Friday, June 9, 2017

Economic Case Study: TB v WB v OTTB

Here's a statement that I'm going to posit as fact:

Financially speaking, it costs significantly more to put a purpose-bred Thoroughbred on the ground than it does a purpose-bred Warmblood, as is reflected in the average relative values of these animals when they enter their sport's markets.

Example: Let's take a somewhat middle-of-the-road TB stallion, First Samurai. If you're into racing and pedigrees and whatnot, you've probably heard of him. Otherwise, maybe you're more familiar with his sire, Giants Causeway. He's a nice stallion, tho he's not the featured star at Claiborne Farms by any means. First Samurai's 2008 stud fee was $40,000

Now let's look at a world class, Olympic gold-winning show jumper, the KWPN stallion Big Star. If you want a breeding, Big Star's fee for a 3 straw dose of frozen semen is ~$3,600.


A Charlie Murray bred to race costs ~10x more just to be bred than a Laguna Star (Hillary's lovely filly) bred to jump, using the example sires and cursory research above. (Not including any other incidentals, the mare or logistical costs - simply the breeding itself)

Of course, once the horse is born, things happen. Things change. The value proposition begins to shift in ways inextricably tied to the individual horse. 

Tho it's a relatively safe bet that there are few amateurs in the racing industry at the ground level of breeding, or even picking up horses like Charlie from the yearling auctions. Whereas young classy WBs very often end up bred and owned by amateurs.

And naturally, not every nicely bred TB does well at the auctions, or even ever makes it there. Bc... ya know. That's horses. Same thing happens with babies of all breeds. And of course WBs have their own quality assurance measures of registries and inspections. 

But if we are talking about each breed and its purpose-bred sport, the economics of what goes in to putting TBs on the ground are pretty black and white: they cost a helluva a lot more than WBs on average. 


Once TBs leave their purpose-bred sport, tho - once they add that "Off Track" to their classification - their value changes accordingly. They then enter uncharted waters - a second career for which they were never specifically intended, whatever that career may be. With, naturally, all the experience, mileage, and potential baggage of their first career carried along in their bodies and minds, for better or worse.

So comparing an OTTB to WBs of similar age or experience but who are just entering their purpose-bred sport is a false equivalency. Is the value proposition between OTTBs and WBs different? Why yes, yes it is.

But the WBs don't cost more at this stage bc economically speaking it took more money to get them to the point of entering their sport - that is demonstrably false. 

They cost more bc they are still performing within the purpose of their breeding, vs OTTBs who by definition are onto career #2, for which they were not intentionally bred. Right? OTTBs aren't bred for the "OT" part. Take them away from their purpose-bred sport and the value proposition changes. It becomes a lot less about potential, and more about confirmed ability.


That's a well understood facet of today's sport horse market. Of course we all know the truism that "a horse is worth what somebody will pay for it," but it's also pretty much established that relatively nice OTTBs can be found for a fraction of the cost of relatively nice WBs, even before we get into the discussion of show records and training, etc etc. Or the sporty TB bloodlines that have been carefully selected into WB books. 

TB Charlie cost $40K just for the breeding, $100K at his yearling auction, and some untold (tho likely lesser) value in the sale to his second owners at the track.

I paid $2,500 for unstarted OTTB Charlie. And it probably would have cost half that (or less) if he were a mare, another facet of today's market that I'm not delving into at present.

My 4* trainer offered me a 4yo OTTB that he restarted and took to a couple BNs for $10K. Other local 4* riders dedicate entire operations to restarting OTTBs for sale. Just the act of bringing an OTTB to their farm bumps the starting price to ~$6.5K, increasing with training. And those are FOUR STAR riders and trainers.


Could I sell Charlie for more than I paid to buy him at this point? Probably. Could I sell him for more than he has cost me over 9 months? Honestly? Not likely. Maybe close... But probably not in this market where there are similar horses hand selected and restarted by 4* riders.

As a no-name amateur, OTTB resale projects are probably a money-losing proposition for me. Especially with the time it's likely to take me to develop the horse to a confirmed level of training (vs a pro's timeline, with the understanding that time = increased cost for diminishing returns in this formula).

And going back to my earlier comparison of TB Charlie to WB Luna, but now adding in OTTB Charlie.... Things look a lot different now, right? 

Luna, in her purpose-bred sport, assuming she continues to develop as such, remains on the upward trajectory. Her future is ahead of her. Determined as always by the mysterious and chaotic calculus that rules all horses, but we can make educated guesses just by observing the actual market, right? Just ask L. Williams, who successfully developed and brought to market her own WB prospect.


