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    06-25-2013, 10:31 PM
  #1
Trained
Thoughts? Comments?

From the Auction Block

Whatís going on with the Arabian horse industry today? There have been several groups of people in the last couple years that are trying to figure out how to get the Arabian horse industry back to where it once was. I wish them all the luck in the world. They have an uphill battle. I see one of the things these groups are addressing is the judgesí qualifications. I would bet money if you listened to George Washington and Thomas Jefferson talk about the horses that they took to a competition, you would hear one of them bitch about the footing in the show ring and the judging. For years we have heard complaints about AHA. In the last year, Iíve spent many hours talking to the different committees at AHA. In working with these different people, including our new president Cynthia Richardson, they have been very cooperative and open-minded. They, too, want to see the Arabian horse industry flourish. They are working hard to get things growing again.

One of the things I would like to accomplish in my lifetime is to create a secondary market other than the mainstay Arabian show horses. We must have a place for the middle to lower end market. That market must be made up of consumers of our product, not producers. Keep in mind, my opinion has always been just exactly that, my opinion. Although I am not a breeder of Arabian horses, I have spent most of my professional career in and around the Arabian horse industry. It has not been only a way to make a living, raise my family, put two girls through college, and pay for weddings, but it has also been my life. I have sold upwards of 6,000 Arabian horses throughout the world. My opinion hasnít always been the most popular. I have been told that we need to spend more time soliciting the high income people. It has always been my view that if we take care of the bottom of the pyramid, there will always be that upper tip for the affluent. Almost all Arabian horse owners, wealthy or not, spent only a few thousand dollars, if that, on their first horse.

Before we go forward, we have to look at some things in the past. It took approximately 60 years to register the first 100,000 Arabian horses. It took only four years to register the next 100,000. Back in the 60s and early 70s, Arabian horse breeders owned a few Arabian mares, and they either owned their own stallion, or they bred to a stallion that was in a close radius of their farm. This was before there was artificial insemination, shipping semen, freezing semen, or embryo transfers. Back in those days, breeders could pretty much count on selling their foals in utero. Many farms would have a waiting list of buyers lined up to buy their foals.

Then came the 70s and the 80s when limited partnerships on mares and stallion syndications became commonplace. Instead of horse trainers walking around with spurs on and a riding crop in their hip pocket, they were carrying a briefcase with the prospectus in hand. At that time the horses were a byproduct of the deal. Most trainers at that time worked privately for individual farms or ranches. The owners showed horses to advertise the breeding program back home with the farm. There was one auction sale after another in Scottsdale, Arizona, in February, and one sale tried to outdo the next. Many people from the entertainment world could be seen at the big horse shows. In those days it looked like there would be no end to the bull market. That all changed in 1986. Ronald Reagan signed into law the passive investment ruling. So, the professional that had been depreciating their mares out faster than they were paying for them and owned horses to shelter their ordinary income were suddenly no more. At that time there was still a 70% tax bracket. The no bottom to the pockets era ended.

In 1986, not only did the Arabian horse industry come to an abrupt standstill, but also the Thoroughbred, Standardbred, running Quarter horse, and many other breeds came to an abrupt stop. One Arabian horse farm after another went out of business. Bentwood, Karho, Lasma, Glennlock, just to mention a few, all closed their stable doors.

In the late 70s and early 80s the average horse trainer was in his/her middle 20s. After the closing of many of the large horse farms, the trainers, in private positions, found themselves either unemployed or faced with the fact that they would have to look for another line of work. They found themselves having to take the Arabian horse business into their own hands. Today we hear many complaints that the problem with the Arabian horse industry is that the trainers run it instead of the breeders and owners. In most cases the trainers had no option. They either had to take control of their industry or learn a new trade. They had to adapt to the times. There began to be less and less Arabian horse farms. Today the average horse trainer is close to 50 years old.

The Arabian Horse Registry hit an all-time high with the registration of horses in 1988 at approximately 30,000. From that day forward the Arabian industry has been on a steady decline. In 2005, we had approximately 41,000 members in AHA. By 2012, that number declined by approximately 39%. The number of purebred Arabians registered in 2005 was around 8700. By 2012, it was down by another 59%.

