Financial Feasibility of Standing a Stallion???

[BookendFarm]

Ok, here is the situation:
my partner and I own 30 acres, 7 horses and both have full time jobs. Three of the horses are mares that we are breeding. We are hoping to make our farm self-sustaining, but both plan to keep our jobs.

Our financial backers (aka my parents) are unhappy that we have not yet made any money. This is our second year on the farm...so far, we have one weanling.

If we were to breed our own stallion, with decent warmblood lines, good movement, etc. and I use it as my personal show horse to train, get experience, give it a show record, and we have it approved by a registry, can we expect to make money? How many bookings do most studs get on average per year? Do all successful studs have to be imported? Am I making any sense at all?

Please tell me what you know!!!! My parents are hinting that we should sell the farm, and I feel like we haven't even had a chance yet! If I can produce a plan for them that shows a chance at profit in the next couple of years, I think they will back off. Help!!!

[Windswept Stable]

Absoultely not. Breeding is not an endeavor entered into to earn profit--by most of us. Unless you are independently wealthy you are many many years away from profit--IF EVER. My stallion has been very successful and profit is never on the horizon. A moderate advertsing campaign each year is over $5,000 just as an example of one of the costs you will encounter.

[ambar]

Even the IRS (last I looked) doesn't expect a farm to make a profit in the first two years.. you only have to profit two out of seven to be assumed to be a for-profit venture:


(Publication 225, Farmer's Tax Guide)

Presumption of profit. Your farming or other activity is presumed carried on for profit if it
produced a profit in at least 3 of the last 5 tax years, including the current year. Activities that consist primarily of breeding, training, showing, or racing horses are presumed carried on for profit if they produced a profit in at least 2 of the last 7 tax years, including the current year. The activity must be substantially the same for each year within this period. You have a profit when income from the activity is more than the deductions for it.

[pintopiaffe]

Well, I've been here ten, and I would have made a profit the last two, until gas prices sent hay and grain through the roof. If the economy had only gone up the same amount it had previously, I would've *barely* made the black.

I originally got my own stallion, after managing others for years, because I was sick and tired of a mare getting just *so* far in training, then having a year off for a baby, then practically starting over. The stallion can make babies AND still work.

I didn't plan to make a profit, but when I advertise him (I haven't the past few years) he earns his keep and helps a little toward the keep of the others. Breeding my own mares to him, live cover, and selling those foals is also a 'good deal' compared to AI and stud fees etc.

I have not been able to keep him active with RPSI, even though he was approved by them. I can't afford it right now.

I think the 100DT and/or performance scores needed for WB stallion approveals are the biggest expense with the boys, in my area anyway.

I am very rural and that is a bonus in some expenses, and a setback when it comes to training, showing etc.

I am sure others will tell you how hellaciously expensive it is to keep a stallion. To me, it's another horse to feed, whom is my training horse, who also can make a little money with far less up front expense than a mare.

Ideally, I would like to have all stallions, and just one or two mares tops, to keep me in my 'foal fix.'

[showjumpers66]

Breeding is a break even deal if you are lucky. Typically, professional breeders will make money by offering many other services such as training, showing, sales, breeding services, etc. so that the loss/income is distributed.

The average stallion only books a few mares per year, not even enough to cover his maintenance expenses much less his annual dues and activation fees. Standing a licensed stallion will easily cost you $15,000 per year. There is a small percentage of stallions that are popular who may consistently book 10 to 35 mares per year and only a tiny percentage that book more than that.

To breed a stallion prospect, you need to start with a world class mare from a long line of proven sporthorses. Many breeders will shy away from stallions from TB mares as often there is an unknown factor there. Of course, that is not the case for all TB mares as we do have TB mares in our country from proven sporthorse lines.

You don't necessarily need an imported stallion prospect, but sometimes that can be a marketing point to have popular or desirable bloodlines that may not be readily available here.

The other part of it is finding a stallion that meets the needs of the American market.

[dmalbone]

This is purely curiosity's sake, but how does that $15,000 to stand a stallion break down?

