Odds On Racing - Harness Racing

Illinois Breeders Speak Out
with breeders Terry Hunt & Ken Walker

By Kimberly Rinker

March 23, 2005

Harness racing purses in Illinois dropped from $41 million in 1989 to $32 million in 2003, according to figures from the Illinois Racing Board. As well, the percentage of handle wagered on Illinois races (both harness and thoroughbred) dropped from 98% in 1989 to a drastically low 29% in 2003. While the implications for trainers, drivers and owners in the Prairie State are obvious, what is not obvious is the effect these financial downers have on Illinois breeders.

While there are numerous backyard and medium-sized breeders in Illinois, the heyday of the populous breeding farms—those that feature full service broodmare care, multiple stallions and yearling preparation—has dwindled to two.

Cottonwood Farm, located in Big Rock, is owned and operated by Terry Hunt—a longtime fixture on the Illinois harness racing scene. Hunt, 52, has owned and/or bred over 1,300 horses since his first gig as a horse owner in 1983. Fox Valley Standardbreds is handled by the husband and wife team of Ken "Doc" and Pat Walker in Sherman, Illinois. The Walkers had previously plied their wares at their northern Illinois Maple Park farm before moving to the central part of the state in the mid-1990s. Fox Valley Standardbreds has owned and/or bred over 2,200 horses to date.

Breeders are—unlike a good many of their peers—some of the most positive thinking people in the Standardbred industry. They have huge financial stakes in their businesses, and when times are difficult, cannot just pick up and move their farms to a more lucrative state.

"The quality of racing and breeding in Illinois has never been better, if you look at 2004 overall," Terry Hunt notes. "Obviously the current problem with the purse structure has caused several Chicago based trainers to move, at least part of their stables, taking many of our better horses to the Meadowlands. But to be in this business for the long run it is necessary to look for the positives as well as to be concerned with the negatives."

"There’s definitely cause for concern right now, but we’re pretty optimistic overall," Doc Walker said. "The racing really begins here, at the breeding farms. An increase or decrease in purses ultimately effects us in some fashion, but we feel that we will always have a good product that is worth something to someone, somewhere. As breeders we’re always looking to increase the quality of our stock."

"The quality of the racing in Illinois is apparent from at least two perspectives," Terry added. "Balmoral, Maywood, Hawthorne and the State Fairs produced many outstanding and exciting races."

Hunt cited 2004 national seasonal pacing leaders Quik Pulse Mindale (winning in 1:48, at Balmoral); Fox Valley Gallant (1:50.3 at Maywood); Loyal Opposition (1:52.1 at Maywood); Chevie Cash (1:50.4 at DuQuoin); Kennans Josh (1:53.3 at Maywood); and Magenta Hall (1:55.2 at Springfield).

"Horses bred in Illinois are extremely competitive wherever they go," Terry said. "Loyal Opposition became the fastest female in the history of the sport--winning at the Meadowlands in 1:48.4 in the Lady Liberty and she followed that up winning the Milton in Canada. Fox Valley Shaker won the $443,200 Sweetheart. There are many more examples, but I really want to get to why I believe the quality of racing in Illinois is first rate.

"Look at the horses that have gone to the Meadowlands for the better purses there. That doesn’t surprise me. We undervalue our own product here in Chicago. To be sure there are bottom end horses that cannot carry their own weight and therefore get assigned the lowest claiming prices. The point is that our $8 to $10,000 claimers are largely as good as the $20,000 claimers at the Meadowlands. There are many current examples of those horses racing out there now. In Chicago they were just "8’s" because someone said that 8 is the number. In East Rutherford they don’t call their bottom-enders $8,000 claimers. The fact that their $20 claimers cannot compete at that level when they come to Chicago is not an indictment of the racing in New Jersey – rather it is the fact that they promote in a positive way—they don’t try to tell the public that these are cheap horses."

Terry remains active in the business on all levels, in the owning as well as the breeding ranks.

