as the winningest trainer at NYRA meetings and four New York trainer-of-the-year awards. Over the years, he’s won 2,364 races from 18,147 starts, a 13% strike rate, with total earnings of $84 million.

But now the economics of racing in New York have caught up with them. Whether at McLaughlin’s elite level or in Contessa’s blue-collar barn, it’s just become too hard to make a go of a job that requires 24/7 attention 365 days a year.

Over the years, I’ve often chatted with McLaughlin as we watched horses working on the Belmont training track. More recently, I had a long talk with Contessa about the costs of training in 2020. Both trainers were on the Board of the New York Thoroughbred Horsemen’s Association during the 14 years that I was a Director. Here’s what I learned.

Trainers in New York charge their owners anywhere from $100 (Contessa) to $125 (McLaughlin) a day to care for the owners’ horses. After adding in the other costs that owners bear – vet bills, van charges, insurance, trainers’ and jockey’s fees when horses earn money, etc. – that means a horse has to earn somewhere in the neighborhood of $65,000 a year  in purse money for the owner to break even, but that’s another story. What about the trainer who’s getting that daily fee?

New York is probably the most expensive jurisdiction in North America, if not in the world, for thoroughbred trainers. Any trainer’s biggest cost is labor. In New York, the minimum wage is $15 an hour. And if the trainer has even one foreign employee on an H-2B visa (temporary foreign workers), then the trainer must pay all employees – not just those on the H-2B visas – the “prevailing wage,” which in New York is $20.20 an hour. And most trainers depend on H-2B visa workers for a significant part of their workers. So, in practice, all but the smallest trainers are paying everyone at least $20.20 an hour.

alt="NYRA horse trainer Gary Contessa standing at Saratoga with Cot Campbell"
Gary Contessa with the late beloved Industry Icon, Cot Campbell

Trainers pay hot walkers $30,000-$40,000 a year, and grooms, who tend to work longer hours, get $40,000-$50,000. In addition, trainers also pay assistants, exercise riders and, in larger barns like McLaughlin’s and Contessa’s, night watchmen. At a ratio of about six horses per hot walker and four horses per groom, and factoring in employment taxes, freelance services like bookkeeping, and workers compensation insurance, Contessa calculated that labor costs alone add up to $109 per horse per day, or almost 10% more than he was charging his owners. And that’s before feeding the horses. Hay, straw (or other bedding) and feed amount to another $23-25 per day per horse. And there aren’t any meaningful economies of scale. Every four horses means another groom; every six means another hotwalker. In addition, trainers buy various supplements, anti-ulcer treatments, etc. to keep their horses in shape, and they buy tack and other barn supplies. Sometimes these costs are passed on to the owners on the monthly bill, but not always.

So, even without the supplements, tack and supplies, it costs a trainer in New York more than $130 a day to care for each horse. For the 35 horses that Contessa had in his barn early this year, that translates to losing more than $30,000 a month, or $360,000 a year, on the day rate. Now it’s true that trainers do get a share of what their horses earn on the track; the usual figure is about 10% of earnings. Historically, most public trainers have aimed to break even on the day rate and take home that 10% of horses’ earnings to cover their living expenses, their kids’ college funds, their own medical bills, really all the necessities of life. But when you’re already bleeding $30 per day per horse, that formula doesn’t work. Contessa, for example, won 30 races last year, with total purses of $2,352,769. Not his best year ever, but a pretty decent result. But 10% of that wouldn’t even cover his day-rate shortfall. McLaughlin has a bigger cushion, since he probably loses less per day per horse, and since his owners send him more high-profile stakes horses, but even he is no longer confident that training can provide the income he needs to support his family.

Add to these ongoing issues the effect of recent New York State and federal labor department investigations, which not only required trainers to start keeping accurate time records for their worker and pay overtime but also went back as much as five years to identify workers who had not been paid what the law required. Both McLaughlin and Contessa are facing six-figure fines for past timekeeping and payment errors; there’s no way those amounts can be made up from future earnings.

Don’t forget the owners who somehow never manage to pay their bills. Recent publicity about Ahmed Zayat stiffing Rudy Rodriguez and Mike Maker is only the tip of the iceberg. Many trainers have at one time or another had to take over ownership of a horse whose owner had stopped paying the bills.

So it’s no surprise that these talented trainers have finally decided to leave. If anything, the surprise is that so many New York-based trainers are still in the game, mortgaging their houses and juggling the bills to continue taking care of the horses they love. With New York racing currently on hold, as Aqueduct is repurposed into a coronavirus hospital, I suspect we’ll see many more trainers finally accepting economic reality and looking for jobs that actually pay a salary.

