A corner of old Kentucky: Spendthrift Australia

September 23, 2019

Nestled in the Macedon Ranges outside of Melbourne, there’s a little corner of old Kentucky.
It’s a stud farm that stands dual US two-year-old Group 1 winner Bolt D’Oro, his fellow American shuttle sire Jimmy Creed, who’s just recorded two winners from his first three Australian starters, and a local quartet headed by I Am Invincible’s son Overshare, and the Redoute’s Choice stallion Swear.

And it’s with some irony, given some of the pricing structures at play, that it’s called Spendthrift Australia.

It’s the latest branch of American billionaire B. Wayne Hughes’ lifelong aim to think differently.
Setting up an Australian wing in 2015 — on the 600 acres that used to be Testa Rossa’s home of Yallambee Park Stud — was a bold endeavour. Putting a then 26-year-old in charge of it, in Garry Cuddy, another.

Spendthrift Australia’s General Manager, Garry Cuddy

But those moves were in keeping with a Hughes approach that has changed things up mightily in the world of thoroughbred breeding in the US.

Now 85, the man who made his fortune in storage facilities entered into horse ownership in the early 1970s, later enjoying the highs of Eclipse award winners Action This Day (2003) and Beholder (2013).

In 2004, Hughes swooped into breeding by buying a farm near Lexington, Kentucky. It had existed since 1937, home to sires like Triple Crown-winners Seattle Slew and Affirmed. And it was called Spendthrift Farm.

The name was enshrined, not to match any sort of business style, but in honour of the outstanding 1870s galloper Spendthrift, owned by an ancestor of founder Leslie Combs II, and who is great-grandsire to the champion Man O’War.

But “Spendthrift” soon assumed ironic tones, as Hughes formulated an approach aimed at keeping costs down and looking after the broodmare owner.

B. Wayne Hughes

Bold strategies

Aiming to operate at low margins, not only was Hughes intent on limiting services fees, he initiated two innovative breeding schemes, also used at Spendthrift Australia.

The first was called “Share the Upside”, designed to get full books happening quickly for first-season sires. Breeders who sent mares to first-season Spendthrift sires could pay a small premium on their service fee to own a breeding right for the rest of the stallion’s life, allowing them to send a mare to him each season for free.

If a sire succeeds, and his service fee rises, those breeders who took the plunge early will reap the windfall of not having to pay a service fee to breed to a winning stallion.

For a good example, go straight to the top. Into Mischief retired to Spendthrift in 2009, for a service fee of US$12,500. Some 20 breeders locked onto the “Share the Upside” scheme with him, paying a small premium which took their outlay to around $16,000.

The sensational Into Mischief is now the No.1 sire in the US. Those 15 or so breeders have gone back to him for free throughout his stud life. Everyone else this year pays US$175,000 a pop.

“Those 15 people are going okay at the moment,” says Garry Cuddy with a laugh. “Mr Hughes always says that without the breeders, we wouldn’t have a business.

“It’s also a great way to get a fuller book, and get more offspring to the racetrack early on.”

Spendthrift offers only up to 100 Share the Upside deals per first season sire. That seems generous, but to hypothesise on Into Mischief: If 100 breeders had bought and used that free breeding right, and he served 245 mares a season (as he did in 2018), 145 times $175,000 is still a handsome return.

Hughes’ second bold strategy was called Breed Secure, in which the service fee of a stallion (second season and beyond) is taken out of the proceeds once the resultant foal sells at auction, again with protections for the broodmare owner.

“If the service fee is $5,000 and the foal is sold as a weanling,” says Cuddy, “the first $5,000 made from the sale goes to the breeder, then the next $5,000 comes to us, and anything over the first $10,000 goes to the breeder.”

On the short side in that scenario, a sale price of $8,000 would send $5,000 to the breeder and only $3,000 to Spendthrift. In a sale of $5,000 or less, the breeder takes the lot, and all shortcomings are forgiven by Spendthrift.

The figure rises for yearling sales, with the first $10,000 going to the breeder.

“With his experiences early on in the game, Mr Hughes learned a lot as a small breeder,” Cuddy says. “He might’ve had a few difficulties along the way which helped open his eyes to these game-changing moves.”

