Estimated Profitability of Thoroughbred Yearlings Sold in Auctions in the United States, 2001–2018

Jenna Bryant,C Jill Stowe

doi:10.3390/su12020463

Abstract

Yearling auctions constitute the most common means of trading prospective Thoroughbred racehorses. The main objective of many equine operations is to breed yearlings to sell at these auctions, and therefore, the ability of breeders to consistently realize positive returns is paramount to their long-term participation in the market. In this article, we investigate the estimated profitability of Thoroughbred yearlings sold in auctions from 2001–2018. According to our estimates, less than 50% of transactions were profitable, with negative median profit in all years under analysis but two. In addition, the likelihood of realizing a positive return diminishes as the quality of sire decreases. Our results suggest that the long-run sustainability for many breeders, especially breeders that may lack the capital to invest in high quality stallions, is questionable.

Highlights

The “triple bottom line” is a framework suggesting that the long-run sustainability of firms, or even an industry, depends simultaneously on economic, social, and environmental concerns
The objective of this paper is to examine the profitability of breeding in the U.S market for Thoroughbred yearlings to identify whether this same type of threat exists
From 2001–2018, over 25% of the North American Thoroughbred foal crop was sold at a public auction as a yearling [2,3,4,5]

Summary

Introduction

The “triple bottom line” is a framework suggesting that the long-run sustainability of firms, or even an industry, depends simultaneously on economic (profit), social (people), and environmental (planet) concerns. The study reported that from 2014 to 2018, 66% of breeders lost money, and the average horse sold at Tattersalls in Book 3 lost £23,500 [1]. The consequence of these and other findings is that the sustainability of the industry is threatened if this type of performance continues. The objective of this paper is to examine the profitability of breeding in the U.S market for Thoroughbred yearlings to identify whether this same type of threat exists. Motivated by the British Thoroughbred Breeders’ Association study, the objective of this study is to investigate expected profit and the likelihood of profitability for yearlings being sold at auction in the United States

Objectives

Methods

Results

Conclusion