The Spendthrift Way

B Wayne Hughes established Spendthrift in Kentucky with strong principles anchoring his decision-making processes. Never one to shy away from new ideas and innovations, Hughes formulated an approach aimed at keeping costs down and looking after the broodmare owner.

“With his experiences early on in the game, Mr Hughes learned a lot as a small breeder,” Spendthrift Australia’s General Manager Garry Cuddy explained. “He might’ve had a few difficulties along the way which helped open his eyes to these game-changing moves.”

FFollowing on from this first-hand experience and putting his money where his mouth is, Hughes initiated two innovative breeding schemes: Breed Secure and Share The Upside. Spendthrift Australia have also implemented the same bold strategies, which became even more important for the 2020 breeding season in a world of COVID-19 presenting enormous economic challenges to businesses.

“We have to take care of the breeders, and I think sometimes that is overlooked,” said Mr Hughes. “If we don’t have a breeder, then we can’t get a mare, so we don’t have a foal, and our stallion is worthless. You have to think about that.”

Hughes views his programs as creative ways to try and improve the industry across the board while also helping his stallions get better books.

“We are going to do what is best for ourselves and for the industry,” he said. “It’s not something we are doing as a favour. The reality is for us it is good, and for the breeders it is good.”

“If we lose the breeders, we won’t have any farms or stallions. We are all in this together. The whole industry needs each other. Nobody is standing alone in this business, and that’s something we all need to bear in mind.”

BREED SECURE

One of Hughes’ first bold strategies is Breed Secure in which the service fee of a stallion is taken out of the proceeds once the foal sells at auction, with protections for the broodmare owner.

This risk-free option provides breeders with a mechanism to continue breeding their mares, even in times when cash-flow is a major challenge.

“I have long believed that if one of our stallions does not produce a profitable foal in a particular mating, we should bear our fair share of the responsibility for it – not just the mare owner,” commented Hughes.

“The focus of the Breed Secure program is on relieving breeders of risk and cashflow issues. All while still allowing them to realise the upside we all hope for when breeding.”

SHARE THE UPSIDE

The second strategy is Share the Upside, designed to get full books happening quickly for first-season sires. Breeders who sent mares to first-season Spendthrift sires could pay a small premium on their service fee to own a breeding right for the rest of the stallion’s life, allowing them to send a mare to him each season for free.

For a good example, Into Mischief retired to Spendthrift in 2009 for a service fee of US$12,500. Some 20 breeders locked onto the Share the Upside scheme with him, paying a small premium which took their outlay to around US$16,000.

The sensational Into Mischief is now the No.1 sire in the US. Those 20 or so breeders have gone back to him for free throughout his stud life. Everyone else this year pays US$175,000 a pop. “Those breeders are going okay at the moment,” says Cuddy with a laugh. “Mr Hughes always says that without the breeders, we wouldn’t have a business.

“It’s also a great way to get a larger book of mares, and get more offspring to the racetrack early on.”

COMPARATIVELY LOW SERVICE FEES

While Spendthrift Kentucky is a massive operation with 24 standing stallions, its Australian wing currently has five stallions. Omaha Beach (War Front) and Vino Rosso (Curlin) are standing their first seasons at $22,000 and $13,750 including GST respectively, with their northern hemisphere fees US$45,000 and US$30,000 in 2020.

Of the farm’s three Australian sires, Overshare (I Am Invincible) stands for $11,000, while Swear (Redoute’s Choice) and Gold Standard (Sebring) are $5,500 each.

“Spendthrift tries to price the horses at what they’re worth, not over-inflate and then cut people deals. We don’t want people to wonder if someone else is getting a better deal than them,” Cuddy says.

“Mind you, if we get a horse we think should stand at $80,000, he’ll stand at $80,000. But mostly the Spendthrift approach is about going for the numbers, and the quality. The income, while not irrelevant, isn’t high on the priority list.”