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Maryland goes all in with growing incentives for breeders, owners

Late in the day at Fasig-Tipton’s Midlantic Fall Yearling Sale Sept. 30, breeder and consignor David Hayden leaned on the wall behind the seats in the pavilion. His yearling colt by Tiz Wonderful, Hip 325, stepped into the ring.
Hayden took a deep breath, glanced around for potential bidders and hoped for the best.
Then his phone buzzed. On the other end was Maryland Racing Commission Chairman Bruce Quade.

The day before, Quade had driven from Ocean City to Timonium for a meeting about the state’s Thoroughbred climate and a reception introducing the state’s newest stallion. The commission had recently brokered an agreement to strengthen incentives to owners and breeders, and Quade wanted to know how things were going at the sale. So he called Hayden, a fellow commissioner and co-chair of a task force on breeding.
One horse does not make a horse sale–or a breeding program–but consider the early returns a success as Hayden’s Maryland-bred colt shot up to $175,000, the second-highest price of the sale.
“He was as excited as I was,” said Hayden, who narrated the sales process for Quade as the price climbed. It’s doubtful the incentives had anything to do with Hip 325’s sale–at that price, buyers are purchasing class, quality and potential not a state-bred program.
But the extra money available for the future racehorses surely didn’t hurt on a day full of buzz about Maryland’s new program.
Breeder Doug Brown saw an immediate impact as he sold a Maryland-bred colt (by Outflanker) for $22,000. It’s the most Brown has ever gotten for a yearling at Timonium.
“It does make an immediate impact,” he said. “The Maryland-bred program made a big difference. My consignor, Bill Reightler, said people actually came up and said they wanted to see Maryland-breds. That’s a noticeable change.”
Breeder John Price sold a Marsh Side colt for $20,000, and would have been happy with less. Bruce Wells wasn’t blown away by his horse’s price at the sale, but was told that the buyer (a New Jersey-based trainer) was shopping specifically for a Maryland-bred.
“We’ve stayed in Maryland and it’s nice to be rewarded for our loyalty,” Wells said. “I used to think the old bonus was good, but the new one is going to be a big help. We breed to sell primarily, but I might keep one a little more often now, too.”
Andrew Motion’s two-horse consignment included no Maryland-breds, but that didn’t stop people from asking.
Hayden’s wife and business partner at Dark Hollow Farm JoAnn had obvious reason to smile, but spoke for many Marylanders.
“Do you want me to tell you what it means? Do you want me to tell you? There’s been an exuberance we didn’t have,” she said. “There’s been an upbeat feeling lately. We don’t know if we just feel that way because things are looking better for us or because things are looking better for everybody. It seems like they’re looking better for everybody. We feel like it’s going somewhere. People never stopped believing in Maryland-breds, we just needed something in our corner and we didn’t have it for so long.”
The corner is full now, thanks to a summer of negotiating between the commission, the Maryland Horse Breeders Association, the Maryland Thoroughbred Horsemen’s Association and political leaders.
The new program for Maryland-breds, which went into effect with the fall meet at Laurel Park, includes:
• A 17.5 percent owner’s bonus for horses that win maiden, allowance or claiming races of $20,000 or more; it’s the same bonus that has been in effect and does not apply to stakes or starter races. In 2014, the bonus expands to claiming races of $10,000 or above and includes horses that finish first, second or third. In 2015 and 2016, the bonus increases to 30 percent and expands to all races. Cost of the program will be shared by the Maryland Bred Fund and the Maryland Thor-oughbred Purse Account, with the purse account taking on full responsibility in 2016. Since 1982, owner bonuses have been paid by the Bred Fund.
• A 30-percent breeder’s bonus for horses that finish in the top three in all races (in stakes, the award is based on the first $100,000 of the gross purse); paid by the Bred Fund. This program went into effect with Laurel’s opening in September and expands on the old bonus of 17.5 percent paid on wins only. The breeder’s bonus program is paid by the Bred Fund.
• A 10-percent stallion owner’s bonus for a horse that finishes in the top three in all races; paid by the Bred Fund, up from 7.5 percent. The bonuses had previously been paid for wins only.
There’s more to the story, of course, and the changes did not happen without some back-and-forth between the parties–over the various funding components mainly. As it did with the 10-year agreement reached late last year, the commission oversaw the negotiations and the ultimate compromise.