Is this decline in numbers only happening in the Arabian horse industry? Absolutely not. Every non-racing breed of horse has seen a decline in numbers. Why is this happening? Why has it not affected the Thoroughbred, Standardbred, and running Quarter horses nearly as bad as the show horses? All of the racing breeds that did show a decline after the tax law change in 1986 have made somewhat of a rebound. Why? Very simple - Slot machines. Any place that the racetracks are doing well, it is because the purse money is shored up by other means of gambling. The racing breeds of horses have always been a prize money driven industry. In all three of the breeds mentioned, their industries revolve around sales of yearlings in the fall of their yearling year. Even though less than 2% of all racehorses make back their training fees, buyers justify buying that yearling, speculating he will be the next winner. No matter what futurities or prize money incentives there are, the Arabian horse has never been a prize money motivated breed.


Thoroughbred racing Harness racing Quarter horse racing
Keep in mind that all the racing breeds of horses from their inception were bred to perform a specific discipline. Breeders bred their horses to make racehorses. Racehorses that won on the racetrack created a demand for that lineage. For many years the reason why a person showed an Arabian horse was to promote their breeding program. If a stallion that the breeder raised became a national champion, that stallion was never shown again. If my memory serves me right, a stallion or mare that won a US National championship was not eligible to be shown in a halter class again. Even in most performance classes, if a horse won a national championship in a specific discipline, that horse was never shown in that discipline again. Today it is not uncommon to see a national champion come back and compete year after year. Last year at the Arabian Youth Nationals, the average age of the horses competing was over 18 years old. This leaves little room for a breeder to market young stock.

So, instead of an Arabian horse breeder showing horses to advertise his breeding stock, today the breeder breeds Arabian and Half-Arabian horses to produce show horses.

There was a time in a not so distant past that, in order to qualify to go to the US Nationals, you had to beat so many horses at class A shows to get to the big dance. I think that in both the open Western and open English classes you had to beat 125 horses in order to qualify to go to the US Nationals. Or, you had to win a regional top five. At that time a regional top five would only be handed out if there were a total of 9 horses competing. At the US Nationals, you would not receive a Top 10 ribbon unless there were a minimum of 19 horses competing. The Arabian horse Association is no different than any organization in that there needs to be a certain amount of money generated in order to cover the overhead to sustain the association. So, with the number of horses dwindling at our class A shows, AHA has made it easier to qualify for the US Nationals. Today there are more Top 10 awards available at the US Nationals than there are horses competing. The case is the same way with the regional awards. Today you can win a top five and be awarded the prize with only two horses in the class. Or, if you are competing at the US Nationals and there are only seven competitors, you still receive a Top 10 award. For this reason both regional championships and US Top 10 winning horses do not carry the amount of prestige as they have in the past.

Today at US Nationals, there is a three-year-old futurity class. Today a horse can be shown as a junior horse through his five-year-old year. Not too many years ago, if you had a three-year-old that was qualified to go to the US Nationals, that horse had to compete against all the older horses because there was only one class for all the English horses in the open division.

LET'S LOOK AT WHY THE DEMAND FOR HORSES HAS DIMINISHED

Letís take a minute and look at the evolution of the horse industry in general.

Downtown New York City 1900
Horses were first domesticated over 6000 years ago. For thousands of years the horse was used as the main means of transportation. They either carried a rider or pulled a vehicle. In the late 1800s, at any given time, there would be approximately 170,000 horses within the city limits of New York City alone. Even if that city dweller was not necessarily a horse lover, they were still exposed to horses on a daily basis. Approximately 18,000 horses would die on the streets of New York City each year. These numbers apply to both light horses and heavy draft horses. In 1908, the use of the light horse for either carriage or riding started to decline. To what can you attribute this demise of the horse in general? One man ruined the horse industry. His name was Henry Ford. In 1908, Ford came out with the first Model T Ford. From 1908 to 1927 there were over 17,000,000 Model T Fords manufactured and could be purchased for a mere sum of $240. The automobile was no longer a luxury item for the affluent. The need for horses for transportation was quickly replaced by the automobile. The new horseless carriage did not require as much labor to maintain as did the horse, 365 days a year.