"I still enjoy the thrill of racing, and have been very fortunate the past couple of years to share ownership of horses like Constant Change, Enemy At The Gate and Undeniably You," Terry noted. "Since I don’t race in New Jersey my horses are essentially on rest and relaxation. The purses offered currently in Chicago are so low they don’t justify putting the horses through the wear and tear of training and racing. I think this is the perfect time of the year for my horses, especially the younger stakes horses, to be given time off. I think we race too many days in Chicago anyway. I certainly am concerned that the purse structure be addressed and corrected though because I recognize that many other stables are geared toward racing overnight horses and claimers. They cannot get along with the purses offered now."

"Anyone involved with a breeding operation has a long term commitment to the sport," Terry continued. "Notice I didn’t say investment. Both Cottonwood Farm and Fox Valley Standardbreds have invested millions of dollars into their breeding programs, and while that is a huge concern for me, I recognize it as a cost of doing business the right way. The element that makes breeders the most susceptible to the ups and downs of the business is that we cannot change much. We are either in the business or we are out. I can’t pick up our farm and move the operation to New Jersey or Ontario. I also can’t just turn the mares out for a season and wait until things get better. We are just about to start up the new breeding season. Think about that. It is 2005 and those babies will be born in 2006, sell as yearlings in 2007 and make their first appearances on the racetrack in 2008.

"Although I don’t think anyone likes to have change forced upon them, a trainer can move their stable to another meet, a driver can pack up his colors, and an owner can decide not to invest in race horses or yearlings. Breeders can’t do that–we are in or we are out."

Turning their thoughts to the rules governing breeders in the Prairie State, Doc and Terry discussed the Illinois foaling rule, the Illinois Stallion ownership rule, and how theses rules affect them and their respective operations.

"We’ve always been super grateful to Larry Marsh, who years ago worked very hard to implement the Horse Racing Act of 1975 here in Illinois," Ken said. "Without that rule, I don’t know where the breeders in this state would be today. Having stallions that are 100% Illinois owned has its pros and cons. I’ve seen what opening up the program did to the thoroughbred breeders here in Illinois—it killed their program. That’s why I don’t think Illinois mares should be bred in-state and be allowed to foal out of state. I think we have to retain as much money as we can here in Illinois."

"I think the foaling rule is archaic," Terry noted. "I know it is restrictive and has cost us a lot of business over the years. The thought that a farm makes money boarding a mare for that 30 days is crazy. The only way we make any money is on stallion fees. With our profit margins I would have to board a mare for about a year and a half to net $1,000 in profit.

"I wish the stallion ownership rule were less restrictive," Terry continued. "I would certainly favor a reduction in the required percentage of Illinois ownership. I am not sure that the rule is effective because I really don’t understand the purpose of the current regulations.

I do remain convinced of one thing however. If Illinois completely eliminated the restrictions on stallion ownership and did away with the foaling rule we would not suddenly be flooded with top stallion prospects. The economics of the breeding and yearling market in Illinois makes such a move economically un-viable. To bring in a legitimate, top ranked stallion prospect, the sort that is generally syndicated and ends up at Hanover or Kentuckiana, the public has to support a horse with a stud fee of between $8,000 and $20,000. Then in order for that stallion to be successful, their yearlings must bring significantly higher prices than are generally paid here in Illinois…otherwise the stallion is a dead issue.

"What would most likely happen is that we would attract second-tier stallions that weren’t considered good enough to stand in Pennsylvania (with their upcoming slots), or New Jersey (with their casino subsidies), or Ontario (with their racinos)," Terry added. "I am all for making our product better by increasing competition…but until the economics of our local breeding business are way more attractive, I wouldn’t expect George Segal to move Brittany Farm to Highland Park. The backyard breeder is always going to exist pretty much the same I think. He is likely breeding for his own use, planning to raise, train and race his own product. I don’t think that changes in the foaling rule or stallion ownership would impact him at all."

Ever optimistic, both Terry and Doc say they don’t believe the diminished purse structure will hurt their yearling sales, at this point in time.

