Spendthrift Australia Offering 'Breed Secure'

Spendthrift Farm enters its second breeding season in Australia offering its innovative "Breed Secure" program, an incentive program the farm introduced to the United States' market in 2010.

Breed Secure is a program that allows breeders to share with the farm the risk of producing and getting a foal to market.

"The focus of the program is on relieving breeders of risk and cash-flow issues, all while still allowing them to realize the upside we all hope for with a successful horse," said Spendthrift owner B. Wayne Hughes in a statement about the Australian program. "I have long believed that if one of our stallions does not produce a profitable foal in a particular mating, then we should bear our fair share of the responsibility for it—not just the mare owner.

"With Breed Secure, we don't get a nickel of the stud fee for an unprofitable sale horse. On the flipside, we can only get back the amount of the stud fee on a successful sale horse, which gives breeders all of the upside needed to maintain as many financially healthy breeding operations as we can possibly impact in the Australian market. It is the fairest and most breeder-conscious deal in the industry. We are all in this business together, and programs like this give us all a chance to be successful—not just the stallion owner," Hughes said.

Spendthrift introduced the Breed Secure program in Kentucky and later New York as a way to entice breeders to support its stallions in their third and fourth breeding seasons, the tough years when the novelty of being a new stallion is wearing off and his runners have not yet proven themselves on the track.

"We want the breeders to have a chance to be profitable when they support these horses during the bubble years," said Ned Toffey, general manager of Spendthrift in Kentucky. "They are taking an additional risk so we are willing to shoulder some of that risk with them."

Under this program a breeder will choose whether to sell the resulting offspring as a weanling or as a yearling at public auction. After the sale is made, the first sale proceeds automatically go to the breeder up to a certain threshold. Breeders will earn the first $6,000 for a weanling sale or first $12,000 for a yearling sale, before Spendthrift is eligible to recoup any of the stud fee. Breed Secure also protects breeders by offering forgiveness of any shortcomings of a sale, which is designed to limit the amount of risk and loss for the breeder.

The key difference between Breed Secure and a standard foal-share deal, according to Hughes, is that Breed Secure only allows for Spendthrift to get back the maximum value of the stud fee. Any sales proceeds over the amount of the stud fee are realized as pure profit to the breeder.

"The introduction of Breed Secure to Australia is a massive thing for our industry, and there is nothing like it anywhere," said Garry Cuddy, general manager at Spendthrift Australia. "We can't wait to have the opportunity to tell breeders about it, and we believe it will be extremely popular, especially with the thriving sales market."

The current stallion roster at Spendthrift Australia features grade/group I winners Hampton Court, Jimmy Creed  , and Warrior's Reward, and grade I-placed juvenile Can the Man  .