26th Apr 2012
After much deliberation the committee of the Racing Post Yearling Bonus Scheme decided to relaunch for a fourth Scheme. The scheme was created at a time of crisis when we had the peak population of horses seeking buyers in a world in economic turmoil. The energy of the moment created an efficient and simple marketing tool which set out to retain existing customers and to try to find new ones. The £10,000 bonuses would go to the successful owner who was considered likely to reinvest the winnings so the overall market would benefit, although the nature of the market means the benefits would be distributed arbitrarily.
The initiative was called “self-help” and applauded for the way in which this conveyed, to the mythical powers that be, a message of an industry which is battling to survive. The communal effort, across borders and across the spectrum, remains one of the greatest strengths of the scheme, though there has been some degree of divergence in what people interpret as “self interest”. Some would prefer to keep the money. Others see the benefit – it really depends on each producers outcomes in recent years. We remain in a market in which wondrous things can happen, as witnessed at the recent breeze-up sales where horses can appreciate in value by multiples. Reality for most is not so sweet.
One aspect of the production cycle is the extended timeframe. We make decisions about matings based on today’s information but the outcome is not revealed for a number of years. The two-year-olds sold last week were the result of mating decisions made in the Autumn of 2008 or the Spring of 2009. The first bonus scheme applied to the yearlings of 2009. This long lagtime between investment decision and outcome means that the financial consequences take a long time to be revealed and also corrections take time too. The mares bought nowadays will come in at a lower entry cost than mares bought in the 2005-2008 era. These mares will have the opportunity to visit Group 1 sires at roughly 40% the fee of the equivalent calibre of horse in that mid-noughty era. And in five years time we will be saluting the foresight of the clever people who chose well. The investors who are not so lucky will not have done themselves as much financial harm as heretofore. So the financial downside is reduced.
The committee of the RPYBS tried to decide the best next move. To cry “enough” was to risk losing an efficient and effective tool for demonstrably successful client retention. On balance it was felt that most people would endure one more rendition of the Scheme during the lifecycle of which we could engage in a serious reappraisal, to include discussion with other parties. Then we either create an even better scheme or feel confident that we can walk away in the firm belief that the Scheme has achieved all it can achieve and that it is certainly time to move on.