Model T Ford 1908 Henry Ford 15 million Model Ts were sold
As agriculture advanced the farmer figured out that the horse had a longer stride and could cover more ground than the oxen. During the industrial revolution, larger machinery that would become a time saver evolved. Heavy horses were originally bred to carry the knights with heavy armor. Then with the invention of the crossbow and then later gunpowder, the heavy horse became obsolete. However these heavy horses made a comeback greater than ever with the invention of the horse collar and hames. These heavy horses were turned into draft animals pulling more sophisticated agricultural implements. When John Deere developed the moldboard plow that was made out of steel, it became commonplace for a farmer to be able to plow 1 acre per horse per day. On a one bottom sulky plow, depending on what type of soil, a farmer would use 2 to 4 horses and turn over 2 to 4 acres of ground in a single day. On a 2 bottom, 12 inch gang plow using 5-6 horses, a farmer could till upwards of 10 acres in a single day, unbelievable for the time. From the 1700s clear up through the 1940s the draft horse was a necessary part of agriculture. Then through innovative engineering, the tractor soon took over the job for the draft horse. Think about it a minute. A person that was born during the great depression and is living today has seen agriculture go from horse-drawn implements to tractors that run through the field today without drivers, because of GPS.


4 horses on a two bottom plow 12 horses on a disk John Deere controlled by GPS

32 horses on a Combine in 1920s Thrashing wheat in 1927 2013 Combine running by GPS
Just to give you a little trivia on supply and demand of horses in the past and today, there were over 8 million horses killed in World War II. Clear through World War II, the Germans used horses to pull artillery because of the lack of natural resources and refineries. Gasoline and diesel were hard to come by. It was more practical and economically feasible to use horses.


Horses pulling German artillery during World War II
My point in this short history course is that for thousands of years, whether a person liked the horse or hated it, through the mid-1900s every person had first-hand exposure to the horse. So, after 6,000 years, we baby boomers are the first generation in history that has seen the demise of the majority of the horses in this country used as a necessity of life and in a practical way with the exception of the Amish and some ranchers.

THE EXODUS OF RURAL LIVING

As late as the 1960s, on a section of land, that is 640 acres or 1 square mile, there would be three families making their entire living off of 160 acres or one quarter section. Then there could be 2 more families that farmed 80 acres and worked a second job non-farm related. Today, for every one farmer and rancher under the age of 25, there are five who are 75 years or older, according to Agriculture Department statistics. The average farmer today is over 65 years old and farms over 1000 acres. There are 36 sections in a Township. The section of ground in the center of the Township was set aside for the school. So, theoretically, you would have approximately 175 families living in a Township. Today we have one farmer on two sections or almost 2 square miles. Instead of having 175 families living in one township, now there are only approximately 18 families living on that same amount of rural area. With the population growing, what does that tell us? It tells us that there are more people moving out of rural areas and into suburbs and urban areas. So, no longer can you have a few horses around for either a nostalgic reason or just because you have the room in barn or in a pasture to where a horse cost you very little to keep. There goes the necessity for the horse and the closing of many little towns across America.

The American Saddlebred, the American Quarter horse, the Morgan, and most other light breeds of horses including the Arabian are facing similar problems. Today, there are over 8,000,000 horses in the United States. With a diminishing population in rural areas, kids today are being exposed to so many other activities that are less labor-intensive, more economical to participate in, and more accessible than horses. Plus, whether you are pro or con in regards to the slaughter houses, the slaughter houses eliminated around 100,000 horses per year that are now on the market. The supply of horses is much greater than the demand.