"Yearling sales are always affected by the overall vitality of the business," Terry noted. "Clearly diminished purses cannot help anyone. Our yearling customers are usually looking for stakes prospects and that helps us a little, but since not every yearling is going to be a top stakes colt or filly the overnight racing is the safety net. I am optimistic that the purse situation will have been addressed by the time the sales come around…hopefully a lot sooner than that. We are planning to hold our annual yearling sale again this September, and again I am very hopeful that things will have changed dramatically for the better by then. If the sale is a failure I would be forced to consider other options for the future. As I mentioned earlier, breeders are in this for the long haul. Even if my sale of 2005 yearlings was a complete flop, by sale time I will have a crop of babies on the ground and another ‘in the oven.’"

"Like I said before, breeders can’t just pick up and move," Doc said. "Purchasing a stallion is at least a five or six year commitment, and it’s an investment that you never get back. As a breeder I think the situation in Illinois will have to be depressed for a long, long time for us to move our product elsewhere, and even then, it’s unlikely."

The two breeders then turned their thoughts to the racetracks, racetrack owners, and racetrack and horsemen relationships.

"I think that as a whole, the people that own and manage the racetracks in Illinois are not as stupid as they have been portrayed by the IHHA nor are they as smart as they think they are," Terry said.

"Racetrack management are darn good business people," Ken said. "They’re the theatre and we’re the actors. We need to put on a good show for the fans. I don’t care how much the racetracks make as long as we make money too. I think we ought to be completely in synch with the tracks, and I don’t think there’s a need for work stoppages. They’re stupid. Our goal has to be to promote a good environment for the racing fans.

Given their huge financial investments, have Doc or Terry ever considered scaling down their operations? Both vehemently say it has never been a consideration for either of them.

"Scaling back isn’t a realistic option for a horse breeder," Terry said. "Much of our investment is in broodmares and in the land. The land can’t easily be switched back and forth from pasture to crops. Regardless of the state of harness racing, we are regularly faced with choices that have to be considered. Property values and mortgage payments have to be weighed against the low profit margins and cash flow problems inherent in the breeding business as compared to selling land to developers.

"Think about the farms that are no longer around in Illinois, Terry added. "Nettle Creek Farm and Talamod Farm are now subdivisions. Lin-Nel Farm is closed, Marsh Stud has been developed, Renvaeh Farm is now a neighborhood. And while the state was lucky that Pat & Doc took over in Sherman, otherwise that farm would have closed. Even Fox Valley Standardbred’s old location was sold off in the process. Do we think about having change forced upon us? Yes, but not only by the thought of recapture."

"We attempt to buy quality horses that will always be in demand, and curtailing our operation just isn’t even an option," Doc noted. "I’d like to think positive on purse increases rather than decreases. We have to turn our industry around in Illinois, and the only way to do this is through legislature. Right now it seems that slots would be much more positive than getting a percentage of the existing riverboats. A percentage can be taken away very easily, just as easily as they are given, and if the slots do come, then we should make sure to see that they are locked in to live racing only. Slots will be our security in the long run. Of course off shore accounts will always be a problem too until the Federal government can figure out some way to regulate them."

"In regards to the decrease in purses, breeders are certainly impacted, and probably most directly and the hardest," Terry noted. "Yearling prices last fall were down across the country. Illinois was no different, although since our prices aren’t as high to begin with we didn’t fall as much as some.

"The purse structure floats the entire industry—it allows owners a chance to turn a profit, or at least recoup their investment and cover operating expenses. The purse structure pays the drivers.

"Chicago racing is a little different in that regard because here the most successful drivers also suffer the most when purses drop. Trainers count on their percentage to make the difference between just getting by and being profitable. That percentage is based upon purses.

"The average investor doesn’t get involved with race horses anyway…but the special investors who love the sport enough to get involved are also smart enough to evaluate the risk-reward potential of owning a race horse.

"Ownership is always a gamble, but an attractive purse structure makes it a gamble worth considering."

-30-