So that's kinda where the rubber meets the road of TB v WB v OTTB. The actual market is pretty clear on this matter, regardless of whether we believe it's fair or just or inflated or whatever.

I'm not saying this to put too fine a point on anything, or to make claims about whether the breeds themselves have greater or lesser intrinsic values than what the market applies to them for their purposes. 

Rather, I'm just looking at actual numbers here. And not even a fully rigorous scientific study of the market - but just a case study of the reality I can see from my own limited vantage point.

What do you think - do you have opinions in the matter? Or maybe you see selection bias or some other logical fallacy in the details I've presented above? 

Do you think it's all a bunch of bull shit anyway and a horse is a horse is a horse, let people spend what they want? Or perhaps you've been deeper into the TB / WB / OTTB worlds and have gotten to see things from a perspective most don't?

62 comments:

  1. Side note: the cost of a breeding to a TB stallion is based on the fact that there is no AI allowed so the stallion can breed less mares and the likelihood of a stallion injury is higher. Cost of breeding and vet treatment tself is lower for live cover but transport and prolonged boarding can be costly.

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    1. that doesn't speak to the shockingly wide variation in stud fees of TB stallions even just at a single farm (did you click the link?). I would argue that, the cost is more bc people will pay it.

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    2. Totally agree, if you have a market you can charge what they will pay.

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  2. This is fascinating. Then factor in the more 'rare' breeds (like Andalusian's in my area) and the costs go up. I think that each breed has it's own trajectory. I do know that it probably cost you more to bring Charlie along then it would have to buy a ready made horse (and not just you- I include me in that as well) but the upfront vs spread-over-time costs are a real factor.

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    1. ha i actually know basically nothing about Andalusians or other less common breeds. tho i'd suspect that while the 'rarity' aspect speaks directly to the supply/demand principles, prices would still relate closely to desired purpose.

      also i'm not sure that the costs of bringing charlie along have differed in any way from owning any other horse - as a lesson junkie i'd still be training as much no matter how far along my horse was. so i think the actual ownership costs for me would be pretty consistent no matter what. obvi that's a lot different if you get a baby or something that isn't broke yet or needs significant work from a trainer.

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  3. i just enjoyed the cut out and the paper clips going for a ride (yeah i am that easily distracted) very interesting though!! Considering I probably will never own a TB (OTTB or not) or a WB I still think it is quite interesting how much everything costs. AND then the raising of said foal etc. Yikes.....

    Charlie is worth ONE ZILLION DOLLARS TO YOU so that point is moot :) HA

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    1. ha those collages are actually originally from this post:
      http://fraidycateventing.blogspot.com/2016/08/open-season-form-over-fences.html

      but i like to pull them out every now and then bc they're pretty :)

      and yea. horses be expensive, yo!! tho at least foals usually cost about the same no matter the breed. at a certain point, the expenses even out a bit - they all use the same kinds of vets and farriers and what not, right?

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  4. this is a really interesting post that i've literally never thought about before. hm. thanks for the thinking exercise.

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    1. i'm glad it's interesting to you too! i had never thought of this perspective either until it came up in conversation with my chiro/acu practitioner during charlie's appointment earlier this week. we were discussing her newest babies (she breeds WBs) and she pointed out that even WB babies by world class stallions don't cost what TB breedings do. it was enlightening and inspired me to start digging around for actual numbers, as presented above.

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  5. Love it. My personal driving question is "why the fuck do people make the decisions they do that cause prices to be this way?" And that is obviously an exercise in chasing my tail. Which I don't have. Point proven? Needs more beer...

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    1. totally valid to question motivations to a certain degree. like some of it definitely makes sense. some of it... does not haha.

      also. unrelated. about that tail you don't have. was literally just digging around various congenital foal syndromes (like ya do), and did you know there's a tail-less foal syndrome? the pics are weird, yo, haha

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    2. See my question is more "why can't I be the sort of person that can make the decision to buy the $$$$$$ horse and am instead broke ass?"

      Cuz that's real life problems yo.

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    3. i mean, as far as i'm concerned, that is the REALEST life problem haha. tho like, i could totally be all like, "my horse is totally a $$$$$$ horse bc people had paid $140K for him by the time he was a yearling!!!!! nvm what he's worth today...." lol

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  6. Really interesting post with a lot of food for thought!

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    1. there's always way more than meets the eye, and my own knowledge here is so so so limited.... but the information that's publicly available certain tells an interesting story!

