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As noted in yesterday’s post, the health and economic energy of the bloodstock business depends on the results of the September sale at Keeneland to an inordinate degree.

One of the corollaries from the present economic situation in breeding Thoroughbreds is that the value of broodmares and stallions also depends on the value of yearlings … just as the value of yearlings depends on the quality of purses available, the costs of racing horses, and the prospects for profitable racing or resale at the in-training auctions or at the racetrack … and especially on the health of the national and international economy.

Breeding Thoroughbreds is one big, happy, interconnected pyramid, with stallions at the top of the heap. Race a colt who can become an important stallion prospect, and that owner likely has put his racing operation in the black for several years. Stand a stallion who becomes a major sire, and that farm has become a major money earner and likely a major power center in breeding.

If it sounds easy, well it ain’t.

Those who bought into stallions, either in the form of equity or seasons, in 2006 through 2008 are in a painfully precarious spot. And those stallions at the top of the price pyramid are in the most danger because prices of yearlings have dropped too far and too fast to allow many of the breeders and equity holders to get out economically.

With that kind of crush (or at the very least “squeeze”), who is going to buy into stallions? And how much can any horse command as a stud fee under the present economic forecast?

From talking to stallion managers and breeders, the top end would appear to be, at most, $50,000, which is real money in most contexts. That is half, however, of the fee for Smarty Jones, when that once-beaten classic winner went to stud, and that is one-tenth of the fee for Storm Cat, who only stood for a half-million at the pinnacle of his fame and success.

And it would take a heck of a horse to be worth $50,000 live foal and actually get it in these times.

The general consensus is that stallions and stallion prospects priced at $25,000 to $35,000 and under will be the most popular, and in another two weeks, we will know a lot more about how steady those numbers might be.