Free Money Expected To Attract Kentucky Breeders And Owners
Wednesday, January 11, 2006

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By Ann Bullard

Free or almost free money: that’s enough to attract any horseman’s attention. Owners of Kentucky-bred Tennessee Walking Horses stand to recover part of their breeding fees, show and other expenses through the program spearheaded by The Kentucky Equine Education Project (KEEP.)

Simply put, the yet-to-be-approved disbursement method would pay an incentive this year to Kentucky-bred weanlings, yearlings, two and three-year-olds that show within the state. The money has been appropriated; the Racing Authority still must approve the method each breed elects to distribute their portion of the funds.

Founded in May 2004, KEEP’s purpose is to promote and protect Kentucky’s horse industry. This not only applies to racing breeds (Thoroughbreds and Standardbreds) but to the smallest of all other breeds. The rationale is simple. In Kentucky, stud fees are subject to sales tax. This amounts to almost $15 million a year, according to Blair Campbell, who chairs the KEEP program for the Kentucky Walking Horse Association.

Racing breeds will receive the lion’s share of the pot, as they produce most of the of the stud fee sales tax revenue. However, all breeds represented in the state will receive a pro-rata share based upon their number of Kentucky-bred horses. Currently, the moneys are divided 80 percent to Thoroughbreds, 13 percent to Standardbreds and seven percent to other breeds.

The Tennessee Walking Horse Breeders and Exhibitors Association based their estimate of 29,550 walking horses owned by Kentuckians on the number registered since 1985. Horses known to be deceased have been accounted for, but not everyone reports this information to TWHBEA, according to Sharon Brandon of the TWHBEA staff.

Quarter horses outnumber all other breeds, with 37,000 Kentucky-owned animals, compared with 25,000 Thoroughbreds. Under the current program, Quarter Horses stand to get back $250,000 to $300,000 in incentive dollars the first year, according to Gene Clabes of KEEP.

“The philosophy behind this program is to establish simple guidelines. We gave each group an opportunity to design their own program, to build the economy for that breed. The Racing Authority is looking at what will have the most economic benefit to the State of Kentucky.

“We really turned over new earth here. We started with a formula that will work in the beginning and can massage it as we go forward,” he said, pointing out that what now is being discussed are regulations, not legislative acts.

Walking horses are ahead of the game compared with some others as they already had a Kentucky-based breeders’ organization. Others have had to scramble to complete organization and paper work required to funnel these dollars to breeders and/or exhibitors. Each organization sets its rules, which must be approved by the Kentucky Racing Authority, which administers the program.

Each breed association also defines the meaning of Kentucky-bred. Campbell defined a Kentucky-bred walking horse as one foaled in Kentucky out of a dam that remains in the state for 45 days. Owners of nominated mares will share in the distribution as will owners of nominated Kentucky-based stallions. Offspring also have to be nominated. There is no residency requirement for owners.

If a foal is by a non-resident stallion, the offspring and dam owners will receive incentive money, owners of stallions based outside the state will not. Horses will accumulate points which will be the basis on which incentive dollars are distributed.

“This is strictly for Kentucky-bred horses,” Campbell said. “This year’s weanlings, yearlings, two and three-year-olds will be grandfathered in.”

According to Campbell, this is the only incentive program that will extend to aged show horses (up to15 years of age) as the current crop of three-year-olds matures. There are no age limits on sires and dams.

Stallions, mares, foals and show horses must be nominated in order to participate. Stallion owners will pay a $50 per year nomination fee; owners of mares, foals and show horses pay a one-time $50 fee. The nomination is transferable. Membership in the Kentucky Walking Horse Association is required.

Proposed rules say that all eligible horses must do is show at any Kentucky show that has walking horse classes. In addition, eligible horses winning a world championship at the Kentucky Celebration and/or at the Tennessee Walking Horse National Celebration (the only non-Kentucky show so recognized) receive double points.

Campbell expects walking horse owners will have $150,000 in their fund the first year. Of this, 10 percent goes to owners of stallions standing in Kentucky, 25 percent to nominated mares and 60 percent to show horses born within the state with five percent held in reserve.

