Just this past week, the world’s number one stallion market analyst, Bill Oppenheim, commented extensively on the subject of stallion ratings and their likely impact on stud fees.

For some years now, we’ve made our views known on the subject, and we’ve expressed the belief that the South African stallion market, given our export limitations and the relative immaturity of our yearling trade, is beset by too many stallions as well as an “upper-end” which is probably beyond the means of most commercial breeders.

One of the consequences of having three major Sires commanding fees of R200,000 plus, is the fact that there just isn’t enough dough in the market to absorb say, 180 – 200 yearlings carrying production costs approaching R300 – R350,000, particularly where breeding is the mainstay of a commercial operator’s income. The attendant risks are inordinately high, no matter the stallion, and while one might expect these to be lower with the better known horses (especially at the money) the reality is, no horse is exempt from the crooked, small or unviable foal.

For reasons connected with their own peculiar circumstances, it seems these realities are evident in the US and European markets as well, and this is apparent from Bill Oppenheim’s remarks of this last week :

Bill OppenheimBill Oppenheim“But what it does mean is that it’s the first time in the 25-year history of APEX ratings that the leading sire of an entire 10-year cycle (1998, when the first foals of F96 sires started racing, to 2007) has an A Runner Index under 4.00. The message is unmistakable: today’s leading sires are not as far ahead of their contemporaries as the previous generation of top sires. The top five sires on A Runner Index are all sires who went to stud before 1996. If you take their top as 5.00 (A.P. Indy is now 5.09) and the top post-1995 sires as 4.00, there has been a 20 percent decline in the frequency with which the top sires produce A Runners; they are coming back to the pack a little bit.

Of course, this is related to our findings, as far back as June, 2004, that “six percent is the new 10 percent,” as far as sires’ percentage of stakes winners is concerned. In fact, it’s probably just a different way of expressing the same thing. And it’s probably happened for the same reason: bigger books. Class is a pyramid, so it stands to reason that if the top 50 sires cover twice as many mares as they used to, the overall quality of the mares they cover must have fallen. These are inferences, since we don’t yet have detailed research which can confirm them as facts—but the evidence is very strong to support these inferences, and there is no evidence to contradict them.

Why it matters? The price gap, for one thing: the top sires stand for a multiple of what the next tier stands for. If Storm Cat is $500,000 and A.P. Indy $300,000 and ‘second 10’ sires stand for $50,000, the differential is six to one, or 10 to one. But if Distorted Humor was $250,000 in 2007 and Smart Strike was $75,000, the differential is narrowed to just over three to one. It will be interesting to see what the ceiling will prove to be for Distorted Humor and other top sires; perhaps in these years of overexposure, $250,000 or $300,000 will prove to be the ceiling for the new generation of top sires, and we’ll see a return to the days when $150,000 was nearly the top stud fee, and even the top sires’ yearlings didn’t average $1 million.

But here’s another interesting gem we’ve unearthed from the APEX figures over the years: there are always top sires, and, though today’s top sires may not be mathematically as far ahead of their contemporaries as yesterday’s top sires, that may be a function of the diluted class base in the mares they’re bred to. There always has been, and is now, a small group of sires - 10 or 12 at most - and they really do constitute and elite group which stands out from the rest - many of which are very good and useful sires themselves.”

Extract from TDN 29.08.07