[Mythology]

This buisness is better as a hobby. If you can prouduce exceptional foals from excellent mares and excellent stallions they mostly will sell as weanlings, even in this market, which is where you would make your immediate money, approx 10-15k per very well bred foal. Even if you luck out with your exceptional mares and sires and prouduce an excpetional colt you will have to wait three years to get him approved and not many people breed to young stallions, so it would take another 5 years to get his foals in the ring and him showing in the big leagues. Then you have the costs assioatied with owning a stallion: registration/assioations, advertising, shows, training, freezing semen, etc. This is not a buisness for the faint of heart or pocketbook. Two years and not making a profit is the norm- in fact five years w/o profit is the norm. If you can be self sufficent at 7-10 years your lucky and doing well.
I have many friends with multiple fairly popular stallions and breed Extremely nice mares, selling out of foals every year, that have problems making ends meet, espically in the winter. But we do this because we love it.
If you have the ability buying young horses and starting them, getting the first shows under the belt, then selling, if you have the contacts and the start up cash, will make better $$ then breeding.

[BookendFarm]

First, thank you to everyone for the information! Please keep it coming!

Second, I understand that most people don't make a profit in horses, but could standing a stallion break even?

Third, as far as the bloodlines of a stallion, what if it is 1/4 Thoroughbred?

Thank you!!!

[Mythology]

Well Europeans like a colt if his dam is by a TB sire, but not the other way around. Americans are a bit less discriminatory, but that leads me to believe there is a reason Europeans like this exact combo...
However if he's winning FEI Grand Prix's then you'll get breedings even if his dam's a full TB.

[Signature]

Agree with the above posters - breeding is not for the faint of heart or pocketbook. We do investment horses that "float" our breeding business, and that is the only way we are profitable. If we didn't breed, we would be making quite a bit, but the breeding takes a lot of the income.

Last year we had $8000 in vet bills for two foals, one of which died. So that killed most of the profit right there. :( Then this year we had a retained placenta (for 6 days in ICU) and then a foal with a patent urachus. Another $5500 in bills. So, it seems like just when you're set to do well, something happens. Make sure you keep a rainy day fund!

Also it takes several years of quality foal production to get established in the marketplace and have a large enough client base to have your foals sell every year. This is our 6th year and we are finally now having our foals sold in utero or when they are quite young, based on previous offspring and general quality of produce/reputation. Of course this is also helped by several buyers showing their babies on the line and ranking nationally, so it takes them to help out also! :) (thank you!!!)

I think standing a stallion is a lot of work and hassle. We've thought about buying our own, but not to stand to the public, just because we work full time and don't know how we'd get it collected, and if we had to pay someone to stand him, then there goes the profit. We would use him only for our mares and possibly sell a few breedings, hoping that having him on farm for teasing/collection and doing AI ourselves would cut out a lot of our vet bills and then stud fees which usually run about $15,000 a year for 6 mares. But, then we're stuck breeding to the same horse which might not be a fit for all our mares and we have to buy fees anyway...

I think it only works if you do it full time, probably doing most of the work yourself, and have a popular stallion that gets 30-40+ mares a year. Of course then you only have income and a job for a couple months out of the year. But then you have to spend a bunch on the initial investment of the stallion unless you somehow get lucky. Spend money to make money type thing. So in general, breeding is definitely more of a hobby type endeavor as most are saying! There are those who make it work but they are few and far between if you really consider all the expenses and time. (sorry to be Debbie Downer) LOL

[RiverOaksFarm]

but could standing a stallion break even

The general consensus seems to be that the average number of bookings a year for a stallion is 5 or 6, depending on who you ask. I'd estimate the average stud fee is maybe $1500 just for a rough guesstimate (?) So that is $7,500 - $9,000 a year. Probably fewer breedings and a smaller stud fee the first few years, and if you're lucky and he turns out to be a star, maybe more breedings for a higher stud fee later on.

If you're planning to breed to create your own stallion prospect, you've got a bit of a gamble ahead of you, plus all the expenses relating to breeding, mare care, and a year of waiting, only to find you may end up with.....a filly, lol. But even if you're lucky and get a stallion quality colt right away, you've got another three years before you can really do anything with him, or even really think about standing him to the public. And it's very unlikely he'll immediately be able to get 5-6 breedings at $1500 each as a 3YO. And at that point look how much time/money you've already got tied up in him...

It might be easier to buy a youngster instead. It could gain you a couple of years, and reduces the risk. But...... it will be more money out of pocket to purchase a legitimate stallion prospect. More money for you to have to recoup to become profitable.

Then there are the expenses of registration, inspection/approval, showing, marketing, and the expenses relating to collecting/shipping semen. Would you do it yourself? If so, there is equipment to buy, and alot to learn beforehand. If you collect at a repro facility, it will be an added expense, which will eat away at your profit margin. There is only so much you can pass along to the mare owner and still be competitive...

