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English Breeding Unprofitable Bloodstock Industry a Gamble Life of Man Who Raises Thoroughbred Stock for Market No Bed of Roses RosesBy By Special Correspondent NEWMARKET England In spite of the ballyhoo in certain quarters about the wonderful prices that are given at the public auction for bloodstock and the prac ¬ tically illimitable postwar prospect for breeders the contention again is advanced that the bloodstock industry is not gen ¬ erally in a healthy or profitable condition The uppermost thought behind this con ¬ tention is the case of the small breeder who sees his yearlings pass out of the sales arena unsold or else knocked down for two figure sums a common occurence during the last lew years yearsBut But the path of the big breeder who gets his 5000 guineas 22500 for say a Hyperion filly if he has one is not a bed of roses Here is a concrete case from this country An ownerbreeder whose name everyone knows from its long association with the turf has a sire whose fee is 300 guineas 1350 and easily gets his full complement of forty mares each season That amounts to a gross income of 12000 pounds 50400 a year a goodly sum eas ¬ ily earned as seen from the outside Now we will deduct from this round figure 1600 pounds 6400 a year for general ex senses upkeep advertising etc This still leaves a net profit of 11000 pounds 44000 for the owner ownerHowever However there is a catch under the legal decision which followed Mrs W W Bail ¬ eys case in Ireland about her sire Bach ¬ elors Doubles earnings some years ago A sires earnings were regarded for income tax as part of the general income from the conduct of a stud farm so long as the owner was what was called we think practising husbandry and losses in other directions could be set against them Un ¬ der an income tax ruling of last year or the year before a sires fees are now added to the owners personal income and are entirely disassociated from the profits and losses on stud farms farmsTaxes Taxes Cause Big Shrinkage ShrinkageNow Now the owner of the sire mentioned is nominally a rich man that is to say his gross income is large and assessable on a high scale And so Jt works out that from every pound net his sire earns the owner pays eighteen shillings to the revenue authorities His net income from his sires earnings is therefore not 11000 pounds 44000 a year but 1100 pounds 4400 a year And this too from a wasting security securityThe The sire referred to is worth possibly 40000 pounds 160000 at current rates In that case his owner can sell him and by spreading the money over sound indus ¬ trial or other investments he probably could average four per cent on his 40000 pounds 160000 That would be only 1600 pounds 6400 a year and income tax at eighteen shillings in the pound would still be payable on it so that his net return would be only 160 pounds 640 a year instead of 1100 pounds 4400 he now receives But and this is a very im ¬ portant consideration at the end of twen ¬ ty years the owner or his heirs if the money had been invested wisely would still have 40000 pounds 160000 intact intactAsset Asset Depreciates With Age AgeThere There indeed might be considerable capital appreciation On the other hand in twenty years the sire probably would be either dead or sterile and the owner would have nothing Out of 1100 pounds 4400 a year he can not allocate sums for amor ¬ tization In the face of this there are those who argue that presentday blood ¬ stock breeding is an economic proposi ¬ tion A gambling proposition most cer ¬ tainly And everyone connected with rac ¬ ing gambles in one form or another even though he may never have had a wager on a horse in his life By and large the man who has his money in the bank or brewery shares can regard his present more equably than the man who has his money in bloodstock bloodstockThe The general level of bloodstock will rise again It is the period when all is out ¬ going and there are precious few in ¬ comings that so many people find trying When a breeder sees a secondhand bed ¬ stead or at least a secondhand bedroom suite sold at auction for more than he re ¬ ceived for a potential race horse he begins to wonder whether breeding today is the sound economic proposition some people pronounce it
