Determining a Service Fee for the Stallion

Jan 29, 2012
Chris Thomas

Stallions can be a Great Investment - C. Thomas

Particularly in the racing industry, stallions are becoming an incredible form of annual income. Setting the right price is important.

A stallion is an entire male horse over the age of three years that is generally used for breeding. If he is not going to be used for breeding in the future, a male horse will usually be gelded or castrated.

The breeding industry is particularly large in the world of Thoroughbred racehorses. Although a lot of money comes into studs or breeding properties via the management of mares, a large sum often comes from the stallion service fee. This is the amount paid by a mare owner to send her mare to a particular stallion and receive a foal the following season.

Considerations for Setting a Service Fee

When it comes to owning a stallion, the amount he will stand at stud for should be seriously considered. The stallion’s service fee is dependant on:

His past performance in a particular discipline (such as racing, eventing, dressage)
His conformation and overall appearance
The number of mares he will be bred to each season

In the racing industry, it is commonplace to base a stallion’s service fee on making back in three years what was initially invested into him. For example, a stallion that is purchased at $300,000 may be expected by owners to generate around $100,000 in income over the next three years.

Three years is a set guide in the racing industry as it is anticipated that by a stallion’s third year of breeding, his first progeny will be sold as yearlings and be getting started under saddle. The demand for his yearlings will indicate whether the following year’s service fee can be increased or will need to be lowered.

If the purchaser of a stallion has made back in these three years what was first invested, the following year when the stallion’s oldest progeny begin racing, may mean a great year of profits – if the stallion’s sons and daughters prove themselves on the trace track. If not, it may be possible to sell the stallion on at a lower price, and still make a small profit on the initial investment.

The Stallion’s Book of Mares

A stallion’s ‘book’ for a particular season is the number of mares that he will be bred to. Some breeders will limit this to a small number and consequently set a higher stud fee. Others may choose to set a lower fee, but allow more mares to be bred to the stallion.

In the Thoroughbred industry it is not uncommon for stallions to be allowed a book of 100 or more mares – assuming the interest is there! In fact, in Australia over the 2009/2010 season, the largest book of mares bred was by Fastnet Rock, with a total of 248 mares being served.

It should be noted that stallion’s generally won’t have a 100% success rate of getting a mare in foal. Service fees are due when mares are 45 days in foal; just because a stallion has a book of 100 mares, does guarantee that 100 mares will be in foal, so the income for all 100 mares, is not guaranteed for that season.

When it comes to investing in a stallion, it is possible to stumble across an incredibly successful horse and make ownership a lucrative business. Always however, the potential income should be based on current demands within the industry and the credentials of the horse being purchased.