The University of Kentucky College of Agriculture’s Agricultural Economics program continues to develop state-of-the-art financial tools to aid decision making in the equine industry.

In a recent study forthcoming in Applied Economics, C. Jill Stowe, PhD, an assistant professor in agricultural economics at UK, analyzed the factors that determine leading sire stud fees in the Thoroughbred industry to inform owners and breeders about the breeding decisions made on a daily basis and their impact on the industry.

Data were collected from the "Blood-Horse Leading Sires List" for more than 100 sires that appeared on the list at least twice between 1999 and 2008 and were available to breed during the next calendar year. Stowe found that among this class of leading sires, the most significant stud fee predictor is the mean yearling sales price from the previous year. The next most significant variable is a sire’s ability to produce colts who themselves will be successful sires. Other predictors of leading sires’ stud fees include total progeny earnings from the previous year, the number of Grade 1 stakes winners produced in the previous year, the percentage of stakes winners a sire has produced in his career, and a sire’s average earnings index (AEI). The inclusion of racetrack performance variables, however, only marginally improves the model’s ability to explain stud fees; statistically, stud fees are largely determined by progeny sales prices and the "sire of sires" measure.

After identifying these attributes, Stowe estimated each characteristic’s market value. The table below provides a general overview of the main results