While present incentives are interesting, what may follow could have a tremendous impact on the entire Kentucky horse industry. A KEEP-proposed constitutional amendment to allow casino gambling at race tracks will be brought to the Legislature in January. If passed and approved by voters in a projected November 2006 referendum, annual estimated revenues will total $1.25 billion. Of this, 15.65 percent would be earmarked for the horse business with the balance dedicated primarily to education, healthcare and local government. KEEP Executive Director Jim Navolio estimates the non-racing breed annual share at $12.5 million.

Navolio sees 60 percent of such moneys being used for programs related to equine education, capital construction (new venues and maintenance of existing ones) and economic development for equine-related industries. The remaining 40 percent would support programs related to specific breeds.

Carrie and Spencer Benedict run a Kentucky training and breeding operation and stand several stallions. She serves as the walking horse representative to the KEEP program. Benedict sees several plusses for businesses such as theirs.

“We have customers in Alabama, Florida and Mississippi. We breed mares for them every year, whether or not they use our stallions,” she said, adding many go to the “Tennessee big-name stallions. Those mares will be eligible provided the foal is born here and the mare remains the prescribed period of time.

“This program is not based on how well a horse does or the division it shows in but just for competing. Owners have an opportunity to make money each time they show. As far as trainers are concerned, it opens more business opportunities, encouraging people to bring their animals here,” she said.

“A horse could earn $2,000 to $5,000 the first year. Down the road, that could be $20,000 to $30,000 a year. Owners might have a chance to pay their training bill,” she said. “Trainers and breeding stations should be focusing on bringing in more business. Even if someone has a nice, but not outstanding show horse that they truly enjoy but seldom win on, they will get the same consideration as the horse winning the class. It’s not based on how you tie; the only time winning plays a part is for The Celebration and Kentucky Celebration.”

Earl Rogers Jr., is president of the Kentucky Walking Horse Association and Chairman of the Breeder’s Incentive Fund. A self-proclaimed “piddler,” he has been in the walking horse business since 1961.

“I like to piddle with them. Sometimes I get lucky and get a good colt,” he said, adding he has cut down to five or six brood mares. “I usually breed half to Tennessee and half to Kentucky stallions, but after this incentive program I intend to breed mostly in Kentucky.

“This program gives the small breeder an incentive to show a weanling, yearling, 2-year-old or whatever and get a cut of the pie. Not only will it help small breeders but the horse show business. Some shows struggle to get horses. Now people can get points just by showing there,” Rogers said.

He pointed out that the program is an incentive for the smaller breeder to grow. One way would be to take outside mares and foal them in the state.

The KEEP organization has grown from an idea proposed by former Kentucky governor Brereton C. Jones. He is described by KEEP director Jim Navolio as “a thoroughbred person.”

The organization was founded as a 501-c6 non-profit to promote and protect Kentucky’s horse industry. By December 2005, there were 9,200 dues-paying members.

“The Governor started a grassroots organization. We recruited a team leader in each county. That person has gone out and signed up every person they could find in their area to be members of KEEP. That’s how the organization was built,” Navolio said. “They raised $3 million through a 2003 stallion service auction. That’s what we’re running on.

“So much of our money came to the grassroots organization through shows and other equine projects. If they agreed to put out a sign or hand out literature we sent them $500,” Navolio explained. “We reinvested $100,343 in 147 equine programs in 67 counties around the state in 10 months.”

During the 2005 legislative session, the organization was instrumental in helping secure appropriations for the breeder incentive fund. In addition, they succeeded in getting a sales tax on horses purchased by out-of-state buyers removed. The tax on animals two-years-old and younger caused buyers to remove their horses from the state, thus taking away jobs. In addition to seeking approval for casino-style gambling at race tracks, KEEP will once again seek the removal of sales taxes that horse owners pay on feed, fencing and equipment.

“The real reason behind push for gaming is we are under threat not only from our own other gaming interests like the lottery [state-sponsored gambling] or charitable gaming, but from border states,” Navolio said. “There are six riverboat casinos on the Ohio River; wherever there is a boat, there is a bridge from Kentucky. Last year, Kentucky residents paid $236 million in Indiana and Illinois taxes. It’s absurd, offensive and unacceptable! The biggest loser is the horse business.

“Our research shows that voters will overwhelmingly support this amendment if they know where the money will go: to education, healthcare and local governments with a small percentage to the horse industry.”

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