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January 31, 2016 on Behalf of the Board of Directors of the New York

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January 31, 2016 on Behalf of the Board of Directors of the New York NEW YORK STATE THOROUGHBRED BREEDING AND DEVELOPMENT FUND CORPORATION WEBSITE: NYBreds.com DIRECTORS EXECUTIVE DIRECTOR John J. Poklemba, Fund Board Chairman Tracy Egan Richard A. Ball, Commissioner NYS Dept. of Agriculture and Markets Jeffrey A. Cannizzo, Executive Director NYTB, REGISTRAR Inc. Adam Lawrence John A. Crotty, Member NY Gaming Commission John A. Graziano, Jr. Edward F. Kelly COMPTROLLER Joseph G. McMahon Jill LaBoissiere Sen. Howard C. Nolan, Jr. Todd R. Snyder, Member NY Gaming Commission William B. Wilmot, DVM January 31, 2016 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, I am pleased to present this annual report for 2015. This report includes information on revenue, award payments, research funding, promotional spending and operational improvements made during the past year. The performances of registered New York-breds on racetracks and at sale pavilions, as well as the expansion and addition of several farms during the past year, demonstrate that the Fund is accomplishing its mission to “support by monetary incentives the responsible breeding of quality Thoroughbred racehorses in keeping with the founding legislation to preserve New York’s irreplaceable farm land.” The award programs administered by the Fund are demonstrably encouraging people to breed, buy and race our home-grown product. The Fund collects revenue from the racing industry and returns a minimum of 91 percent to stakeholders in the form of agricultural awards, purse enrichment for NY-breds and support for equine research. In doing so, the Fund contributes to the economic health of the state and its racing and agricultural industries. Sincerely, John Poklemba Fund Board Chairman One Broadway Center Suite 601 Schenectady, NY 12305 PHONE (518) 388-0174 FAX (518) 344-1235 Executive Review By Tracy Egan, Executive Director Forty-one years after the New York State Legislature created the New York Thoroughbred Breeding and Development Fund Corporation, the “Fund” can humbly note that the racing and breeding programs in New York are recognized as the best in the nation. We are one of only two states that can report foal-crop increases for the past four years in a row. The programs run by the NYTBDF can boast that in 2015: • NY-breds won 13 graded stakes races, including two Grade Ones • NY-breds earned more than $90 million worldwide • Five more NY-breds reached the million-dollar mark in earnings • NY-bred awards were very close to 2014’s record level • The New York foal crop grew for the fourth year in a row • Twenty-four new Thoroughbred farms opened in the state • The Zweig Fund benefited from a near-record contribution ($439,000) that is comparable to the amount provided in 2014 The combination of $44.6 million in restricted purse money, plentiful chances (825) to race in restricted company and an enviable awards program have made NY-breds a must-own for any racing stable. To quote Hall of Fame trainer Todd Pletcher, “NY-breds are an excellent asset for a stable, with lots of opportunities for great purses.” Graded Stakes Perhaps the most important illustration of their improved quality is how well NY-breds perform at the open- company stakes level. New York-breds had another outstanding year in 2015, accounting for two Grade 1 stakes wins, four Grade 2 wins and seven Grade 3 wins. As shown in the chart in this report, both Effinex and Princess Violet won Grade 1 stakes in 2015, and there were an additional 13 NY-bred placings in Grade 1 races including, most famously, Effinex’s second place-finish to Triple Crown winner American Pharoah in the Breeders’ Cup Classic. Significantly, La Verdad was named 2015 Eclipse Champion Female Sprinter based on her Grade 2 win over Wavell Avenue in the Gallant Bloom and a near miss to the same filly in the TwinSpires Breeders’ Cup Filly & Mare Sprint. The graded-stakes performances delivered by NY-breds in 2015 demonstrate most clearly that New York breeders are increasingly breeding quality Thoroughbred racehorses. Earning six figures in any given year demonstrates that registered New York-breds give owners a chance to make a profit at the track, and 2015 was no exception. More than 90 NY-breds took down healthy six-figure earnings during the year. In 2015, NY-breds earned a worldwide average of $27,269 ‒ $80 less than the average earnings of a horse foaled in Kentucky. In addition, for the second year in a row NYRA demonstrated its respect for the contributions of NY-breds by hosting three Showcase Days featuring all-NY-bred cards. Stallions New York’s 2015 stallions were a tough act to follow for the sire class of 