Recently I read an article in the Western Horseman Magazine stating that the youth membership of the American Quarter Horse Association has dropped by 25% in recent years. What they brought up in this article was that because of the television exposure to the X games and Olympic Games, our kids today are drawn to sports like soccer, gymnastics, freestyle bicycle riding, skateboarding, snowboarding, snowmobiling, four wheeling, and many of the other X games. Here in Edmond, Oklahoma, our city has built a multimillion dollar skate park just for the kids to rollerblade, skateboard, and freestyle bike. Western Horseman claims that the generation of kids today are drawn to this because itís easy to understand and much more economical and much more exciting than the everyday maintenance of a horse, and the parents condone these sports also because of economics. And, we must not forget the video games that it seems like our kids are all addicted to. ..........................

I have to split this off into 2 posts because it violates the "character limits" on the site.
     
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    06-25-2013, 10:34 PM
  #2
Trained
From the Auction Block

***Continued*****

DECLINING ENTRIES AT MOST HORSE SHOWS

Around 1975, I had the opportunity to show the first horse I had ever shown at the Ohio Buckeye show. I was showing a purebred stallion in the purebred Arabian open English Pleasure class. At that time, before USEF, it was still called the American Horse Show Association. AHSA had a rule that if there were 40 horses or above in a single class that the class had to be split. The open Stallion English class that year had 38 entries so all 38 horses were shown at one time in that small ring in Columbus, Ohio. Now if there were 38 stallions, there probably were anywhere from 75 to 100 open Mare and Gelding English horses. Back in those days, if you just made the championship at the Buckeye, you were doing darn good. Also at that time, if you had a horse that may have cost from $1500-$15,000, you were competitive. Today at the Buckeye, it is not uncommon to see only 4 to 8 open English pleasure horses, total with a possible price tag of $150,000 and up.


BASKE FIRE
SIMPLE ECONOMICS

Let’s talk about breeding today. In 1975, I sold a nice four-year-old, Park horse mare for $27,500. This mare’s sire had a stud fee of $450 which was quite common back in 1975. The farm I worked for at the time produced all of its own grain, hay, and oat straw for bedding. As most breeding farms, we had plenty of our own pasture. We felt that by the time we brought a three-year-old into the training barn, we would have approximately $1400 in that colt or filly. Once in the training barn, including labor, feed, and bedding, it cost approximately $150 per month. This particular filly was in the training barn approximately 9 months. She was shown one time in a class of 18. She placed second at a regular class A show in Ohio. At this point we had approximately $2700-$2800 in this filly in the fall of her three-year-old year. We were asking at the time $30,000 for her, and she sold for $27,500 in the spring of her four-year-old year. This mare went on to win many more times in shows in Ohio, Michigan, and US Nationals, then retired as a broodmare. As you could see at that time, it was worth breeding and showing. If you had a breeding farm that stood a stallion, you could also count on mare care as added income to the stable or the farm. In 1975, the farm was profitable.

Today, shipping semen either chilled or frozen has eliminated all of the mare care that was income on breeding farms. Also, shipping semen and embryo transfers has made the gene pool in the Arabian horse industry extremely small. Today the costs of stud fees versus sales ratio are way out of whack. That filly that sold in 1975, sired by a non-major advertised stallion and only shown one time at a local class a show, would be more likely to sell under $3000. I really believe that stud fees today are set by ego rather than pure economics. I am sorry to say I can’t tell you how many weanling colts we sell each year for under $1000 where the sire had a stud fee of $5000 or more. You do the math. There are few stallions standing in the United States whose offspring of average quality will sell for even the stud fee. It doesn’t take a CPA to figure why the Arabian registry has seen a steady decline over the last 25 years.

What has happened in the last 30 years of showing Arabian horses? The cost of maintaining and showing, including training, veterinarian , farrier, transportation, entry fees, stall fees, and office fees have made it cost-prohibitive for many of even the upper middle class to show horses. Sad to say many class A shows are no longer in existence for lack of entries.


