At Darley, the selling of lifetime breeding rights to its Australian-bred stallions is a relatively new concept, but one which has grown significantly in popularity in recent years.
Having started out by selling 30 lifetime rights to Impending in 2018, Darley is currently busy fielding interest in those wishing to invest in the long-term success of the latest star addition Microphone, who will stand his first season at Kelvinside at $38,500 (inc GST) in 2020.
"We started doing it with Impending and we followed the formula they had successfully embarked on in the Northern Hemisphere," Darley's Head Of Sales Alastair Pulford said.
"Our formula is two and a half times the advertised service fee in the first season. We offer a maximum of 30 in any one horse." - Alastair Pulford
"We like to think we’ve got the formula right. Our formula is two and a half times the advertised service fee in the first season. We offer a maximum of 30 in any one horse."
In the case of Microphone, breeders who pay $96,350 (inc GST) will receive a lifetime right to go to the son of Exceed And Excel, plus a bonus nomination in years two or three.
Alastair Pulford (left) and Sophie Swain
The exact formula varies from stud-to-stud with Pulford saying Darley feels its arrangement provides breeders with the right balance of options.
"We do it with the local horses because we can guarantee supply. With the shuttle horses there is always that element of risk in terms of travelling. We offer the breeding rights to breeders rather than investors, because we want people to share with us in supporting and making the stallion as a top-level stallion, rather than people wanting to just sell nominations."
"We offer the breeding rights to breeders rather than investors, because we want people to share with us in supporting and making the stallion as a top-level stallion." - Alastair Pulford
The breeding rights formula is an alternative to studs syndicating stallions outright. Depending on the stud and stallion, the cost of a breeding right is typically equivalent to 2-3 multiples of a nomination. The buyer has no equity in the stallion and is not entitled to a dividend payout. A share would be closer to five times the price of a nomination and with allocations varying depending on the contract.
Newgate Farm have also utilised the breeding rights model to launch their new stallion Tassort. The deal is based on a breeder sending a mare to Tassort in his first two seasons (for a total cost of $22,000 inc GST), with a limit of one per breeder.
At a service fee of $11,000 (inc GST), the grandson of I Am Invincible may provide his supporters with a financial windfall if he kicks in the same manner.
The Vinnie story
The poster boy for breeding rights in Australia is Yarraman Park's I Am Invincible, who attracted 13 investors ahead of his first season in 2010 when he stood for $11,000 (inc GST).
He stood for $247,500 (inc GST) last year, with all but one or two of those initial holders of breeding rights having on-traded their options on the horses at substantial profits.
I Am Invincible | Standing at Yarraman Park Stud
Yarraman Park Director Arthur Mitchell remembers the stud wanting to involve several of its clients in the long-term future of the son of Invincible Spirit (Ire).
"We had bought half of him with the original owners having half and we just offered those who were interested a chance to get a lifetime breeding right," Mitchell said.
"We never pushed it. If they sent a mare for three years at advertised service price, they got a lifetime breeding right and they also got to send an extra mare for half the service fee in the first three years.
Arthur Mitchell
"They could have bred six mares for $45,000 and quite a lot of them did.
"They were local breeders, mainly small breeders who have all done very well out of it. They all bred to him and as the money went up, they took the money. Every one of them would have gained a big financial help."
A Brazen option
One of the breeders to snap up the early option on I Am Invincible was Bernie Howlett, who is based at Berant Park outside of Canberra.
He opted to send two mares to the first-season stallion for a total of $5500 (inc GST), Darwina (Marwina) and Sansadee (Snaadee {USA}). While the initial return looked questionable after a mishap claimed both Darwina and her foal, the Sansadee colt was to turn into a Group 1 winner in Brazen Beau.
Brazen Beau was conceived on a breeding right to I Am Invincible | Standing at Darley
"I was only just a small breeder and I was looking for a sire that was value. I thought because he was by Invincible Spirit, he was giving a different bloodline and he would be worth a shot," Howlett said.
"I was only just a small breeder and I was looking for a sire that was value." - Bernie Howlett
"Another thing I looked at when I decided to go to him, he's a big nice-looking horse, a really good type of horse and he obviously throws good types. That’s the big thing, his progeny have been good types and that's why they have been successful."
What made it such a good deal for both parties was that not only did a small-time breeder get his chance to produce a Group 1 winner, but I Am Invincible also secured a crucial early flagbearer. Brazen Beau won both the G1 Coolmore Stud S. and the G1 Newmarket H. and is forging a successful stallion career of his own at Darley.
Brazen Beau winning the G1 Coolmore Stud S.
Like most of the other rights-holders, Howlett cashed out his lifetime right in I Am Invincible a couple of years ago.
"Because I'm a small breeder and plus the fact the mares that I've still got apart from Sansadee, they weren't probably up to the standard of going to I Am Invincible, I thought I’d sell my nomination," he said.
But Howlett is understandably a fan of the concept and has been happy to re-invest in another young stallion.
"Because he's nice and close and he's a Snitzel horse I ended up going in with Olly Tait at Twin Hills Stud with Odyssey Moon. It will be interesting to see if he can kick," he said.
Odyssey Moon | Standing at Twin Hills Stud
I Am Invincible's rise into one of the country's top stallions has been one of the big stories of the past decade in Australian breeding and for the Mitchells, sharing that ride has been particularly enjoyable.
"The breeding right people all sent good decent mares to him and they have all been rewarded in the ring and been rewarded when they on-sold the breeding rights," Arthur said.
Some of Australian biggest breeders now hold those breeding rights, having purchased them over the past few years.
A different model
Yarraman Park decided to go down a different path when embarking on the breeding career of I Am Invincible's Group 1-winning son Hellbent a couple of years ago.
"He was syndicated into shares. He was a lot more expensive. He was valued at $6 million when it was done and we felt it was fair to offer shares," Mitchell said.
The deal to syndicate him was done quickly, with the stallion shares sold in a couple of days.
Newgate Farm's Tassort will also utilise the breeding rights model
The process around selling breeding rights is similarly rapid-fire and Pulford said Darley has already sold 15 of the lifetime rights in Microphone, who was only announced as going to stud a fortnight ago.
"We don’t make it open ended. It’s 30 maximum, the first 30 in and Microphone is already halfway there. We will close that off at the end of this week," he said.
"With these things, you are either in or you are out. It’s a decision that people can make fairly quickly, whether they want to be involved and that works well for us."
