EC January/February, 2008

This program is a shot in the arm to the breeding industry which has been declining the past few years, Amy Gumz, owner of Gumz Farms says. “There has been a substantial increase in the interest of our stallions and breeding facility due to us moving to Kentucky.”

Gumz recently bought a breeding facility in Morgantown, Kentucky for the sole reason of taking advantage of the Breeders’ Incentive Fund Program. For example, this year, there were many different stallions that inquired about standing at Gumz Farms. For the 2008 breeding season, Gumz narrowed the stallions and decided on standing eight Quarter Horse stallions and four Paint Horse stallions.

Cindy and Stephen Stephens from Riverside Ranch also recently moved their breeding division to Leitchfield, Kentucky. Cindy Stephens says it will be an advantage for their young stallion, My Final Notice because buyers of his offspring will be more motivated to campaign and show them due to the extra monetary incentive. “Buyers and breeders are starting to catch on and the interest in our stallion has started to drastically increase the past few months,” Stephens says.

These breeders moving to Kentucky are the first indicators that this program is at the beginning stages of turning into a huge success. “The program was established to meet three objectives,” Kentucky Quarter Horse Association President Norm Luba says.

“The first goal was to increase the value of horses in Kentucky. The demand for Kentucky bred horses was immediate, and I would say they are 5 to 7 times more valuable than they were before this program came into effect.”

Our second goal involves increasing the quality of the horses available in Kentucky, Luba says. “This process will occur over time with numerous high quality stallions and mares moving to Kentucky.” However, the Kentucky bred horses can compete all over the world. “We wanted to make sure the quality of the horses coming out of Kentucky were going to increase over time,” Sargent says. “If the horses also had to show in the state, the quality would remain stagnant. We want the Kentucky horses to be able to compete with the best horses in the industry.”

The third goal was to improve the overall Kentucky economy by bringing more business to the state. The economy is already being stimulated by the buying of farm properties and many breeders’ moving their businesses to the state. “People that have left and quit showing Quarter Horses now see a value of coming back,” Luba says. “There will also be an increase in participation at the smaller shows. Many people have said they have not seen this much excitement about a program in quite a long time.”

This fund was created as part of Kentucky Governor Fletcher’s “Jobs for Kentucky” initiative to help increase breeding opportunities and to assure Kentucky’s standing as the leader in the Equine industry. Other programs created as part of this initiative- the Kentucky Thoroughbred Breeders’ Incentive Fund and the Kentucky Standardbred Breeder’s Incentive Fund were started earlier. Kentucky Sen. Damon Thayer was the main architect for the Thoroughbred and Standardbred Incentive Fund Programs. Kentucky Quarter Horse trainer Bennie Sargent discussed with Sen. Thayer the possibility of adding non-racing breeds such as Quarter Horses to the program. Sargent and Luba were two of the main driving forces in getting this non-race breed legislation and program guidelines turned into state law. Senator Thayer was skeptical at first, but was eventually convinced that it could work. It was decided that 7% of the Kentucky’s Breeder’s Incentive Fund would go toward the top 10 non-racing breeds, with 80% going to the Thoroughbreds and 13% going to the Standardbreds.

The Kentucky Legislature passed the laws for this program during the 2005 session of the General Assembly. The first funds are being paid out in 2007 based on show points earned by eligible horses in 2006. The funds come from sales taxes (6%) paid on stud fees. The law designates approximately $1 million annually for so called “non-race breeds.” In 2006, $1,131,706 was allocated to the top 10 non-racing breeds in Kentucky.

For this article, Quarter Horses and the program developed by KyQHA will be used as an example to explain the details of the program, although each of the top 10 non-race breeds has different rules and eligibility requirements. The KHRA has a list on their website of the different breed affiliate contacts, so any interested party should contact the local Kentucky breed affiliate for more information.

The money in the fund is split between the non-race breeds according to population numbers in the state. For example, there were 37,590 Quarter Horses that were verified by the national registry in 2005. “There are actually more verified Quarter Horses in Kentucky than Thoroughbreds,” according to the KyQHA website. Of the non-race breeds, Quarter Horses had the highest population numbers and was awarded 32.6% of the total money allocated which netted $368,942.00 to go toward the program.

The KyQHA BIF follows the same rules as the AQHA Incentive Fund Program. Therefore, the AQHA Incentive Fund points earned by these Kentucky bred horses will be used to determine the number value of each point. For 2006, the value of a KyQHA BIF show point was estimated to be $2,711.73. This is 100 times the value of an AQHA Incentive Fund Point. The value of a 2006 KyQHA BIF racing point is estimated at being $228.08.

For 2007, $1,370,007 was allocated toward the non-race breed fund. The Kentucky Horse Racing Authority (KHRA) is in charge of determining and distributing the funds. Quarter Horses were given $446,629.00 of the allocated amount to be divided by the total number of AQHA Incentive Fund points acquired by Kentucky bred Quarter Horses at the end of 2007.

“By regulation, incentive awards will be paid out the 1st quarter of the year following the year the award was won. So for any awards earned in 2007, the KHRA and the state affiliates will distribute funds in the 1st quarter of 2008 through December 31st of 2008,” according to the KHRA website.