2016. Only Kentucky topped New York in the number of stallions ranked in the top 60 in 2015 progeny earnings. Big Brown, Freud and Posse checked in at 37th, 40th and 60th, respectively. Additionally, New York had six first-crop sires that ranked in the top 50. Giant Surprise was sixth, followed by Dublin (24th), Courageous Cat (27th), Here Comes Ben (29th), D’Funnybone (32nd) and Bank Heist (46th). New York will have a minimum of nine new stallions in 2016 seeking to make a national impact: Al Khali, Golden Ticket, Japan, Majestic City, Major Gain, Micromanage, Midas Touch (GB), Normandy Invasion and Zivo. NY-Breds at Auction In 2015 At auction, sales of yearlings, weanlings and two-year-old NY-breds mirrored the national auction market in 2015 in that sales were strong and steady with a pronounced preference for commercial pedigrees. The sales statistics presented later in this report show that the year did bring about significant developments in two very important areas. Yearling sales, the bellwether for the health of the New York-bred marketplace, hit a new high in both gross receipts and average after undergoing a minor correction in 2014, indicating that the current demand for New York-breds remains robust. Most striking, the average price for race-ready two-year-olds in training, no doubt bolstered by the enhanced state-bred juvenile stakes program on the NYRA tracks, rose in value by more than 25 percent. New York breeders can feel more confident than ever that, given a well-prepared quality foal out of a quality mare, they will be rewarded in the sales ring and beyond. Becoming a New York-Bred In order to encourage breeders to keep their mares and foals at New York State farms, the Fund has firm rules that must be followed to ensure that a foal that is dropped here is eligible to become a registered NY-bred. Breeders must make sure that their mares follow our residency rules, which in some cases necessitates that they are bred back to a registered NY stallion, that they file mare movement cards to help us establish compliance, and that they allow their mares to be inspected by our registry compliance team. It follows that only Thoroughbreds registered by the Fund by virtue of meeting the residency and inspection requirements can be entered in NY-bred-only races held at race meets conducted by the New York Racing Association and Finger Lakes Gaming and Racetrack. Similarly, only registered NY-breds can generate awards for their breeders and owners, as well as for the owners of registered New York stallions. NY-breds can also run in any “open” races in this state and throughout the world. 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 increased earnings potential has led to some sparkling results in the sales ring. Revenue Total operating revenues of $21,955,413 in 2015 just missed reaching the record of $22,096,393 set in 2014. The decrease of less than 1 percent resulted primarily from slight declines in VLT revenue at Finger Lakes Gaming and Racetrack and from a universal decline in handle. The bright spot was represented by the VLT operation at Resorts World New York City, the revenue from which increased by 2.8 percent. Total VLT revenue supplied nearly 65 percent of all Fund revenue for the year. Awards Breeders, owners and stallion owners earned more than $17.4 million in awards in 2015, a decrease of 2 percent compared with 2014. These awards help our stakeholders pay school and property taxes, employee salaries, and farm-related expenses ranging from blacksmithing to registration fees. Equine Research The Fund’s contribution of more than $439,000 means that we provide 60 percent of the revenue received by the Harry M. Zweig Fund at Cornell University. Among the studies funded were the following: • Harnessing the immunomodulatory properties of interleukin-10 through a gene therapy approach to prevent equine osteoarthritis • Controlled postponement of ovulation in mares • Enhanced breakdown screening in Thoroughbred racehorses through multimodal imaging and serum biomarker combinations • Evaluation of lubricin as a new biotherapeutic for equine joint disease Please refer page 5 of this report for a quick graphic reference concerning breeding and racing trends. Also, please note that the current Farm Directory and the Zweig Report are incorporated by reference to the following links: Farm Directory Zweig Report The following map shows how awards are distributed in New York State by region: Table of Contents Financial Review .............................................................................................................................................................. 1 Summary Statements of Revenue, Expenses and Changes in Net Position ...................................................................
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