The Thoroughbred industry has historically made decisions based on instinct and experience. Compared to other industries, minimal statistical evidence exists to support these decisions, particularly in regards to setting freshman sire stud fees. However, the University of Kentucky College of Agriculture’s agricultural economics program is helping provide state-of-the-art financial tools to the industry.

In a recent study published in the Journal of Agribusiness, authors C. Jill Stowe, PhD, an assistant professor in Agricultural Economics at UK, and Billy Ajello, a former undergraduate student in Agricultural Economics and recent Darley Flying Start graduate, analyzed the factors that determine freshman sire stud fees in the Thoroughbred industry to better inform owners and breeders about the decisions made on a daily basis and the impact they have on the industry.

Data on more than 600 incoming (freshman) sires from 1999–2009 were obtained from the Blood-Horse MarketWatch, the Blood-Horse Stallion Registry, and the 2009 American Produce Records. Stowe and Ajello found that different measures of a freshman sire’s own racing career, such as winning percentage and number of Grade 1 stakes wins, are significant in determining stud fees, even though according to previous studies, these attributes are only marginally heritable (passed from one generation to the next). In addition, certain individual characteristics (such as age entering the breeding shed and where the sire stands at stud) and sire and dam quality measures are factors that help predict freshman sire stud fees.

Once these attributes were identified, Stowe and Ajello estimated the market values of each characteristic. The table below provides a general overview of the main results