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  7. Every horse I have owned has been acquired through taking advantage of how these chips fall. The most expensive horse I ever owned? $600. The cheapest, $80. The fact that mixed breed horses can often have a lesser value right from the beginning has helped me in finding great horses at a lower cost. I also had a great deal of luck with PMU farm babies in the past where quantity of foals + mixed breeding = very low cost to purchase. Savvy was $300 as a 3-yro and Shiraz was $250 as a weanling. I have to just roll my eyes at how prices are determined and consider myself lucky to nab up excellent conformation and minds on horses that do not have impressive breeding to inflate their purchase price.

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    1. yea i mean, i would argue that as amateurs who might realistically never truly need the full potential that these expensively bred horses are supposedly able to attain (for whatever purpose they were bred), i think it makes a lot of sense to shop the way you do - find something that is built nicely for your purposes and has the disposition to make for a successful partnership. but then again it really really does boil down to our purposes and goals with the animals.

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    2. I guess what I mean is, horses have far more potential to excell in any direction and our perceptions of what a given breed should do may be the limiting factor rather than actual ability. For example, my OTTB was highly competative in western pleasure (peanut rolling), reining and gymkana and later went on to a career in hunters. She wasn't any different than any other sound OTTB out there. The only difference was that I needed her to do all the things well back in the day when I was showing to make money and was far more competatively driven than I am now. But, on the other side of things, my view is very limited and wonder how much easier the road would be on a "purpose bred" horse? I will prooobably never know, lol!

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    3. yea definitely. the funny (or maybe not) thing about all the numbers i wrote about above? and all the comparative values? none of it has ANYTHING to do with confirmed ability by the individual horse. it's all at either the point of breeding, or the point of entering a sport's market, saying nothing of a record or training or whatever.

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  8. I guess you can equate to changing careers to two different fields even if they are slightly relateable. You are older and maybe you commanded more salary in your previous position but you are now less seasoned in the new career and therefore can expect to make less salary. Will your salary go up over time? Yes, but not at the rate as someone who started in that field to begin with and stuck. For example T was previously in a field that he could command a healthy 6 figure salary, switched to a related but less lucrative field and where as I still find his high 5 figures impressive (because I am in a less lucrative field to begin with) he finds its kinda depressing.

    Back to horses though, Luna has the added bonus of a long breeding career which non of my geldings have, adding dollars to her future price tag even if she doesn't do that well performance wise or gets injured.

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    1. i think there's definitely something to be said for the versatility of being able to change careers - but definitely agreed that a big enough change means sacrificing some of your built up 'equity' (to use yet another metaphor) lol. and also yea, Luna has value for a few different reasons relating to potential

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  9. This is a really interesting way to look at it. You could also argue that the ottbs coming directly off the track are so cheap because it's essentially written off as a loss. If the horse is not making you any money you need to stop paying that feed bill asap. The purpose bred warmbloods are sold/given away at similar prices when they are also a "loss". Like if they are unable to be bred or ridden due to injury or unstable temperaments, where the price is again driven by the need to get rid of the animal and get it off your feed bill asap.

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    1. yea but that's still the supply/demand economics thing, right? like if an ottb brought into the sport horse market could claim the same price as a wb first entering that same market, i promise you the track owners would sell them accordingly.

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  10. I also think this is interesting food for thought. I haven't considered the cost to produce and purpose bred parts of the market much before, but I am continually amazed at how relatively small factors can greatly influence the price of a horse. For example, two foals could come from the exact same breeding, be raised at the same breeder's, go to the same trainer, but if one is 14.3hh and the other is 16.3hh they will demand HUGELY different prices. In that scenario, cost to produce is the exact same, but price is set by demand. Similarly, even if actual conformation is discounted, a "pretty" horse usually goes for more (symmetrical markings, nice head etc).

    Last time I was horse shopping I was always amazed at how I would have had to pay $5,000-$10,000 more on average if I wanted a horse over 16hh who jumped. That's directly related to the demand for horses in the area, but it was great for me as a non-jumping short person!

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    1. size is definitely a big deal for the vast majority of buyers. that's where we start getting into the value propositions shifting in ways specifically tied to the individual horse. as someone who was recently competing a 14.3 horse but now rides a 17h+ behemoth, well. it makes a difference!

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  11. Absolutely fascinating! I've never thought of it like that before.