Contributing Authors

Steve Zorn

Steve Zorn recently retired after 20 years as racing manager of the Castle Village Farm thoroughbred partnership. He was vice president and, for 14 years,...

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Comments

  1. greg Apr 1, 2020 at 12:47 pm

    I know and agree with everything you’ve written, what is not written though is a problem trainers create for themselves, and I’ll tell you the responses I’ve gotten before I tell you the problem
    Answers:
    #1 “If I do that then they won’t give me more horses”
    #2 “I can’t do that because then there won’t be any purse money, and it’s also not legal” and there are many more.

    Questions:
    #1 Why don’t you stop training (other than the necessary for the horses’ health)and spending money if you’re not getting paid?
    #2. Why don’t you stop entering and run their horses, and if the horse does run and gets a check why don’t you get 100% of the purse until you’re paid in full, you do have invoices and bills?

    The problem: trainers continuing to train for owners who get behind.

    Those are excuses that just financially drown any business owner and I still do NOT understand what the true reason is

  2. tristarperformancehorseshow@yahoo.com Apr 3, 2020 at 11:46 am

    I am a former employee at numerous Standardbred and Thoroughbred farms, ranging from leading Breeders to a small family Breed-to-Race set-ups. I lived in Ontario, Canada during the peak years, when there were over 400 Yearlings consigned to the Annual Woodbine Sale. Last year, more than half of a greatly reduced offering of Yearlings, did NOT sell in the Sale. The Fall and Winter Mixed Sale in 2019 was equally disappointing. The CTHA-Ont has historically not been a welcoming institution. Not one attendee at the 2016 Owners Brunch at Woodbine reached out to speak to us. As a long time member of AQHA and several other Performance Horse organisations, such as the NRCHA, NRHA, OE, FOSI, I have likewise watched the rise and fall within my own industry. I agree with Greg’s analysis. It goes without saying that the revenue stream must continue to flow, if ANY business is to remain viable and solvent. Our Ranch enterprise would be considered small, compare to those of the ‘big players’, but we continue to be strong, by following a basic premise. The first requirement is to have a long range plan, which is tempered by ever changing economic conditions. In the past few years, the price of ‘designer’ offspring, has been peaking. People were posting on-line ads, ISO (in search of) horses with as many colour variances and preferred pedigree lineage, akin to a Certified luxury vehicle. The S-1 Spash-1 ‘bald face’ blaze with high chrome ( high white socks) became American Quarter Horse’s ‘most wanted’ prospect. But as my grandfather told me, ‘a good horse has no colour’, i.e. it doesn’t guarantee you a trip to the pay window. Witness the 2019 NRHA – National Reining Horse Futurity, where the Open Level 4 winner was a plain Bay gelding, whose precise maneuvers earned the highest score and the $150,000.00 USD pay check. I also work pro bono as an Equine Welfare Advocate, and along with my colleagues, we have witnessed a huge increase in the number of horses, ending up in feed lots and kill pens on 2018 onward, a large majority of which have been Thoroughbreds. They ranged from culled Yearlings, horses deemed to be not competitive or injured, and too many OTTB’s of riding age being discarded by their owners. The flattening of the high end market in conjunction with an increasing sell off of unwanted horses was indicative of economic disparities in society. It did not bode well. The boom was destined to bust. There was a virtual road map leading to economic problems ahead. You didn’t need a GPS to find your way. While we didn’t expect the horse business to be brought to a sliding stop by a health pandemic, we could see a major ‘correction’ and realignment was ahead. We decided NOT to breed our mares in 2019, and focus on shoring up our resources, to ensure we had adequate feed and supplies for our horses. To pay it forward, we donated money to a small Rescue Farm who had assisted us in the Quarantine of newly purchased horses. We fully expect to purchase more horses, who may be sold off indiscriminately, in 2020+. The reality is that Thoroughbred Racing is no longer the Sport of Kings. Grandstands are often empty, while seats in the Casinos are full. Gambling increased exponentially, while interest and participation in Horse Racing declined. Add to this, the concerns which spiked over the multiple deaths (30+) of horses at Santa Anita Race Track. Indictment of trainers such as Jason Servis, on ‘doping’ charges, further tarnished the image of the Racing industry. Servis has been charged with administering a drug called SGF-1000 to Maximum Security and other horses, and then conspiring with a Veterinarian to cover up the doping. Such illegal practices can cause horses to over-exert themselves, potentially leading to their deaths. Learning of underhanded tactics and criminality can only turn more people away. There is zero tolerance for perpetrators of animal abuse. Horse Racing is now balancing precariously on the economic fault lines, of a Nation on financial ‘life support’. Audrey @ Tri-Star Performance Horses, USA and Canada

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