Email from Welmoed Jansen

Welmoed and her family are the breeders of Chagall, Bretton Woods, Wynton, and colt (Wynton x Ferro) selected this year for den Bosch.  I'm sharing her latest email to me (with her permission) because she raises some excellent points for discussion and thought:

Hi Scot,

Finally time to respond to your email.

As already mentioned, I think the idea is very interesting and I have thought of it myself after the selling of Chagall and having made some money to invest.

The year after the selling I went to a couple of foal auctions in NL and in Germany to try to purchase one or two top foals. Maybe even three .

My experience was that the real top foals (out of excellent pedigrees) I was interested in, were bought by the “big money”, people you can never win from because they simply do an investment of 40,000 – 50,000 € or more for 1 foal. I wanted to have three foals for that money (plus auction costs).

The alternative was to go for the second best foals but once I had seen the excellent ones, it made me hesitate to buy the second best. And hesitation at an auction never results in anything (in my case).

I have been following a couple of the foals I was interested in over the past two years and sometimes the investment was worth it, sometimes not.

Loucky also stated this in her reaction where she mentions the fact that sometimes the foals are not big enough as a 3 year old, or sometimes their movement is not spectacular enough.

Besides, you also have to face the risk of the veterinary examination.

We only breed with elite mares and only cross them with KWPN stallions or stallions from abroad whose X-rays are good. All our horses go outside every day of the year.

But it is not a guarantee. We also have to deal sometimes with unexpected OCD (for example Bretton Woods).

Now the first selection round in NL has been completed I am more and more convinced that breeding and more specifically, getting a colt selected and approved, is a gamble. Yesterday at the late selection day a few cracks failed to be selected (horses who were already approved in Germany and other horses whom everyone believed of that it would be a walk in the park).

Having said this, I still like the idea very much.

Another point is when do you decide to sell the horse (and who is going to decide). I made a decision tree for our own horses when it is the best time to sell them or to keep them  so you can still make some money or just keep a good horse. In our case, the foals from our own breeding program, are good, but not really impressive at the age of 3 months. None of the elite auctions wanted to have Wynton for example. Even at the age of 2 ½ he wasn’t selected at the Stallion Show. At the age of 3 ½,once under the saddle, he started to impress people. I see that with other horses of our farm: once under the saddle they show their real qualities. But they are not real show horses.

Until now we just had one horse in the championships of the Mare show and none in the championships of the Stallion Selection Show.

I hope you don’t mind my remarks. I am trying to come to a conclusion:

1.      Top foals are hard to get at an auction; the big money is always after them

2.      An alternative would be to have a scout to find the foals at the breeder’s home (and try to  convince the breeder not to sell at an auction)

3.      The outcome of X-rays is unpredictable even when all the circumstances are optimal; you have to deal with the risk.

4.      Not all top horses or good horses are recognized as a foal or even as a 3 year old; that is important to realize when to sell or not.

Regards,

Welmoed

An Already Approved Stallion vs. Young Prospects

Here is an excerpt from a conversation I'm having with a jury member in regards to the short-term needs of the US:

Actually, you might consider doing both - getting an Approved stallion
in 2013 - 2014 (yes! a short term goal,) which then gives you lots of
time to raise some prospects (a long term project, which could take 5
years or more to get anything Approved, if you are buying foals...)
If you float both as possibilities, you can see where/who the interest lies -
some people would be interested in one or the other, some in both...

I would think that there are some desirable Approved stallions who
would not be too expensive, but not old - just not getting many
breedings:
maybe there are many of those blood lines (e.g. Jazz crosses,)
maybe they're not popular with the Dutch breeders (could be for many
fickle reasons,)
maybe they would cross well with our mare base, but maybe not so well
in Holland, etc.

Anyway, worth considering doing both...

Thoughts?

Money

Just to reiterate, we divide the amount of money we decide we need/want to spend on a propect(s) in a given year, and then divide by the number of people involved that year.  I through out the $5000. amount as a maximum investment.  Given the price of some of the very top foals, 10 people at 5K each raises enough money to be competitive.  We may not need that much.  We may have 20 people and have it cost each of us less.

Just Dressage Prospects?