I'VE GOT A HORSE TO SELL

We get telephone calls on a daily basis from someone telling us that they have a horse for sale. A typical scenario would be, “I have a five-year-old Arabian gelding with two regional halter championships.” They will tell us that the horse has great Hunter potential and is just getting started under saddle. The first thing that we do is look the horse up on the Arabian Horse Association’s data source. We glance quickly at the pedigree to see if it’s conducive to a performance horse. Then we look at the accomplishments, and we find out that yes, the horse was a champion halter horse in 2 different regions, but there were only three geldings in the class. Unfortunately, the only thing that we have to sell is a pretty gelding that, once he is trained under saddle and is no longer a junior horse, will have to go against the old campaigners. This horse may be worth $800 to maybe $1500. You may ask, “How can that be?” The unfortunate part is, if you send that horse to any quality horse trainer, you can easily spend $5,000-$6,000 just to see whether this horse is going to have any talent in the performance ring or not. Sad but true. My point is, if anyone has a three-year-old to sell, by the middle of his three-year-old year he must be at least broke to ride. Different than the old days, the resident trainers on breeding farms started all the young horses. Also, when I’m told a horse has great Hunter potential, it better be a great one. I know of no farm or breeder in the United States that breeds Arabian or Half-Arabian horses specifically for the Hunter division. Most potential buyers/trainers looking for a performance prospect want to see where that horse can put his head, his neck, his hock, and his knee. Even showing a horse in the long lines and a round pen is better than trotting a horse in hand. We do not have enough young trainers out there today that want to start colts. So the leading trainers want to at least see what the potential is in some category. Today the easiest horse to sell is the three or four-year-old, broke but not finished, with little or no show record that a trainer can see the potential and go on and finish that colt to make a show horse.


THE HALTER HORSE

Halter horses are a whole different deal. Halter horses today have a more global market than in years past. However, it seems like many breeders today are looking to hit that one big lick on that multimillion dollar deal . Most halter horse breeders end up with many young horses that find little or no market unless that horse can be turned into a performance horse. The chances for most breeders to hit that one horse that has a European, South American or Middle Eastern allure have the odds stacked against them. It would help most breeders of Arabian Halter horses to employ a young horse person with experience in starting young horses under saddle to help widen their market on horses that do not make world-class Halter horses. This at least gives them the opportunity for a secondary market. Old timers like me call that young trainer, simply, a colt man.


We are going to have to make major changes in marketing the Arabian horse.

At Addis Live Online Auctions, we have never before had the data that we do now. Our stats find that the biggest market today in the United States are 36 to 62-year-old women. The median age would be approximately 53 years old. We find many of these women had horses as kids and now they have their kids grown, some through college, and for the first time in years, they have the disposable income to own a horse that they hadn’t been able to afford in the past. What kind of horse do these ladies want to buy? For many years in our auction business, our bread-and-butter were English horses, three and four-year-olds, well started, with little or no show record. Today we’ve seen a different trend. We find the most marketable horses are the Western horses. We feel the reason why is that median age lady that’s 53 years old may be entertained by that English horse or a fancy going horse; however, she’ll watch that video of a Western horse and say to herself, “I think I could ride that horse.” Quieter horses that show more manners may not be as entertaining but more user-friendly. We also find that the day of the owner sitting in the stands and watching a trainer show his or her horse is not near as prevalent as it was years ago.

Today most people that own an Arabian horse are more hands-on than ever before.


As we keep producing more and more horses and the life expectancy of a horse is somewhere between 25 and 30 years old, we are producing horses much faster than they are dying. Think about it. Of the horses that were entered in the Kentucky Derby 20 years ago, most of those horses are still living today. Just between the American Quarter Horse and the Thoroughbred horse, we’re still producing over 150,000 horses per year in those two breeds. Supply and demand.

What trends do we see growing in the equine industry today? Look at the horse trailer industry. In the past we would see many 2 horse trailers pulled by a pickup truck. We see an expanding trend in three and four horse slant load trailers with front end living quarters. We see a huge influx of the baby boomers involved in pleasure trail riding and competitive trail riding. The most recent statistics on the trail riders claim that there are over 100,000 members of the different trail riding associations. Many of the baby boomers want merely to just go ride out in the country, leave their troubles or their stresses of everyday work at home, and just go out and have a good time, and meet other people with the same interests. All they want to do is ride their horse and hang out with other people that want to do the same.