Which brings up something else -- since you mentioned you and your partner both work full time -- during breeding season when you're standing a stallion, you're pretty much "on call", so you'd also have to factor in how feasible it would be to take a day off work with no notice, and you'd probably also have to factor in the money lost because you took a day off work.

Also, you'll have to pray the economy improves! There are already alot of nice stallions in the US, and some have very competitive stud fees, and as the economy gets worse and worse there are less people breeding, so there are less mares to spread among all those stallions. I wouldn't be surprised at all if the average of 5-6 breedings a year per stallion drops (or maybe has already dropped.)

This probably all sounds really discouraging -- and it's not meant to! I've been involved with stallions, my own or belonging to others, off and on for about the last 13 years, standing as many as three at one time (not all mine, lol!) I guess my situation is similar to PintoPiaffe's in that I currently have my own stallion. I adore him, and I would adore him just as much if he never got another breeding, and he doesn't "cost" me any extra because he is a stallion (in fact I get a small break on my property taxes, and I get to write-off his expenses as advertising -- things which certainly are not reasons to get a stallion, but they're a nice bonus when you already have one.) And it means I have a really nice stallion available for my own mares as well. And it means I have a really nice stallion to ride and show. So there are certainly benefits :)

The best thing to do is to put it all down on paper. If you've got a certain breed in mind, look into stallion requirements for that breed (stallion testing, approval, inspection, all the various requirements and the related fees/expenses.) Also look at the fees you'll be paying to keep the stallion in good standing with his registry, etc., as this could be $$$'s per year. Think about marketing -- choose a magazine and pull up their advertising rates. The cost of a fancy full page color ad will nearly give you a stroke! Of course, there is no rule that you have to advertise (I do almost no advertising) but a good thing to consider and factor into your business plan is an advertising budget. Same with showing, he'll need to be showing, so there's another expense. If you're going to do your own collecting, look into the expense involved with the equipment etc. If you'd be using a facility, check out their pricing. There are also things like Equitainers to buy (appx $225 each), or would you use disposable boxes...... Alot to think about!

Either way, good luck with your farm and business venture. And kiss your parents for helping you! This can be a tough business, I hope whatever you decide on works out for you. :)

[BookendFarm]

I just wanted to sincerely thank all of you who took the time to give me information! While it does sound as though standing a stud is not neccessarily a way to make money, I am encouraged to hope that maybe someday one of our foals will be nice enough to keep as a stud. In the meantime, I guess we will just have to sell a few of our horses and keep riding a hobby...maybe we'll sell a foal soon! :-)

Thanks, again!!

[smm20]

You indicate that you would like to breed your own stallion to stand at stud. Well, even if you get an exceptional stallion prospect out of your 2010 foals, it will be several years before you can even start your stallion, and several more years before you will have established a good show record. If your parents are threatening to take away financial support after one year of farm ownership, there is no way they would be willing to wait 5+ years for a stallion to be born, mature and prove himself!

[showjumpers66]

First, you have the investment into the lab - minimum breeding dummy, microscope, AV and necessary pieces, extender, densimeter, incubator, shipping containers, etc. Probably expect to invest a bare minimum of $5000 plus a yearly amount to restock necessary items such as extender, lube, disposable liners, baby bottle liners, slides, supplies for densimeter, etc.

Lab investment and yearly lab maintenance
Stallion maintenance - feed, bedding, farrier, vet, tack
Basic advertising - website, DVDs, fliers
Annual activations and dues

This doesn't include magazine ads, training, stallion testing and licensing, or showing.

This is purely curiosity's sake, but how does that $15,000 to stand a stallion break down?

[Whitfield Farm Hanoverians]

I guess this is kinda off topic but if you TRULY want to make any $$$ breeding horses buy the very best mares you can find FIRST. Unless you just want to go out & buy a young stallion prospect which again is pricey. I say find the best mare you can afford then double the amount you planned on spending & get an even better one!!!
Keep us posted on your babies. Always nice to see breeders trying. I know I keep trying even after spending almost $10K on ill babies & losing one of them this year.
Yep, need my head examined! Could be driving a nice Porsche!

[Mythology]

Yep, need my head examined! Could be driving a nice Porsche!

Ditto:winkgrin:

[DownYonder]

Bookend, some questions -

1) do you have experience with stallions?
2) do you have experience raising colts to "manhood"?
3) how many foals have you put on the ground?
4) how many warmblood inspections have you attended?
5) how many foals have you presented at warmblood inspections?

