In an earlier article, I assessed the top tier of entering stallions for 2017, which are led by Horse of the Year California Chrome (by Lucky Pulpit), Grade 1 winner Frosted (Tapit), Kentucky Derby winner Nyquist (Uncle Mo), and Preakness winner Exaggerator (Curlin).

In a rational scheme or market, a breeder would expect an upper tier of horses that anyone would like to breed to, given the required cash. Then we would expect a middle segment of strongly supported horses who do not have universal appeal and whose stud fees reflect that. Then we would have a lower tier of stock that have recommendations but for one reason or another lack a broad appeal.

Well, that’s what you might expect if breeding happened to be rational.

In truth, it was once very much like that. The very popular horses, the significantly supported horses, and then the ones that somebody loved (occasionally to their great profit).

But no more.

The market today is increasingly bifurcated (a $64 word that means chunked into two great bits). One segment is the horses everybody wants, and the other is the rest of them.

Farm owners and breeders and stallion managers are all struggling with this situation. Only one of the ironies of this situation is that some exceptionally important stallions would be on the “rest of them” list today, including Mr. Prospector and Danzig.

Both of those great sires stood all or most of their stud careers at historic Claiborne Farm, which is experiencing the same challenges in attracting mares to their lesser-priced stallions.

Bernie Sams, from Claiborne Farm, candidly noted that “the horses priced at $12,500 and under are struggling everywhere. Everybody’s in the same boat.” It’s tough out there in stallion world. The mares haven’t shown up for the stallions who are in need of them to fill their books, and stallion farms can only do so much to persuade mare owners.

A principal reason for breeder reluctance is the selling price of mares and foals that a sizable number of owners have found at the sales, where losses have become commonplace.

Carrie Brogden of the Select Sales consignment agency said, “A lot of this is fallout from the free stud-fee deals. These have become endemic to the industry, and I think there are a lot of people who traded in the $10,000 mares and the lesser stud fees, and they have lost their asses the last three or four years. I think when you are breeding to higher-risk stallions on higher-risk years, there is a lot of risk and can be a lot of losses.”

In the commercial market for weanlings and yearlings, which is the purpose of breeding most of the foals in this price range, small differences can make the difference between profit and loss.

“The perceived value in a lot of these horses is in the stallion,” Brogden said. “If a sire is perceived as ‘hot,’ then that foal will sell. Overall, I think the stallion farms are getting the backlash from the sales – where the buyers wanted to purchase either first-year stallions’ stock or proven stallions’ stock. First year or proven, and not much else.”

One of the rationales for the selectivity of the buyers is that most of them are buying to resell. Whether choosing horses for the yearling or the 2-year-old market, resale buyers usually have a specific vision of the type and sire power they want. And with the large volume of foals and yearlings available, buyers can be very selective.

Due to these considerations, Brogden said, “We are in a situation where yearlings are either worth a ton or worth-less. Worthless. The free fall is staggering now, and as a result, people are afraid to take risk. People are understandably afraid of the risk, and a poor one costs as much to keep as a good one.”

The situation for young stallions in this “at-risk” sector of the market all depends on whether the foals run. If the 2-year-olds train well and show ability on the racetrack, then commercial disfavor is forgiven.

This is the silver lining because the sales market ultimately does correct to reflect the reality of the racetrack, but till reaching that point, breeding in this part of the market can be both challenging and financially painful.