One person has suggested we only look at dressage prospects.  Although breeding for dressage is my primary interest, we have people interested who are jumper breeders, so I'd prefer we have a decision making system in place prior to purchases that clarifies what we're looking for.  Maybe each year we decide to go one way or the other, or one of each? I'm not personally wedded to any idea at this point, so will wait to hear what the rest of you think. We have enough people interested that we can separate purchase price and colts within a given year if we need to.

Timeline

What do you think of this timeline?

-Commit and sign any legal paperwork by the end of March.


-Pay our portions of the decided upon pool of money by June 1st.

On Going Training and Promotion Expenses

There is no doubt that training and campaigning a stallion in North America is more expensive than in Europe, especially when you consider the number of potential breedings bringing in income to offset expenses.  In this situation, we all have a vested interest in ownership and all expenses are split among us.  It's also the reason I've invited three International Grand Prix riders to be part of our group.  They, too, are people I like and trust.  They can be part of an organization bringing in top talent for them to develop.  Of course, we don't expect them to work for free, but they have a vested interest in the success of our boys.

If we feel a stallion is costing us too much money for the interest he generates, then we sell him as a riding horse.

In North America, we tend to look at horse business as an oxymoron--the two words just don't go together.  It doesn't have to be that way.

Incentive for Dutch Members?

In my mind, there's a lot of incentive for Dutch members of our group.

1.  The strength and robustness of the North American breeding pool directly contributes to frozen semen and horse sales of our counter-parts in Holland.

2.  Directly related, the larger stallion owners, such as VDL and Nijhof have long supported North American breeders--it's good for them and good for us

3. It will best serve North American needs if any stallions we get approved begin their careers in Holland--the breeding base is bigger, they get an index, they get an immediate foal report, they get the early stallion competitions, and they develop a reputation--the income a popular young stallion in Holland can generate is substantial

4. The people I've invited are friends of mine and people I trust who both will look out for our interests and have connections to possible colts we might not have otherwise.

Trade for Skills and Services

This is a no-brainer for me.  We're eventually going to need some accounting services, legal services, training, advertising, etc. It's not a given that just because someone comes forward and offers a service we agree to a barter situation, but there will certainly be needs, times, and situations in which it's appropriate.  I certainly intend to deduct my out-of-pocket expenses from my portion.  I don't expect this group to pay me anything, but I also don't expect this group to cost me money, either.

Invite Others?

I'm of the general opinion "the more the merrier."  That being said, I invited people with a genuine interest in Dutch breeding and an interest in promoting Dutch breeding in North America for the benefit of their own programs, the benefit of their current business connections in North America, the potential access to top riding prospects, and/or the promotion and development of their programs in Holland.  Moreover, I invited people I like and trust.  If you want to invite someone else to consider joining us, just give me a heads up so we can have a conversation about it.  Believe it or not, my secondary goal is the strengthening of the North American breeding pool; my primary goal is to be excited about a project and have fun with this.  I'm not interested in managing a bunch of crazy people.

From Loucky

What a good idea and plan to start this great idea.

In the region Zeeland we started 2 years ago with a similar plan, we bought a colt and it was a disaster- not tall enough and a colt was lacking the great movements. The colt had an excellent pedigree and all the horses out of this bloodline were great movers and good performers. We sold the colt and had a loss.Now we bought another colt via a foal auction with the remaining money and additional funds from our members ( 18 in total).We are happy with this colt and he is now in a opfokbedrijf. (farm that raises colts)

Every 2 months we do a kind of evaluation, very nice because it is also a social event with all those breeders.

We had also an other obstacle, 2 members wanted to quit and wanted their part of the money in return( was in the bylaws mentioned). Now we had this changed in our bylaws.

Also another point of attention is that many foal auction require an amount of money, sometimes Euro 10.000 when the colt is approved by the KWPN. Some breeders have the same policy,so be aware with the budget.

Ownership of the LLC

Carol and I have started three LLCs over the years, but I'm not a lawyer.  Let me check into the options.

If everyone who participates in 2013 is a member of the LLC, what happens in 2014 if one or more of the people want to keep their ownership in the 2013 colt(s), but don't want to participate in the 2014 prospect(s)?  That's my biggest question.