    I think this is an example of perceived value of return - For example, if you bred a winning racehorse, you will earn prize money. The chances of breeding a showjumper that earns you enough cash to pay for itself is probably slim to none. Sure, you might get a really good jumper, but most sport bred horses aren't going to win their owner tons of cash, they are going to be a cash drain on their owner until the day they are sold. Granted, there might be a pretty incredible resale, but I'd say the majority of us aren't funding our horses completely out of prize winnings.

    Would also agree with your above ^^ Owners only need to shop to the level they are riding at. And a horse that has confirmed, talented parents is going to be assumed to be more talented than an unknown quantity. And, not everyone wants/needs a horse like that. I've noticed as my interest/skill has developed, the cost of my horse has gone up...I started at $600, and each one has been progressively more, and now I'm willing to pay for one that is more likely to get me to the level I want.

    I personally am glad our sporthorses do not cost as much as racehorses! That would price us out of this fast!

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    1. ha seriously! like, the common wisdom seems to be that warmbloods cost more to buy bc they cost more to produce but like.... in a way it's kinda cool to see that that's not the case. almost makes them feel like they're more accessible haha (if you're into them).

      totally agreed tho on being purposeful in our riding ambitions and related shopping wish list. like. sometimes that means that you need to be more selective bc you want something very specific goal-wise (again, i'd point to L Williams as my example there). sometimes you can cast a wider net bc it doesn't take a very exclusive type horse to get you where you want to go (that would be me haha)

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  12. For me I don't generally think of the cost of breeding a TB when I compare the OTTB prospect and a WB prospect but rather the price that the OTTB enters the sport horse market at as rejects of their intended purpose bred sport.

    My example would looking at 3 ways you get a green sport horse prospect:
    A) buy an OTTB for 1000-5000
    B) breed a WB/whatever breed (for your intended discipline)for $10k min just to get on the ground (wide variance because there are so many factors - also add in cost to care for horse until its of riding age)
    C) buy purpose bred sport horse (WB/etc breeds) for wide ranges of price - for this argument we will say the avg price is 10-20k depending on age/experience and pedigree

    If you look at the horses starting price in this market the WB will have a higher overall cost in this specific market. In my eyes the directly off track TB is cheaper to acquire and thus develop for sale in most cases for the sporthorse rider/trainer etc and thus starts at a lower base price or cost to develop. In my eyes that is where I see the difference in pricing.

    That said people have different preferences and a lot of people will only buy X breed of horse or personally place a much lower or higher value on a specific breed due to this conception they have.

    Very interesting subject to consider!

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    1. yea definitely - the market is pretty clear on the cost differentials between an ottb as a sport horse prospect and a wb, all other things being equal.

      tho i'm not sure i'd agree with the underlying assumptions about ottbs being cheaper to develop for sale. not that it isn't super common, bc it definitely is - we see it everywhere. but i think there's actually a big issue there. using the example of the 4* trainers above and the specific costs associated with the horses they are offering - if 4* trainer is selling an ottb with a recognized record at BN for $10K, i'm probably not going to be able to sell a similar creature for more, being a no-name amateur. so just based on that resale market, i've kinda got ceilings on the types of prices i can put on my resales to move them. but... can i get an ottb to be a confirmed BN event horse in the same amount of time as a 4* pro rider? no. no i can't, and the extra time it takes me is what's gonna cost me the most money, and ultimately profit. unless like... i wanna be a sheisty horse flipper lol, which i totally don't! seems like ottbs fall into certain fairly well-defined price ranges based mostly on confirmed ability at the highest end, but that these prices are often actually quite inflexible on the upper bound (in other words, it's a buyers market).

      anyway tho, i got into this subject tho bc it was interesting to me, having heard that same argument before that "it takes $10K min just to get the WB foal on the ground, and thus that's why they're expensive." bc..... it costs a HELLUVA LOT MORE to get these same TBs on the ground. like. yearling charlie, with already $140K invested in him, thinks that $10K is pretty darn cute. but.... for the purposes of the market? that cost isn't actually what matters when you take the horse away from it's purpose-bred sport (ie, go from "tb" to "ottb").