After the horses have been verified by the breed affiliate and membership requirements have been met, the breed affiliate will send the KHRA a list of all the potential recipients that have qualified for the awards. Then, KHRA will send a letter to each potential award winner. The potential recipient will be required to provide the name, address, email address, phone number, social security number or tax id number and signature before the money is released.

“If the necessary forms are not returned by December 31st of the same year in which the KHRA notified the incentive winner of the award, the monies not claimed will default into the next year’s fund,” the KHRA website explains.

According to Sargent, it is not necessary to register or verify your Kentucky bred Quarter Horse in order to qualify for the awards. AQHA has developed a system to help keep up with the Kentucky bred Quarter Horses. However, verifying the horse with the KyQHA will help the breeders, sires, and owners receive their payouts quicker. In order to verify a horse, interested parties should go to the website and fill out the necessary forms. It costs $20.00 for members and $35 for non-members to verify their horse. Show horses must be enrolled in the AQHA Incentive Fund in order to be eligible, but Quarter Horse Racing horses do not need to be enrolled in the AQHA Incentive Fund in order to be eligible. However, it is highly encouraged for them to be enrolled to make these horses still valuable after their racing career has ended.

“There are no penalties for an owner or nominator who was not a member of the AQHA and the KyQHA at the time the points are earned. The KyQHA will notify every potential recipient when an award is earned. They may join the AQHA and KyQHA at that time and checks will be released,” the website states. “We are trying to make this program as horse friendly as possible,” Sargent says. “Our main goal is to increase business in Kentucky.”

Many critics of the program have stated they don’t believe this program will work due to the watering down of the point value over time, AQHA trainer Kelley Rampey says, “But I disagree with this statement, any sort of financial bonus at the end of the year is always welcome.” Gumz says she believes most critics haven’t done their homework, “I wouldn’t have uprooted my family and moved my breeding program to Kentucky if I didn’t think it was going to work.”

Stephens also says she’s not worried at all about the point value decreasing, “Even if the point value eventually gets down to $200.00 a point, which is more than any other program out there. The Incentive Fund point isn’t worth anywhere near the point value of the Kentucky Breeder’s Incentive fund point, but most people are unwilling to buy a horse that is not in the Incentive Fund,” Stephens says. “Any sort of earnings potential is beneficial and creates demand over other horses that are not eligible for these awards.”

“There has been a large amount of planning and thought gone into developing this program. This program is based on solid economic theory and research,” Luba says. “It will be watched closely, and we obviously will be reminding the Kentucky legislature that this program is important to Kentucky’s economic development and will be asking for the state to invest and increase the amount designated to this program.”

Eligible stallions for the 2008 Breeding Season and Kentucky bred verified horses for sale can also be located on the KyQHA website. Please go to the Kentucky Horse Racing Authority (KHRA) website, www. khra.ky.gov, or the KyQHA website, www.kyqha.com for more detailed information.

Below is the detailed requirements of the KyQHA BIF Program (Please check back with www.kyqha.com for updates) *The following eligibility criteria must be met to qualify for awards:

1. The foal must have been born in Kentucky during 2002 or later
2. The foal must have been conceived in Kentucky
3. The “Sire” on the certificate of registration must have stood the entire breeding season solely in Kentucky in the year that the conception occurred.*Note: No semen shall be allowed to be shipped into Kentucky from out-of-state stallions for show horse awards. Semen may be shipped within Kentucky. It is the intention of the Kentucky Quarter Horse Association to evaluate the impact of stallion eligibility requirements on the industry prior to 2009 and to determine whether program modifications are warranted.
4. The sire and dam must have physically been in Kentucky when the cover/insemination occurred.
5. Annually, out of the KyQHA BIF monies available for each point earned at an AQHA-approved event: 80% will be awarded to each of the recorded owners during a year, the premium money awarded to each of the record owners will be in proportion to the points earned during each recorded ownership period according to AQHA’s records. 10% to the breeder of an eligible race horse, or the AQHA Incentive Fund foal nominator of an eligible show horse.

If eligible:

• 10% to the owner, at time of breeding, of the sire of the KyQHA BIF eligible race horse.
• Or 10% to the sire nominator of an AQHA Incentive Fund sire nominated for the breeding season in which the KyQHA BIF eligible show horse was produced.

• Sires standing the entire breeding season solely in Kentucky will be eligible for the ten (10) percent allocation to sire owner or nominator.

• If sire does not qualify as in # 7 and # 8 above, the 10% sire owner or nominator allocation for that horse will be distributed among the eligible sires as a supplemental award in the same proportion as earned payouts.

• All owners, breeders, foal nominators, sire owners, and sire nominators of KyQHA BIF eligible horses must be members in good standing with the American Quarter Horse Association and the Kentucky Quarter Horse Association before checks will be issued.

• KHRA will not distribute award checks prior to March 1 of the current year for the previous program year. Award checks will only be distributed when all program requirements have been met.

• All officially sanctioned AQHA racing and show events qualify. American Quarter Horse Association will serve as a guide and default criteria for any and all aspects of the KyQHA BIF.

• All required information must be post-marked to the office of KyQHA no later than December 31 of the year following the program year. Example: for program year 2005 payouts to be considered, all required materials must be received at the office of KyQHA no later than December 31, 2006. Any dollars available from Incentive fund requests not meeting this deadline will be allocated to the following year KyQHA BIF monies.

(*Printed from the KyQHA website. Check with www.kyqha.com for updates on all rules)

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