My other question is, if we are all members, how membership in the LLC is handled for Dutch natives. We have interest from a number of people whose legal residence is Holland.

I'm going to have to check with our lawyer.

We've Got Lots of Interest and Questions

A couple people want to be able to see and respond to all the feedback and reactions.  Rather than have this turn into an email nightmare, it makes more sense to me to start a blog.  I may be the only person who can initiate a new topic, but all of you should be able to post comments.  If you want a specific topic raised, or if one naturally appears through conversation, let me know and I'll start the thread.

Original Email

Hello, everyone.  

OK.  I think I’m at a place with both my health and my life that I’m ready for another major project:  Looking Forward, LLC.  

North America needs KWPN breeding stock, especially stallions available via fresh cooled semen.  The lack of access to quality stallions is an ongoing problem and a limiting factor to the success of our breeding programs, and, indeed, the KWPN-NA as an organization itself.  The problem is compounded by our small breeding base and the price of approved stallions of sufficient quality. We can lease or buy an older stallion that is no longer used much in Holland, but this has limited benefits.  My idea has long-term and ongoing benefits. We start a group of investors to buy weanling colts, raise them in Holland, and attempt to get one approved occasionally.  Basically, we function as a stallion station or individual with the buying clout to pick up a top prospect or two each year. Here’s how I envision it working:

-we form an LLC (Limited Liability Corporation) in New Hampshire--we buy the colts in the name of the company.

-we attempt to buy between one and three top quality colts per year-ideally two.

-initial investment is $5,000.--if 10 people are involved, this raises $50,000. to use for the first year of purchasing. The number can be greater or fewer--will depend on the year and the people who want to be involved.

-we split the costs of raising these colts--average young horse raising costs are approximately 150 Euro/month, so between 10 people, that’s not a lot, even if we have more than one colt.  When the time comes to prep the colts for inspection, the costs go up a bit, but that’s probably in the range of 500 Euro/month for the months involved, then whatever it costs for the entry fees, radiographs, etc. Again, split among 10 or more people, it’s really manageable. Even if you’re involved every year, we’re probably talking about 4 to six colts that you’re part owner of before we either, most probably, sell or get a horse approved.

-if the colts are not accepted, they are sold.

-each year, the individuals who wish to be part owners of additional colts, put in another investment amount for purchases that year.  Just because you’re part owner of 2013’s colt(s), does not mean you have to be of 2014’s, but you will still cover your share of the expenses on the 2013 colt(s).  When 2015 rolls around and you want to invest in that year’s colt(s), you can.  You only pay a portion of the expenses of the colts purchased in the year(s) you buy in.  Similarly, if a colt is approved and, subsequently, has breeding income or sold, you only benefit if the colt is from a year you bought in.

-we get a certain number of breedings to any approved stallions without a breeding fee--collection costs, etc. will have to still apply so it’s not costing the person standing the horse.

-I’d like some native Dutch people involved for a couple of reasons:  one, it will be to our benefit financially and reputation-wise to have any young stallion begin his breeding career in Holland, and they can help with this; two, they speak the language; three, they will have contacts that may help us procure some top colts; and, three, I like the people I’ve invited and would love to have them part of this group.

-I’d like some major KWPN stallion holders involved because it is to their benefit the North American breeding base grow, and it’s great public relations for them to be actively in support of that growth.

-everyone involved is welcome to give input, help search for possible colts, offer advice, etc, but, after taking everything into consideration, the final selection and/or purchasing decisions will be mine.

-I’ll work though a lawyer to establish the LLC and contracts--I’m not sure what the terminology will be--it’s possible that we call them shares/part ownership/just not sure legally what it is, but the ownership would be transferable, saleable, willable, etc.

This is a conversation right now.  I’d prefer that this is an invitation-only group.  That being said, if we can’t get 10 people to start, I’ll make it more public.  Send me an email or give me a call with questions, interest, scepticisms, etc.  If you want off the email list so you’re not kept in the loop, let me know that as well.  My feelings won’t be hurt...for more than a minute or two. I just want to get the conversation started so we can begin in 2013.

Scot