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  13. This is a very interesting topic to consider. It does make perfect sense that Charlie initially cost more to produce, but like a few other commenters said, I think perhaps it may be like some type of monetary return/loss. I was around a lot of breeding farms and reining trainers in Texas, and the WBs sound so similar. Really, all of those QH babies had famous dads and at least point earning moms. But their stud fees were low, just like the WBs. Maybe around $5k. But there were 2 yr olds with 90 days of training that were for sale for over $80k. There were 2 yr olds at sales with 6 mo-1 yr training selling for $200k. (Srsly, I'm not kidding) Then you have full siblings, maybe one has more chrome than the other, and they may be equally talented, but the one with chrome will sell higher. It's really just fascinating what people look for and are willing to pay for, even if the horse may or may not have a lot of talent.
    While Charlie cost more to breed and produce and raise, I think in the end some of these WB and/or reining QHs sort of cancel that price out. Like you were saying, these WBs and QHs are staying in their purpose-bred field, while you have to "take a chance" on an OTTB that is taken outside of his known career for something new. In the end, Charlie absolutely cost more to produce, but I think somewhere in the middle the "general" cost in the long run kind of evens out. But the difference in the stud fees at Claiborne? Crazy!

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    1. i mean, that's all basically the point right? i don't know a ton about the QH or breed worlds, but it's the same arguments, just different purposes. and when the amount of chrome speaks to that purpose, then that amount of chrome speaks to the price (that's the part where i say that once the foal is born, the value proposition becomes inextricably entwined with that individual horse, and also the parts where i say these costs for the animals to even enter their markets are different independent of training and records and points, etc).

      my point is kinda two-fold: 1) tbs bred to race on average cost more money to put on the ground than wbs bred for sport. i'm positing this as demonstrable fact as extrapolated from examples like those i gave above. this isn't saying that a charlie today is worth what he cost to put on the ground .... bc that is also demonstrably false.

      and 2) the costs of these animals are directly related to their ability to fulfill the purpose for which they are bred. remove the animal from that particular sport's market and their value changes accordingly. ie, why charlie today isn't valued the same as yearling charlie, but why luna is still on her upward trajectory.

      that's an interesting idea about the value of different breeds evening out over time, a sort of regression to the mean. like the 'value' of a wb over its lifetime equating to the value of a tb while its on the track (and typically at peak value). that would be hard to prove bc so many sales (the only true valuation of any horse) are private, but it would be interesting to see.

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    2. Oh yeah, agreed. There were just as many well bred QH "successes" as there were well bred "failures" and it was amazing how much the price dropped. It was really jaw-dropping. At one point I was considering grabbing these "failures" and giving them another job and perhaps not selling them for profit, but just to a good home. Unfortunately, most of those "failures" - especially if they're mares, just get put into the breeding barn. Which I don't agree with, but that's neither here nor there right now.
      Ah, thanks for the clarification! I was getting it a little from your post, but I will be the first to admit that me and economics do not mesh. At all. Period. The end.
      So yeah, isn't it funny that some people think of TBs as "lower" because they "failed" at racing, when in all actuality they're a little more "prestigious" than these WBs! At least, if they're still racing. But you are correct: any horse that is removed from its purpose bred field will be "cheaper" than one that is successful. It makes it easier for amateurs to pay for a diamond in the rough, but just because a horse failed at one thing doesn't mean he's useless for anything else!
      And I'm not familiar with the TB world or many others, but I have noticed that for a reiner, if you have one that's a 2 yr old, the price keeps going up and up until they're shown. If their proven, the price keeps ascending. But what I've noticed is that the further many get past those 3 yr old futurities or even the derbies their price begins to drop depending on how well they perform. Many are then advertised as "ammy" horses because they aren't as competitive as the trainer/owner wants. It is just interesting to me how the prospect prices can be so much, but then drop a lot as well if the horse doesn't perform as expected. But yeah, a very thought provoking piece, Emma.

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  14. A comparison is tough because the sports are so vastly different and those involved. You are talking of the high end of racing. There are thousands of TB stallions with stud fees in the mid to low 4 figures. You can get a TB on the ground for a similar amount as a WB when we are talking the majority of racing. The percentage at the top who are paying mid to 5 figures make up a small percentage of the sport. We also have to take into account who are the buyers and what are their goals. Financial contributors pouring the high amounts of money into this sport are not trainers, amateurs or really anyone much involved with the horses. They are extremely wealthy people looking to spend their money and racing is a fun way to do it. These are not adult amateurs trying to bring along pet to do an activity with at a cost they can afford. These are people that have so much money that a $40,000 stud fee is a drop in the bucket. Also keep in mind there is no money in any of these other sports. Racing is the only potential investment business. So these people don't see it as an expense but an investment. They may have 10 flops but the 11th is winner than they can get that money back. Any money you throw at a warm blood is pretty much money lost. Besides maybe resell to recoup some of it or make 5-10 grand on occasion. TB racing costs money because you can make money at it on many levels. As a trainer, breeder, jockey and owner.