The other thing you notice about Spendthrift is the comparatively low service fees.

While Spendthrift Kentucky is a massive operation with more than 25 standing stallions, its Australian wing currently has six stallions. Bolt D’Oro (Medaglia d’Oro) is standing his first season at $13,750 AUD (inc GST), with his northern hemisphere fee US$25,000 in 2019. His fellow American shuttle sire Jimmy Creed (Distorted Humor) stands for $8,800 here in Australia compared to his 2019 US$20,000 fee.

Of the farm’s four Australian sires, Overshare stands for $11,000, while Swear (Redoute’s Choice), Gold Standard (Sebring) and Hampton Court (Redoute’s Choice) are $5,500 each.

“Spendthrift tries to price the horses at what they’re worth, not over-inflate and then cut people deals. We don’t want people to wonder if someone else is getting a better deal than them,” Cuddy says.

“Mind you, if we get a horse we think should stand at $80,000, he’ll stand at $80,000. But mostly the Spendthrift approach is about going for the numbers, and the quality. The income, while not irrelevant, isn’t high on the priority list.”

Revitalising the farm

Spendthrift hasn’t skimped in revitalising the old Yallambee Stud. American-style four-board timber fences now line the property’s low green hills. Plus, a large American-look Stallion barn is nearing completion.

Spendthrift Australia

“We’ve tried to maintain the same feel, so if you’re on Spendthrift in Kentucky, or in Australia, you know where you are,” says Cuddy, who learned much of his craft under bloodstock agent Vin Cox, and went with him to Kentucky to buy both the dams of Spendthrift’s own Hampton Court (Redoute’s Choice – Roses ‘N’ Wine) and Russian Revolution (Snitzel – Ballet D’Amour) to name a few.

Shown great faith by Hughes despite his relatively tender years, Cuddy is excited about the gathering momentum behind the stud. Bolt d’Oro is covering “a solid book of mares” in his first season.
And speed sire Jimmy Creed is creating a buzz. To date, his winners-to-runners ratio currently sits at or around 75 per cent. In Australia, albeit with only his first few runners having raced, it’s 66 per cent.

“He’s had two winners from his first three runners,” Cuddy says, highlighting the Paul Preusker-trained Knock Knock (out of More Than Ready mare Shameless), who won on debut at Bendigo and may be aimed for the Magic Millions three-year-old race.

Overshare, a Group 3 winner at Caulfield, raced in Spendthrift’s famous orange and purple quarters before being retired to the farm last year. Breeders who took up the Share the Upside offer are returning this spring.

“We’re excited to have that I Am Invincible blood here through him,” Cuddy says. “He’s a great looking horse who looks very similar to his dad. He’s got foals on the ground who are also a similar shape, and they’ve all got a bit of spunk about them which is great.”

Swear, a versatile Group 3 winner from his five starts, has yearlings on the ground. One of them, out of Queen’s Plaza (Elusive Quality, USA), was bought out of the paddock recently by Prime Thoroughbreds syndicator Joe O’Neill.

“Joe came out to have a look at our yearlings and said, ‘What’s that one?’ I said ‘That’s a Swear filly’, and he said ‘I think I should buy it.’

“I think that’s a good indicator of the quality of the horse he has on the ground,” Cuddy says.

Hampton Court, who won the 2014 G1 Spring Champion Stakes in what’s still the Randwick 2000m record, has three-year-olds on the ground. They include the Jason Coyle-trained Sirmaze, a winner of his fourth start who may follow his father’s footsteps towards the Spring Champion Stakes.

And there’s Gold Standard, who had a Group 2 win over Champion Australian 3yo Trapeze Artist to his name before an early retirement as a three-year-old.

“I’ve been hearing lots of good things about his foals,” says Cuddy. “It was possibly a blessing in disguise for us that he didn’t race on as an autumn three-year-old. If he had, I feel he would have won at the highest level which quite possibly would have seen him out of our purchase price range.”

Which seems to sum up quite precisely a Spendthrift ethos that, for a lot of broodmare owners, can count as another blessing.

Featured on TDN AusNZ

Written by Trevor Marshallsea