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January 31, 2013 To: the Honorable Andrew M. Cuomo, Governor of The

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January 31, 2013 To: the Honorable Andrew M. Cuomo, Governor of The NEW YORK STATE THOROUGHBRED BREEDING AND DEVELOPMENT FUND CORPORATION DIRECTORS John Sabini, Chairman EXECUTIVE DIRECTOR Darrel J. Aubertine, Commissioner NYS Department of Agriculture Tracy Egan & Markets John A. Tesiero, Jr., Chairman CHIEF FINANCIAL OFFICER NYS Racing Commission Harry D. Snyder, Commissioner Jean Coutts (Acting) NYS Racing Commission Joseph G. McMahon, Member John A Graziano, Jr., Member REGISTRAR William B. Wilmot, DVM, Member Barbara C. Devine Howard C. Nolan, Jr., Member Edward F. Kelly, Member Jeffrey Cannizzo, Member January 31, 2013 To: The Honorable Andrew M. Cuomo, Governor of the State of New York Members of the New York State Legislature On behalf of the Board of Directors of the New York Thoroughbred Breeding and Development Fund Corporation, I am pleased to present this annual report for 2012. This report includes information on revenue, award payments, research funding, promotional spending and operational improvements made during the past year. The Fund’s work continues to support New York’s reputation as the home of world-class Thoroughbred horses. Those who breed in New York can watch their foals grow up for careers on top-class tracks anywhere in the world, and NY-bred starters often fill the starting gate at NY tracks for races that would otherwise not be able to be run. NY-bred restricted races typically have more starters than open-company contests, which translates into more revenue for the state. For the first time, the NYTBDF Corp. and those it serves benefited from a full 12 months of revenue from the Video Lottery Terminals at Resorts World Casino New York City. Horsepersons have voted with their wallets to pronounce the Empire State the leader of an industry comeback that began in 2012 and will pick up steam in 2013 and beyond. As that industry evolves, the Fund will continue to support Thoroughbred breeders in New York and contribute to the agricultural viability and economic health of the State. Sincerely, Tracy Egan Executive Director Executive Summary 2012 By Tracy Egan On the eve of the 40th anniversary of the establishment of the New York Thoroughbred Breeding and Development Fund Corporation by the State Legislature, it can be said that 2012 is the year the state’s Thoroughbred industry began its comeback. • NY-breds win the most graded stakes ever • Racing opportunities abound • Revenue rises • Awards increase • New sires arrive • A thousand mares join the breeding population • Foal crop grows • Zweig Fund benefits Now more than ever, NY-bred Thoroughbreds are a hot commodity, with nearly $40 million available in restricted purse money. Only Thoroughbreds registered by the Fund by virtue of meeting the residency and inspection requirements can be entered in NY- bred-only races conducted at race meets held by the New York Racing Association and Finger Lakes Casino and Racing. NY-breds can also run in any “open” races in the state and worldwide. In 2012, 11 NY-bred horses won 14 graded stakes, which represents a high mark for horses foaled in New York State. Significantly, five of those wins came in Grade I races, which are the top-tier races in the world. In 2011, the NYTBDF Board of Directors tweaked the Fund’s mission statement to specify that it is promoting “the responsible breeding of quality Thoroughbred racehorses.” Victories at racing’s highest levels assure us that breeders are striding in the right direction. Those who buy and own racehorses appreciate that with a NY-bred there will be more chances to earn money. Our horses can win a maiden race, any number of claiming races and two NY-bred restricted allowance races before turning around and running in the same allowance conditions against open company. That earnings potential created some sparkling results in the sales ring (read about NY-breds at auction elsewhere in this report). The marquee event of the year, New York-Bred Showcase Day, offered a record amount of more than $1.3 million in purse money on a race card that featured only NY-breds. Twelve months of revenue led by the quick-paying Resorts World Casino New York City, plus healthy revenue from NYRA, FLCR, Off Track Betting outlets and other sources, brought in more than $16.6 million to the Fund. As of this writing, the Fund expects to