ENDURANCE RIDING RANCH SORTING TRAIL RIDING
Addis Live Online Auctions has been promoting ranch sorting. It is the fastest-growing discipline of any breed of horse. The RSNC Association has grown from 5,000 members in 2007 to nearly 20,000 members today. The ranch sorting has several attractions. It is easy to understand, tailor-made for the novice rider, it is timed, not judged, conducted in a controlled environment, brings the cowboy out in you, it is economical to participate, and the RSNC has almost identical demographics as the Arabian Horse Association. The RSNC participants are, again, those 36-62-year-old ladies. In June of this year, there were over 7,200 teams competing at the finals in Fort Worth.


The RSNC is free to join

PERCEPTION BECOMES REALITY

The perception of an Arabian horse is a horse that it is extremely high strung, high priced, and out of the range of most middle class people. What can we do to change the image of that flighty Arabian horse? Put yourself in a position of the people that have always admired the Arabian horse for its obvious beauty. They decide to go to our Arabian horse show for the first time just to see what the horses look like and see the horses in person. So they go watch the Halter classes. They walk up towards the end gate and are standing there with no expectations whatsoever. They just want to see the pretty horses and the first thing they see is the designated bagger (the designated bagger is a person delegated by the show management to shake a plastic bag at every Halter horse going through the gate so they are all on an equal playing field) out in the makeup area shaking a plastic bag and getting the horses all excited before they go into the show ring. Once they get in the show ring, they see the horse’s tail up over their back, all excited and snorting. Then they watch the handler walk up to the judge and stand the horse up for judging. The horse is standing there with his eyes bugged out of his head, with the hair around his eyes and the muzzle either rubbed off or shaved off with baby oil all over its eyes and, in some cases, so much oil on the horses body that it looks like they just came off the beach with suntan lotion. Every time that horse makes a move the handler reprimands the horse and, in some cases, will threaten the horse with a whip. Now you tell me, if you are a person that had been told how flighty and high strung the Arabian horse is, and you went to see for yourself, you just got a permanent engraved picture in your mind of just how flighty and high strung the horse is. I honestly feel as though the way that we still show Arabian horses has been counterproductive in rebranding the Arabian as the versatile family horse.

For years people have complained about the Arabian Horse Association. I know now from experience that AHA does everything in its power to promote the Arabian horse.

Bottom line, in order for the Arabian horse or any other light horse today to continue we must find an occupation for every horse in the barn. It has been my experience, having sold over 6,000 Arabian and Half-Arabian horses since 1987, that a horse that is worth $100,000 is easily sold regardless of the breeder/seller. If there is a horse that can compete on a national and worldwide stage, it is definitely a seller’s market. There are people around the globe that will pay whatever it takes to get a horse that they just want, throwing all economics and common sense out of the equation. With that being said, we have the other 99% of horses that still need to find a home. We don’t need more breeders, we need more consumers.

For us to succeed we must embrace the casual owners. Those are the trail riders, the competitive trail riders, the endurance riders, the ranch sorting participants, and the folks that just want to go to a play day and forget about their daily stresses of work and whatever taxes their brain. These people just want to have fun.

Will the horse industry ever get back to the way it used to be? I really doubt it. As I stated in the first paragraph of this dissertation, instead of always trying to fix the judging, complaining about the footing, complaining about AHA, we need to look and see, on an individual basis, what we can do to educate the general public on how much fun and how competitive with other breeds the Arabian horse is. You don’t have to be a multi-millionaire to own them. Their disposition is the same as any other light horse, some nuts, some docile. The Arabian horse doesn’t cost any more than any other hobby if you love it. In the 1960s Keller Electric Arabians traveled around to c county fairs in Ohio with a tractor trailer rig and a big top tent advertising their ,versatile , Arabian horses. Maybe it is time for that type of promotion again. So put a little ad in the paper and invite the local folks over to see your Arabian horses. Let them know how great it is to have their kids involved with horses instead of sitting around facebooking and tweeting all day.

Thanks for your time,

Bill Addis


I'll make my comments in a little while, after a few folks have posted their thoughts. There are some things in this article that struck me and I'm wondering if anyone else will see them and comment. I don't want to direct anyone's thoughts on this, so I'm holding back.
     

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