Quade sees that as the state agency’s responsibility and called the owner and breeder bonuses a key piece in the industry’s redevelopment.
“It’s up to us to use the money wisely,” Quade said of the added revenue from slots. “The industry is a three-legged stool with the tracks, the owners and the breeders equally invested. The commission’s job is to manage or oversee all sides of the industry for the best interests of racing and breeding.”
Maryland’s first casino opened in 2010. Since then, more than $66 million has been raised for purses with another almost $20 million contributed to the racetrack redevelopment fund.
While even figures like that can’t make an overnight difference, the revenue has made an impact as the farms, tracks, owners, trainers and breeders start to feel the return of a healthy business. Regionally, Maryland lost ground to earlier slots-fueled racing programs in neighboring Penn-sylvania, West Virginia and Delaware. The new incentives give the state a way to compete, and people are noticing.
For five years, business at Shamrock Farm in Woodbine declined by 10 percent annually. Some of the attrition was normal, but much of it involved clients moving their mares to Pennsylvania, thanks to the state’s rich purses and incentives for breeders and owners. Stallions followed the mares, meaning Pennsylvania’s Thoroughbred industry grew while Maryland’s shrunk. Now, the clients–and mares–are coming back. Business at Shamrock was up about 10 percent in 2013.
“And we hadn’t even finalized anything yet,” said farm manager Jim Steele. “I foaled more mares than I had in the past few years. This is going to be a positive thing for owners, trainers and breeders. It helps put us on a par with the other states and let’s face it, if the breeding business is healthy, it’s going to help the races. This gives people that breed in Maryland a chance.”
Steele is realistic, however. A few more mares, a few more foals and some anecdotal sales increases are all examples of momentum not the end of the need for growth. Steele talked about a cliché in reverse. There’s a sign at a store near his home that–paraphrased–says “We regret to inform you that the light at the end of the tunnel has been turned off. . .”
In the case of Maryland breeders, somebody just installed a new bulb and everybody can see.
“The perception was that we were already dead,” he said. “Now, people say ‘whoa, you’re turning around.’ Perception is worth more than reality. We have turned around, it’s going to take a little time to get through the tunnel though.”
Steele sees something in the Maryland Thoroughbred industry that ensures partici-pation and, ultimately, recovery in a foal crop that has declined 72 percent since 1991.
“We were losing mares every year and they were going to Pennsylvania and we were getting beat up,” he said. “I understand, but I think Marylanders want to see their horses race in Maryland. We have good horsemen here, good farms. There’s something about going where the money is, but there’s something about wanting to stay home too. It all goes hand in hand. If our incentive program is comparable to other states, then stallions are going to want to come into this state, mares are going to stay, foals are going to be born here. . .”
That will be good news in Annapolis, where state legislators seem to debate the racing/slots relationship annually. There are no slots at Thoroughbred racetracks, and racing’s share goes toward industry concerns–purses, owner/breeder incentives and racetrack capital improvements.
The connection gets tested, however, by citizens, legislators and other industries seeking assistance. Quade sees a need for continued work on the 10-year agreement, purse incentives and anything else that might help the industry justify itself.
“It’s quite a project trying to turn around an industry that’s been flagging, any industry,” said Del. Eric Luedtke of Montgomery County. “The state stepped up to the plate with significant funding. (Breeding incentives) are the types of results legislators want to see. They want to see the industry helping itself and making progress. The industry is working together and making good decisions for how to use this assistance.”
Legislators like to see efforts to boost breeding and ownership in the state. While nothing can prevent horses from other areas competing at Maryland tracks, the assistance was always intended for in-state horses, owners and breeders as much as possible. Annapolis wants to see active farms producing horses.
“One of the strongest selling points has been protecting the industry, protecting the open space and the jobs the industry creates,” Luedtke said. “Making sure we have actual breeding activity happening in the state is a big part of that. The assembly didn’t make the investment in horses in hope of helping horse owners from elsewhere. We were hoping to help Maryland’s horse owners, horse breeders and Maryland’s farmers.”
Steele, long an advocate for the farming/agriculture industry in Maryland, likes to see the progress and the state recognition.