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    1. Take my horse for example. He sold as a yearling at auction for $30,000. A lot of money one might think. He went on to win those buyers $322,000. Worth the investment? If say so. And he is just one middle of the road race horses. There is a lot of money in the sport but a lot to be won. You would never get that kind of money out of any WB.

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    2. yep - definitely a lot of good points there. tho note that i don't make any arguments for the 'whys' of the costs, or that one sport has the prospect of making more money than another.

      simply pointing out that, from a numerical perspective: it costs more money, on average, to get a tb on the ground than it does a wb. are those numbers skewed by the top percentage of outliers at the high end? probably, but that's the law of averages, right? and if you compare high end to high end of the two breeds and what it costs to put a horse on the ground, the hypothesis remains true.

      i was inspired to write this bc we hear so much all the time about how warm bloods cost more money in today's market bc they cost more money to just get them on the ground. and... well. that simply ain't true. there are probably lots of reasons why they cost more, but this one particular reason? nope. race bred tbs, on average, cost more to get on the ground than sport horse wbs.

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    3. I've never heard that argument but I agree that it's not a valid one. Horses don't increase in value congruent with the cost of their production. Period. Those who say or believe they do are not educated on the subject or are feeding a load of crap.

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    4. yea i think it's one of those 'common wisdom' type arguments that doesn't actually reflect reality, but that *does* reflect the 'reality' of the market that is most easily visible to the typical amateur.

      like, if i look at the current market - those three bullet points hillary writes above look pretty much right to me, right? and so i might nod and think, hm yea wow ok so it really does cost more money to even get that baby wb, compared to the readily and cheaply available ottb!

      but.... by zooming out a little bit and looking at the horse industry as a whole, there appears to be a lot more money in the breeding of race horses. tho.... a little more googling just found me this study from Deloitte in 2005 that surprises me:

      "When considering indirect and induced spending, the horse industry annually generates approximately $102 billion dollars for the U.S. economy.

      Of the total economic impacts reported, approximately $26.1 billion is generated from the racing segment, $28.8 billion from the showing segment, and $32.0 for the recreational segment."

      http://www.bloodhorse.com/pdf/nationalsummary_v8.pdf

      so.... according to that, horse racing is actually *not* a bigger industry than horse showing, as a portion of GDP. but yet the costs for breeding high end horses in each different group is remarkably different.

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    5. also i did more googling too bc i can't help myself (in my field, we'd say that i've fallen down a rabbit hole pretty well and good here lol) trying to find the most expensive, high end breeding costs from the warmblood world.

      i came up with the following: an embryo fertilized by Totlias that sold for 32K euro (estimated at $44K at the time). so.... the highest of the high end WB is getting pretty close to high end TB breeding costs - but still not at the apex.

      http://www.horseandhound.co.uk/dressage/dressage-sensation-totilas-sold-to-paul-schockemohle-302861#

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    6. Wow! That's really fascinating! And who doesn't love a rabbit hole? lol

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  15. I don't have the full brain capacity (thanks moving cross country!) to totally go down this rabbit hole with you, even though I want to...

    But as I read through the comments, my thought was that the original breeding cost for an OTTB becomes a sunk cost once they're being sold for another purpose. Which, if you had a warmblood (we'll say gelding to eliminate breeding potential) who had to switch disciplines, say, from sporthorse-bred to suddenly going to be a ranch horse, you'd encounter that same sunk cost. But if they stay in that purpose-bred neighborhood, it's not sunk, but rather contributing to value still?

    IDK. Too long since I've had a high enough level economics class to properly analyze this. But super interesting.

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    1. yup, you basically nailed it. at the ground level of each breed entering their sport, on average, the value invested in the typical TB to get it on the ground is higher than the typical WB. but turn that TB into an OTTB and... it doesn't matter any more. and - more so - the horse in some ways loses some of the 'potential value' that a WB might have bc of the nature of moving into a career for which it was never intended.

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    2. Does this apply when selling across disciplines? Because a horse's value also changes drastically when doing that. Often for the better.

      We talk about these horses coming off the track being sold for far less than their worth as precocious yearlings, however their cost sold into a sport horse home ($500-$5000 on average) is often lower or the same as what they would go for on the track as failing racehorse (figuring a $2500 claiming price).

      In the same vein, a warmblood bred for dressage but without the ability to concentrate or develop enough collection could be sold for a lot more money as a hunter prospect than as a middling lower level dressage horse.

      There are too many variables to speak on this in anything but generalities, though. And not really enough widespread hard data to back it up.

