Business Is Business - With Shane Plummer as seen on QHN
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Yesterday, I was speaking with a good friend and client regarding the current horse market. He’s looking for a good investment opportunity. I have heard all the cliches about the horse business, such as this timeless classic: “If you want to be a millionaire in the horse business, you’ve got to start out with two!” I’ll be the first one to say that navigating the horse industry to make a profit is not for the faint of heart. There are so many facets and different factors to take into account that there is a steep learning curve. But I’ve learned that business is business, it doesn’t matter if it is horses, clothing or widgets. There are things that you can control and things you can’t.
In the modern world, a performance horse is a luxury item. The overall economy has the biggest impact on the health and viability of the horse industry. I’ve seen so much change in the market over the past 10 years. In 2006, the horse industry was really rockin’ and rollin’. Prices were outstanding, prize money was amazing and the industry as a whole was flying high!
When the housing market dropped at the end of 2008, a catastrophic meltdown happened worldwide, the impact of which is still being felt today. The effect on the horse industry was immediate. Values, for the most part, were cut in half or more. As someone who’s sole income is breeding horses and standing stallions, I can say its been an interesting rollercoaster ride for sure! I could use other words to describe it, but I’ll refrain…
The first breeding season affected by the “Modern Depression” or “Great Recession” was 2009. The number of mares bred was cut in half. So of course there were half as many resulting foals in 2010. I can say I am very grateful for some superb associations in the horse industry, such as the American Quarter Horse Association, National Cutting Horse Association, National Reining Horse Association, National Reined Cow Horse Association, Thoroughbred Owners and Breeders Association, etc., that kept shows and horse events going during that time. With extremely rocky financial markets and a vast evaporation of individual wealth, these associations maintained relatively healthy purses for which performance horses could still copmete. As long as there is money to be won in competition, there will be demand for horses to go get it. I can’t overstate enough how important good, healthy events and prize money are to the overall health of the horse business.
Fast forward from those 2010 foals to today. Well, they are about “aged out;” this is their last year of aged-event eligibility. That “supply” of horses has run its course in eligibility for the large aged-event purses. There are still many opportunities for them to compete for years to come in any-age competitions, but the larger purses are coming to an end for them.
It has taken six years to have the first foal crop affected by the downturn in the economy to get to this point. With 50 percent fewer mares bred over that time, the supply has been small. In turn, demand has been good because of the previously mentioned success of our great equine associations. Relatively speaking, it has been cheaper for most folks to “buy” than to breed, as there had been an oversupply of horses in the market. That is no more.
All that being said, I have seen broodmares on the rise in public auction – proof that demand for quality prospects is ramping up. I have seen an uptick in the quantity of mares being bred. I have seen breeders return to the game. This is exciting to me. It should give everyone in the horse industry reason to be optimistic.
I love the horse business. I love the excitement and sure thrill of these amazing animals. This is what I choose to do. I love the relationships and friendships I have made in the course of being in the horse business. No matter on which level you play this game, know that we are all in this together. We all need each other.