pay $12 million to breeders, owners and stallion owners whose registered NY- bred horses finished first, second or third from Jan. 1 to Dec. 31, 2012. (This figure includes the payout of roughly 80% of the 10% that was withheld during the six pay periods of 2012. The Fund expects to make this payout sometime in April, after we receive audited financials.) These awards help our stakeholders pay feed bills, school and property taxes, as well as their employees. As you’ll read later in this report, these and other spends made by our stakeholders are a catalyst to the breeding, racing and agricultural segments of the State’s economy. As we just mentioned employees, it should be noted that it is the farm and backstretch workers who work most closely with our horses and who deserve the industry’s utmost thanks and respect. We know the vast majority of them love horses and often put the animal’s welfare above their own. While such devotion to the horse can’t be measured in dollars, their contribution to the economy can be. That is one element covered in a new report issued by a coalition of equine groups, including the Fund’s sole source provider NYTB, Inc., referenced later herein. The 2012 report details highlights of NY-bred accomplishments on the racetrack and in the sales ring, and provides a detailed accounting of receipts and disbursements of the Breeding Fund’s three incentive areas (breeder awards, stallion awards, and open- company owner awards). Additionally, it contains the performance results of New York- breds on the track and an analysis of the success of the New York State Thoroughbred Breeding Program. We also look at how: • Other states are trying to compete with the Empire State • The Fund helps foster demand for Off Track Thoroughbreds • The Fund promotes aftercare for retired Thoroughbreds • The Fund encourages young people to choose a career in the Thoroughbred industry The reader will find in these pages the results of the 2011 Harry M. Zweig research report from Cornell University. When the 2012 report is published and provided to the Fund, we will update this annual report to reflect the latest equine research performed at Cornell with the support of more than $330,000 from the Fund. * * The Fund makes this payment upon receipt of audited financials. Please refer to the pages immediately following this Executive Summary for a quick graphic reference concerning trends in the NY Thoroughbred Breeding Program. Breeder Awards $10,000,000 $8,833,801 $7,766,065 $7,905,269 $8,000,000 $7,148,284 $7,474,838 $6,532,919 $6,817,331 $6,646,168 $6,496,055 $6,300,452 $6,350,760 $6,000,000 $4,000,000 $2,000,000 $0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Stallion Awards $3,000,000 $2,592,781 $2,629,828 $2,451,903 $2,370,035 $2,500,000 $2,217,057 $2,213,774 $2,043,002 $1,919,812 $1,984,053 $2,000,000 $1,559,215 $1,334,934 $1,500,000 $1,000,000 $500,000 $0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Open-Company Owner Awards $1,600,000 $1,424,780 $1,372,430 $1,340,363 $1,388,649 $1,400,000 $1,311,678 $1,273,002 $1,145,343 $1,107,667 $1,109,393 $1,200,000 $993,323 $1,000,000 $859,621 $800,000 $600,000 $400,000 $200,000 $0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Mares Participating in the New York Program 3,900 3,900 3,600 4,000 3,500 3,475 3,534 3,169 3,500 2,828 2,735 2,805 3,000 2,439 2,500 2,000 1,500 1,000 500 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Resident Mares 3,388 3,395 3,250 3,500 3,150 3,040 3,084 3,000 2,826 2,478 2,500 2,112 1,976 1,876 2,000 1,500 1,000 500 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total Mares Bred 3,302 3,500 3,296 2,938 3,006 2,898 2,949 3,000 2,607 2,451 2,404 2,500 2,121 2,132 2,000 1,500 1,000 500 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 US Foal Production 33,315 33,671 33,413 34,070 34,200 34,350 33,550 35,000 32,235 31,727 27,800 30,000 24,900 25,000 20,000 15,000 10,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 New York State Foal Production 2,183 2,209 2,022 1,968 2,100 1,910 1,925 1,888 1,788 1,610 1,600 1,450 1,495 1,100 600 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 The 2012 figure for US foal production will be provided when made available by The Jockey Club. NY-Breds at the Races in 2012 By Bill Heller From January through December, from Aqueduct to Santa Anita, New York-breds made a national splash in 2012, not only prospering in open company but winning graded stakes.
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