“We’re not just breeders, we’re not just stallions, we’re not just owners, trainers, farmers, we’re a combination of everything,” he said of the horse industry. “The governor has realized breeding farms are good for open space, good for the Chesapeake Bay. Farms have a tax base. When racing goes bad, people just pick up and go to the other state, so it’s all connected and the farms matter.”
In today’s times of tight state budgets, the connection between slots and racing frequently gets questioned–in Maryland, Delaware, Pennsylvania, West Virginia, New York, pretty much anywhere. Luedtke, chair of the Finance Resources Subcommittee, says Maryland is no different.
“There are almost annual efforts to defund the purse dedication account and we have to make the case to legislators that it’s worth the investment,” he said. “On a political level (the new incentive program) makes it a lot easier to defend.”
The fall yearling sale and early results from Laurel provide the only immediate data for this effort. Will it lead to a larger, healthier Thoroughbred industry? Will the incentives bring more mares, stallions, breeders, buyers, owners? Will Maryland compete with other slots states? Can it return to its place as a regional Thoroughbred leader?
Time will tell.
Brown unintentionally expanded his modest breeding program when a mare he thought was barren turned out to be in foal.
Her weanling, and a full-brother to the $22,000 yearling, will be part of Fasig-Tipton Midlantic’s December Mixed Sale in Timonium. The string totals three mares and he’s thinking about breeding a fourth.
“Look at the history of Maryland racing, the sad part is watching the numbers go down,” he said. “We’re not even in the top 10 (nationally) anymore. What happened? We all know what happened. Maybe we can get the mares back. The proof’s going to be in the pudding, but I really believe once we get these purses starting to kick in, it’s really going to make a difference. It can bring some excitement to the business again.”
Chanceland Farm sold six Maryland-breds, one for $102,000 and another for $75,000, at the sale in September. Co-owner Bob Manfuso joked about the returns being “not bad for amateurs,” but he and partner Katy Voss are anything but. They breed, buy, sell, prep, raise and race Thoroughbreds that fit anywhere in the country. And he likes the new program.
“Bonuses and things have to help breeders, absolutely,” Manfuso said. “It makes horses more valuable here and at the racetrack. But I think we need, very candidly, for the tracks to do a better job marketing their product and taking care of the owners. They’re the end users. They’re the ones that matter.”
And that’s a topic for another discussion. Manfuso also sees a big benefit in educating buyers about the Maryland program. The state lost ground to other states, but now competes in the same arena. Inform those end users about the benefits of racing in Maryland, he said, and continue the turnaround.
Buyer Ellen Charles regularly supports the regional programs and welcomes the chance to buy and race quality Maryland-breds.
“This is already the best source of Maryland-breds and I think it’ll get better as things come together,” she said. “(The new incentives) are going to bring better stallions here because people with better mares want to breed to better horses. I’d love to buy nice Maryland-breds here.”
Racing at Laurel resulted in early bonus payments, including two qualifying wins by Maryland-breds on opening day. Cross Mountain, bred by Mr. and Mrs. John Friedman, won a $20,000 open claimer on the turf. The Friedmans received a bonus of $5,301. Owner Equine Service received a bonus of $3,392.25. Two races later, Sagamore Farm homebred Daring Dancer won her debut in a race worth $40,000. The 2-year-old Empire Maker filly earned $22,800 in purse money, plus a $6,840 breeder bonus and a $3,990 owner bonus. That’s $33,630 earned in a race with a $40,000 purse and almost $11,000 more than a horse without Maryland roots would have made.
As percentages, bonus payments will increase with purses and will expand further in the next three years.
Larry Murray, private trainer for the Bender family and manager of its Glade Valley Farm in Frederick, feels the progress even if he cautions the industry–a little–about getting ahead of itself. Making an impact on the breeding side may come more slowly than some anticipate. For starters, a foal conceived in 2014 won’t be a racehorse until 2017 at the earliest. Other states in the region still have a head start when it comes to foal population and racing opportunities. And the nation’s economic climate will still have its say on whether racing grows or not.
But there’s no doubting an impact.
“It’s going to be huge,” he said of the future. “The money coming in is just the tip of the iceberg. The atmosphere is a lot better. Everybody’s encouraged. We’re about to see a resurgence in Maryland racing.” 

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