Straight As An Arrow

Following is an interview with John Messara from the International Thoroughbred (Issue 04) by Sally Duckett.

1. Many of your stallions have received some of the largest reductions in fees – do you feel that such large falls were necessary?

Yes, we are in the worst economic downturn since I’ve been alive, and most asset classes have suffered significant reduction in value. At Arrowfield, we are keen to ensure that breeders stay in the business, because they can continue to breed for profit. One of the factors in all this, is the stallion service fee. Accordingly we took the scalpel to our prices and made them attractive to our customers, even in the current economic environment.

2. Even for a stallion such as Redoute’s Choice?

Redoute’s is arguably one of the best stallions in the world. He is perhaps the most successful active sire of the Northern Dancer line. Nevertheless, we treated him like the others, such that commercial breeders could justify going to him and we could maintain the impetus of his breeding career.

3. Is there an argument to say the stallions were over-priced previously? How busy have your stallions been with their bookings?

Prices of stallion service fees are established by the good old supply and demand curves. Last year, prices did not deter breeders, on the other hand those prices do look expensive in today’s environment.

Our fee reductions were early and sharp and we have been well rewarded with decent bookings for pretty well all our stallions. These days it’s always a little difficult for stallions in their 3rd or 4th seasons, but even so I am pleased to say that we are ahead of where we were last year at the same

time.

4. Would you discount your fees again if necessary – either as a formal announced reduction as in the US or are you happy to negotiate with mare owners?

We are always prepared to move with the market as we have done this year however we don’t anticipate any situations in the short term that would require further discounts on our fees. We are strict on our pricing policy because we take a lot of care in setting the fees and our clients understand our policy in this regard.

5. Will you limit book sizes? How many big a book size will you aim for young sires such as Charge Forward and Not A Single Doubt? What about Redoute’s Choice?

To some extent, the economy will take care of book sizes. Generally our larger books will be around the 150 mare mark. We limit Charge Forward to around 100 mares, while Not A Single Doubt will cover a number closer to 150 mares. We expect a book of around 150 for Redoute’s Choice although there are always latecomers with mares that somehow creep into the book.

6. Are Australian breeders remaining positive? Are they altering their covering plans for mares – covering fewer mares, going for lower level stallions than previously?

Australians are generally positive by nature and Australian breeders are also a positive group as a whole. I have not noted much of a change in their breeding patterns this year, but we have made it a little easier for them with our significant fee reduction.

7. Some of the Australian yearling sales still had great clearance rates this spring – were vendors very realistic? How do you feel demand was at the sales? How quickly do you think things will bounce back again – both in the bloodstock industry and the wider economy?

Generally, yes, I think vendors were realistic, although I understand some vendors had to buyback into part of their yearlings to get them away. One analyst recently estimated that the clearance in “real terms” was closer to 65% than to the official figure. Having said that, overall the Australian sales seem to have done better than most of their international counterparts.

Demand was better than we expected at the sales, with some previous domestic buyers finding that the market had returned to within their range. As always the foreign bench was a major contributor. I think it will take some time for the bigger individual local players to return to the market. They’ve been our biggest losers here in wealth terms during this global downtown and they will feel constrained from re entering the horse market in a significant way until they have recouped some of that wealth. This may take some time.

As for the economy and stockmarket etc, I think we’re enjoying a bit of respite now, because the Armageddon possibility seems to have evaporated and it will now turn into a medium term “workout” for the private and public sectors. But it’s too early to become enthusiastic.

8. Where is the Australian bloodstock industry within the global bloodstock industry?

I believe that the Australian Bloodstock Industry has come of age. The world sees us as genuine players within the international sphere; this is a far cry from where we were only 20 years ago. The arrival here of some of the world’s most influential owners and breeders is evidence of that.

I think we can build on it now, as two way trade in bloodstock develops and the success of the Australian bred horses continues worldwide.

I think we are particularly well placed in Australia, to take advantage of any change in policy by the Central Committee in China on the issue of racing and wagering, if that were to come at some stage in the future.

9. There have been some divergent views after Sheikh Mohammed’s decision to take nine horses from Australia to join Godolphin…..

Only those that look inwardly and cannot unshackle themselves from the 1950’s mentality can’t see the huge benefits that flow to the whole industry from the position taken by Sheikh Mohammed in Australia. The export of a handful of Australian bred horses for racing in Dubai and Europe as 4YO’s is a real plus for us. It’s a further step in the internationalisation of our industry. I felt so strongly about this that I issued a personal media statement on the subject.