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    3. yea the degree of variability when you begin looking at the individual horse based on training and experience and record and what not makes it difficult for me with my own resources and limited information/knowledge to make theories.

      that's basically why i'm just looking at: breeding cost to just get it on the ground, for the purpose of tb and wb; and then cost at the point of entering the non-racing sports, for ottb and wb.

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    4. Do you think the age/maturity difference should figure in? When those TBs are sold as the aforementioned precocious stage their price is very high (high on hope, lol). When they are sold into the sport horse field, their price is often higher to a sport horse buyer than to a claiming home, assuming someone even wants to take a chance claiming the horse.

      A warmblood at a similar age to a newly OT TB is still at the "precocious" stage. They haven't had a chance to leave the "hope" stage. So their price is still higher.

      This kind of makes sense why a TB that sets foot in a 4* rider's barn is immediately worth more money. You're paying for their assurance on the "hope factor" of the OTTB.

      Does that make any sense? (I love discussing complicated theory way too much)

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    5. yea i mean, the selection by a 4* rider kinda lends credibility to the horse's potential in a way that selection by a no-name amateur like myself cannot.

      i honestly don't want to delve too deeply into age or maturity other than to say ottbs by definition are onto career #2, but carry the experiences (for better or worse) of career #1 with them in body and mind. and that, in most cases, the idea of their 'potential' is not enough bc they also were not intended for this sport - and that the proposition shifts more to 'confirmed ability.' the highest priced ottbs on the sport horse market are those who have accomplished something as a sport horse.

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  16. As a fan of my Welsh Cobs, I gotta say I need to stop looking at the ads from the UK...prices there are about a tenth of what people market them for here...definitely a rarity factor here or something. I'm lucky in that mine were both very fairly priced...but even so, the amount of time and work and training, not to mention board costs, there's no way I'd ever make a profit, particularly as neither are going to set the world on fire through sheer talent. Agreed, if I was going to search out a potential prospect for resale I'd likely choose warmblood just because there is a wider audience of potential buyers.

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    1. yea i think you're right about the WB in some ways being the easier resale prospect. not necessarily bc there isn't enough of a TB audience (bc i think there is) but bc the price market is way stickier. also isn't it maddening how much more accessible incredible horses are over seas?!?

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  17. I’m gonna go ahead and wade into this topic even though I clearly do not have the knowledge or data that you’re working with. I’m going to go from the angle of a welsh-cob owner ;) I feel like there are sport bred horses (TBs, Warmbloods – super athletic beasties) and then there are horses bred more specifically for amateurs (welsh cobs, haflingers, certain lines of QHs, etc.) I think horse’s that tend to be less athletic, but more amateur-friendly have stickier price points. I bought Gavin for $6000 as an unstarted 4 y/o and then put about $3000 in training on him. Regardless of his added mileage, or the fact that his current delusional owner **me** thinks he moves like a mini-WB, I doubt I could get much more than 10K for him. It’s like, what you’re paying for in a WB or TB is the potential to excel at the top of a particular sport (I’m clueless on the TB v. OTTB price differences except that the obvious money making potential is gone). However, if you were to buy Gavin, you know you’ll never be at the top of any sport (I won’t hold my breath for the Pony Olympics), but you also didn’t buy him for that, you (me) bought him for a very specific type of chicken-ammy fun. And apparently that fun is worth about 10K. Disclaimer: I’m not saying WBs or racing-bred TBs aren’t ammy friendly, just that mostly they aren’t specifically bred to be. Likewise, I’m not saying other breeds can’t be very athletic, just that maybe that wasn’t the ultimate goal for them.

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    1. yea definitely agreed that TBs and WBs (tho to a lesser extant) aren't always necessarily bred with the ammy in mind - esp TBs, all that matter is that it runs. i'd argue tho that cobs definitely have their specific purpose in breeding (why else would their type be so closely protected?) for both riding and driving sports. it's a different purpose than show jumping or flat racing or whatever, but it's still a purpose. i'm a lot less familiar with other breeds so i really didn't mention them in this post, but the world of horses is DEFINITELY bigger than tbs or wbs. it just so happens that, at least from what i can find, the most money goes into breeding tbs for racing.

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  18. Great post and I loved reading all the comments too. I know the purpose of your post was to look at purpose bred horses in their intended sport and what it takes to produce one hence looking at a TB/racing and WB/jumping and that by the numbers it costs more to breed for a racing TB.

