On average, in 2005, only 25% of yearlings that sold at auction actually produced a profit for their breeders. That figure dropped to 23% in 2006. The decline in profitability has placed added pressure on breeders to sell a set number of their horses for a large profit in order to compensate for the losses generated by 80% of the yearlings they sell. Indeed, if breeders are unable to produce one or two horses that will sell for a large amount of money, they will show substantial losses for the year. As a result, breeders have to become increasingly strategic in their choice of stallions. One of their best alternatives is to choose a first a year stallion.

We will examine how first year Stallions have performed for the breeders that have supported them in their intial year at stud and why breeding to a first-year stallion provides powerful economic incentives for commercial breeders.

There are three main factors that commercial breeders should look for in deciding which stallions to use. First, what percentage of the yearlings by that sire are profitable. Second, what is the degree of profitability of those yearlings. Third, what is the risk that those values will not hold up by the time the yearlings produced hit the sales ring. Read the rest of this entry »