The reason I am asking is because 1) if you have no stallion experience, you probably do not need to be trying to keep a stallion, or raising a colt as a stallion; and 2) if you haven't had many foals, or attended many warmblood inspections, or presented many foals at warmblood inspections, you very likely do not have the eye or the bloodline knowledge to understand what kind of colts might make good stallion prospects.

Also, your comment "have it approved by a registry" sounds as though you think all you have to do is present a decent looking colt to a registry and it will be approved for breeding. This is very, very far from the truth, and you would be surprised at how many very good colts with great pedigrees, etc., are turned down for stallion status.

Furthermore, your assumption that you can make money on your foal crops by having your own stallion reminds me of a well known stallion owner who decided the same thing after spending thousands of $$$ each year on stud fees. She bought a nice stallion, imported him, and has by now sunk far more into him in training fees, showing fees, advertising fees, registry fees, etc., than she would have ever spent by buying semen from top stallions.

As others have pointed out, stallion ownership isn't as easy as it sounds. ;)

[DreamStreetStallion]

The truth is no, you can't make money standing a stallion(s). In fact, if you don't start out with a tremendous amount of money (Multi Millions), you don't even have a chance of breaking even. Its a common misconception that stallion owners make money. I can tell you we don't.

In 2005 when I originally conceived Dream Street Stallions I was a virtually unknown kid that had watched world class horses in Europe (my eye was mainly on stallions as I was training at Gestut Gronwohldhof, home of Donnerhall and other greats) over the years and had a dream and a lot of drive. Lucky for me I also had the money to make it happen, but even then breaking into the business was extremely difficult on a number of levels.

Its HARD work, heartache, tears, dedication and a lot of fun. That's the only reason you play the game. I've loved it and wouldn't trade some of my memories and experiences I've had for the World. I've cried, had goose bumps and thanked God many many times. At my young age, I feel very lucky and blessed.

Best,
Rick Rockefeller-Silvia

[Tiki]

Besides the $15,000 per year, or so, to stand a stallion, it costs anywhere from $7500 - $15,000 to have him go through a stallion inspection and some form of Stallion Performance Test. And that doesn't include the training costs to get him to the test. Then there's the training and showing and advertising each year that COULD cost more than the $15,000 proposed.

And no, you can't just take a boy horse - especially with an uninspected, unapproved TB dam or granddam and expect to 'just' have him approved for breeding with any WB Registry.

[BookendFarm]

DownUnder -

All good questions! I don't have any experience standing a stallion, but have trained and ridden a couple. I have been training horses for 27 years, so have a pretty good idea of what goes into the handling and training of a stallion (or any other horse for that matter...I think some of the worst are mares!). We are only on our first foal of our own, however I managed a friend's breeding farm for several years. I found that I have quite a knack for pairing mares and stallions, as I produced top 3 Nationally placed weanlings both years (in the USDF Sporthorse Breeding Series). Not only did I choose the mares and stallions, but we presented the foals for inspection and handled them at the shows ourselves, so I have a bit of an idea about that (however I would definitely not call myself an expert as it was only 3 years).


Rick (and everyone else) -

I think what you said is the general consensus! Thank you for putting it into perspective so clearly, though. It seems that we would need a good bit more money than we have already invested to get to where we want to be. We are willing to put in a lot of hard work (we have already done most of the work on the farm ourselves...fencing, run-in sheds, barns, etc.), but don't have a ton of extra money laying around! :-)


Tiki -

I totally agree with you. Although we are using TB mares right now, they will be inspected and approved this fall (they are very nice mares). And, for breeding a stallion prospect, we would actually either lease a WB mare or use on of our fillies o/o a TB mare, by a WB stallion. Also, to breed a stallion prospect, I was planning to breed to a well-known stallion producer...maybe Don Shufro or Sandro Hit.


My initial plan was this...
I want to breed Irish Sport Horses. So we gor some nice TB mares, but the Irish Draught semen doesn't ship well. After trying two stallions for a total of 7 inseminations, we gave up and switched to WB stallions. I would like to get an Irish Draught stud to stand myself, as there aren't any in my state. Then we could breed our mares to him and sell the offspring, as well as offer him to local breeders. Any thoughts?

[horsetales]

I My initial plan was this...
I want to breed Irish Sport Horses. So we gor some nice TB mares, but the Irish Draught semen doesn't ship well. After trying two stallions for a total of 7 inseminations, we gave up and switched to WB stallions. I would like to get an Irish Draught stud to stand myself, as there aren't any in my state. Then we could breed our mares to him and sell the offspring, as well as offer him to local breeders. Any thoughts?