    I was always taught to compare not only apples to apples but macintosh apples from the NE to macintosh apples from the NE in research: reduce as many variables as possible. So to me the next question to ask would be is it more expensive to produce a TB for jumping than a WB for jumping? When comparing the exact some purpose for the horse being bred for, is the TB still more expensive to produce? In my completely uneducated opinion, I'd bet not. I think that this plays a lot into why an OTTB is also way less, not only because it is inherently on its second career for which it wasn't bred, but also because in that second career the breed isn't as highly sought after. The same WB that goes for big money in the dressage ring would have little value being bred for endurance. Just another train of thought this led me to.

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    1. My point, which I belatedly realized I never actually got to, was that I think the numbers show it isn't necessarily the breed being bred that is dictating how expensive it is to produce, but the industry it is being produced for. Racing as an industry comes with a higher price tag for a breeding than the jumping industry and it just so happens that the breeds used for top performance in those industries are the TB and WB.

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    2. i think that's a fair assessment - and definitely will be the first to admit that what i've presented above would never fly as 'rigorous' scientific study. yes: i agree that it is the purpose for which TBs are bred that influences the cost for getting them on to the ground (tho i was very interested in that blood horse link above to see that as a portion of gdp, racing actually is not a bigger industry than showing). the ultimate hypothesis tho: that it costs more money to get a race bred tb on the ground than it does to get a sport bred wb on the ground remains valid tho.

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  19. It's a tough world out there for OTTBs, but I think they money is going to stay with whatever wins shows. And as long as dressage is ruling eventing and dressage judges like the way WBs move ( and hunter judges prefer WBs, etc) the WBs will be where the $ is.
    I personally don't like dealing with baby horses, so breeding isn't something I pay much attention to. I just look at what I can buy in my price range at whatever time I am looking. If I wanted to win shows, I'd definitely be looking at WBs. As I own a Mustang and a mule, I clearly have other priorities:)

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    1. i hear what you're saying and agree (to a certain extant, tho i would point out that there are an awful lot of TBs in eventing and at the upper levels). tho it's all a bit secondary to what i'm positing above, which is that there's WAY MORE money going into race bred TBs than sport bred WBs. the financial arguments i put forward above have little to do with an individual animal's performance or outcomes, but just the costs in getting it onto the ground, and then into its sport's market (that sport, incidentally, not being limited to eventing as i used a show jumper as my wb stallion example and have a dressage example elsewhere in the comments). and it's not really saying anything about why one breed costs more than another in different markets, except to say that each breed performs better in the market for which it was purposefully bred. and in the TB's purpose-bred market? they typically end up costing a helluva lot more than WBs on average.

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    2. I'd like to add that TB's can do well at H/J shows. Not just Warmbloods because Judges are judging against an ideal. They aren't inspecting brands and lips at the gate. So a TB that trots a 10, canters a 10 and jumps a 10 is going to beat the WB that jumps a 5, canters a 6 and trots an 8.

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    3. concur 100% - realizing i left that out of my list in the above, but yea. tbs can be successful in hunterlandia as well. my barn is full of 'em. and of course... this is all saying nothing about the percentage tb so many of today's wbs are.

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  20. I think tbs can do well. It's not impossible. I just see more WBs winning. I'm not opposed to TBs either. Rather, I think judging needs to be more open to different ways of going and reward non WBs.

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    1. In show jumping (the example sport for which I chose a stallion above) the only judge is a clock and the rails. So..... Again my point here has little to do with the relative merits of the breeds for their purposes and whether the judging is right or wrong. It's that...... Tbs cost more money to put on the ground than WBs for their purpose bred sports. And when you take an animal away from the sport for which it was purposefully bred, the value proposition changes. That's it.

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  21. This is a fascinating blog post and reminds me of something that I think about once in a while, and then try to forget:

    Over the almost three years I've owned my OTTB (who was green at purchase). . . I could have bought a much more expensive, finished horse as he's been in full training (which is several hundred per month). I'm an okay enough rider for a green horse, but not educated enough to train a horse to do all the things (jumps, lead changes, smooth transitions, etc.). So this far into owning Knight, I could have had a horse in the 20K price range. But the problem is I would never have that kind of money all up front. My trainer has just told me she doesn't think Knight enjoys jumping, so I'm at a point I have to figure out what I'm doing, what he's doing, and how to move forward. Ug!

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  22. In regards to the last comment, my old neighbor was totally in the "a horse is a horse is a horse" but he was an old moronic wanna be cowboy. He once told me "yeah no horse is worth more than $2500...well maybe Secretariat..yeah I'd probably pay 5 thousand for him" and thats when I never talked to him again lol

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