Kentucky is the capital of thoroughbred racehorse breeding for good reason. Breeders in Kentucky enjoy having the best and largest selection of sires to chose from, access to some of the best land to raise horses in the world and ready access to the best racehorse sales in the world. For these reasons most major breeders have set up headquarters in the bluegrass state and have invested millions of dollars in bloodstock and infrastructure.

Through the years many states have developed important regional breeding programs to attract investment in their industry. Many of these programs offer incentives to stallion owners and breeders that provide income every time a horse they bred runs well in a race within that state. Therefore breeders are not completely dependent on the price a horse fetches in the auction ring to make a profit but may continue to receive income throughout a horse’s career.

There are other benefits for breeders who breed in regional programs. First, the horses that they breed are eligible to race in softer restricted races which usually carry high purses. These races provide breeders with greater opportunities for their stock to make money throughout their careers which translates to higher income for the breeder. Second, state bred restricted stakes races also increase the chances that a given foal will become a stakes horse which increases the value of their sires and dams. Third, regional breeders may be able to negotiate cheaper fees for Kentucky stallions. Some farms are now even offering free breeding rights in exchange for being listed as a co-breeder of the resulting foal and thus becoming eligible to receive the state bred incentives.

During the times when auction markets were strong, these additional incentives were not particularly attractive to many national breeders. They were content to breed the best they had to the best they could afford and hope that the auction market would reward them for their efforts. However, in a severely declining auction market these breeders would be wise to revise their strategy and look to regional markets to improve their odds of making money in the long run.

Breeding in regional markets would reduce their cost of production since they would be able to negotiate cheaper stud fees and increase the amount of money they can get out of the resulting foals since they would no longer be dependent on making a good sale in the auction ring.