I'm sorry you had such rotten luck. We have been quite lucky with the stallions we have used. Braveheart RID is located in Texas and he caught my mare on the 1st try. I also thought Prescott Farm in TX had a RID stallion (but my memory could be wrong). When we bred to Dandelion Diamond Rebel he was in TX (now in MD) and caught my mare 1st try (so he shipped real well and in heat). Good luck, I hope you can find a great (R)ID - and please share if you move forward with your plan :) We once looked into maybe standing a RID, but after learning the real economics as pointed out here, chose to stick with mares.

[Foxtrot's]

A reply from DreamStreetStallions - he should know!!

I have had a "breeding operation" for revenue Canada purposes for many years and my accountant is on at me to sell something, to attempt to show a profit somewhere.
But with unexpected vet bills and lost breedings and all that 'stuff' it is just impossible on a small scale.

[Ravencrest_Camp]

A reply from DreamStreetStallions - he should know!!

I have had a "breeding operation" for revenue Canada purposes for many years and my accountant is on at me to sell something, to attempt to show a profit somewhere.
But with unexpected vet bills and lost breedings and all that 'stuff' it is just impossible on a small scale.

I am not an accountant, but I do play one on TV. :yes:

Your accountant should look into a recent Supreme Court of Canada ruling regarding the reasonable expectation of profit rule. Here is the Coles Notes version. In the past for a business with some personal component, which your breeding business could very well be, CRCA would expect you to make a profit after a certain length of time (3-5 years I think was the standard). If you did not make a profit after that time, they deemed that what you were doing was a hobby and not a business and therefore you were not entitled to write off your losses. The Supreme Court ruled that to be too narrow a definition of a business. There has to be an intent to make profit, but you don't have to actually have to make a profit. You can't be penalized for being a bad business person, if you intended to make a profit. :lol:

[Ravencrest_Camp]

Every stallion owner that has posted on this thread says you can't make a profit standing a stallion. Including those that by the look of their websites/farms are successful to some degree.

So then the cynic in me asks, "Why do y'all do it?" Why do you keep subsidizing mare owners? Why do you stay in business? Why do you keep standing a stallion? You can't all be that altruistic. It just doesn't seem rational.

Sure to goodness gracious someone of you smart people has figured out how to make a profit with a stallion.

[jdeboer01]

My initial plan was this...
I want to breed Irish Sport Horses. So we gor some nice TB mares, but the Irish Draught semen doesn't ship well. After trying two stallions for a total of 7 inseminations, we gave up and switched to WB stallions. I would like to get an Irish Draught stud to stand myself, as there aren't any in my state. Then we could breed our mares to him and sell the offspring, as well as offer him to local breeders. Any thoughts?

Bookend --
Have you seen Kilpeck Diamond Knight? http://www.diamondcrestfarm.com/kilpeckdiamondknight.htm
His owner is an extremely experienced breeder, and very professional. As a matter of fact, Adriana Wagner, his owner, is a trained veterinarian. She will give you an honest and educated assessment of his semen quality. I have seen this stallion on many occasions, as I was having one of my mares foaled out at the farm where he stands. He is SUCH a gentleman, even with many mares very close to his paddock. He is truly almost 18 hands, and has amazing bone and feet. She has quite a few of his foals on the farm as well out of RID mares -- so perhaps you could purchase a stallion prospect.

Best of luck to you! :)

Judy

[RiverOaksFarm]

Ravencrest, I think you'll find that there are many people in the horse business who do not make money, their money comes from somewhere else. They are in the horse business because they love it, not for profit.

Of those who stand a stallion as a part of their business, and make money, I think you'll find that most of us do more than "just" standing a stallion (ie, training, teaching, judging, standing outside stallions, selling foals, etc.)

[avadog]

I believe there are people making money. There just aren't very many people making money. I don't think you can keep a horse on the show curcuit and make money.

[Foxtrot's]

Ravencrest - I do believe my accountant does a good job for us. We were audited a few years ago and they didn't find a single thing to nab us on. But it makes one wary and want to be a good person and remain in the taxman's good books!! She was just saying we should try and find a sale or two. Well, I have moved a couple of ponies over the years... :)

[Equine Reproduction]

Irish Draught semen doesn't ship well.

I think this might be a bit of a broad generalization! :) We've handled quite a few RID's over the years (including one mentioned in this thread!) and haven't found them to have better or worse semen for shipping than any other breed. :)