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January 31, 2014 To: Andrew the M.Honorable Theof Cuomo, Stategovernor New of York Executive Summary 2013

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January 31, 2014 To: Andrew the M.Honorable Theof Cuomo, Stategovernor New of York Executive Summary 2013 NEW YORK STATE THOROUGHBRED BREEDING AND DEVELOPMENT FUND CORPORATION DIRECTORS EXECUTIVE DIRECTOR Barry Sample, Fund Chairman & Gaming Tracy Egan Commission Chairman James Bays, Dept. of Agriculture & Markets Jeffrey A. Cannizzo REGISTRAR John A. Crotty, Gaming Commissioner Adam Lawrence John A Graziano, Jr. Edward F. Kelly Joseph G. McMahon COMPTROLLER Sen. Howard C. Nolan, Jr. Jill LaBoissiere, CPA John J. Poklemba, Gaming Commissioner Todd R. Snyder, Gaming Commissioner William B. Wilmot, DVM January 31, 2014 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 2013. 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 in sales pavilions, as well as the expansion of 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 is a pass-through organization that collects revenue from the racing industry and sends a minimum of 91% of that revenue back to stakeholders in the form of agricultural awards, purse enrichment for NY-breds and support for equine research. In short, the Fund contributes to the economic health of the state and its breeding and racing industries. Sincerely, Tracy Egan Executive Director Executive Summary 2013 By Tracy Egan Thirty-nine years ago, New York welcomed the first foals born into the New York Thoroughbred Breeding and Development Fund programs. Established to help encourage the purchase of dairy farms whose owners could neither sell them nor pass them on to a new generation of farmers, the Fund started out much like a newborn foal: full of promise but in need of wise supervision over a period of years to ensure that its promise would be fulfilled. Measured by several indicators, it appears that 2013 is the year when it became clear that NY-breds start with a distinct advantage due to the state’s commitment to our breeding and racing industries. • NY-breds win the most graded stakes ever • NY-breds prove their quality in open-company races • NY-breds are in demand at auction • NYRA demonstrates respect for NY-bred quality • Revenue & awards set records • Mare population grows • Foal crop increases for the second year in a row • Contribution to the Zweig Fund hits a new high GRADED STAKES NY-breds more than doubled the number of graded-stakes wins they recorded in 2012 (14) by notching 31 victories in graded stakes during 2013, including Grade I wins by Discreet Marq and Artemis Agrotera. Importantly, NY-breds “got the monkey off their back” when London Bridge won the Grade II Breeders’ Cup Marathon at Santa Anita, the first NY-bred horse to win a Breeders’ Cup race since the inception of the series in 1984. OPEN COMPANY Naturally, the graded-stakes horses led the way in demonstrating the improvement in NY-bred performances in non-restricted company. More NY-breds than ever before performed well in open-company stakes races, open-company allowance races and non- restricted optional claiming races. Later in this report, we will present charts that break down by NY track and condition where NY-breds earned their money. DEMAND IN THE SALES RING The combination of plentiful racing opportunities, good purses for NY-breds, and higher- quality bloodstock created unprecedented demand in the sales ring during 2013. New York-breds at auction were an important factor in the dramatic upturn in sales that made it a banner year for the Thoroughbred bloodstock market nationwide and capped a three- year period of recovery. An improving U.S and world economy, combined with a strong demand for horses and a decline in the national foal crop (i.e., decreased supply) led to market strength not seen since the recession of 2008. Even in the context of marked national success, New York-bred sales results were outstanding, and nowhere was the strength of the New York-bred marketplace more apparent than in yearling sales, which analysts regard in general as the main driver of a healthy bloodstock market. The marquee event on the sales calendar for New York-breds, the Fasig-Tipton New York-Bred Preferred Yearlings Sale in Saratoga Springs in August, posted a record- breaking 65% increase in total sales in 2013 over 2012. Fifty-eight more New York-bred yearlings sold at this sale in 2013 than the previous year, for an average price increase of 16% (from $62,551 to $72,480). The median yearling price at the sale, which speaks to the strength of the middle market, increased by 10%, to $55,000, from last year’s median of $50,000. Industry insiders note that this improvement in sales performance is a result of breeders stepping up the quality of the individuals they are breeding, as well as industry recognition that NY-breds are running for the best money around and are supported by a sound breeding program administered by the NYTBDF. Fasig-Tipton president Boyd Browning noted, “There’s no question that the purse structure that exists in New York for New York-breds and the quantity of races makes it almost a necessity for any significant owner or trainer to consider New York-breds as part of their equation.” The Fasig-Tipton New York-Bred Preferred Yearlings sale set the tone for a booming New York-bred yearling market in 2013. Meanwhile, sales of New York-bred two-year- olds continued to post steady gains in average and median, while weanling sales gained considerable ground in 2013 as a result of the success of the second Fasig-Tipton October mixed sale. NY-BRED PROGRAM AND NYRA The New York Racing Association, Inc. ran 637 restricted races for NY-breds with purses totaling $39,158,270. That is well above the 600 restricted races requested in the franchise agreement NYRA concluded on September 12, 2008. (“New NYRA shall run a minimum of six hundred (600) New York-bred races subject to availability of a sufficient number of New York-bred horses to run competitive races with customary field size.”) In fact, NY-bred races are so attractive to the betting public, fans and handicappers that NYRA added a second day of racing for NY-breds only – Big Apple Showcase Day – on June 1, 2013 to kick off the Belmont Festival leading up to the Belmont Stakes leg of the Triple Crown. Traditionally, NYRA had waited to spotlight NY-breds on a showcase day in October. It is gratifying to see NYRA’s affirmation that the programs administered by the NY Thoroughbred Breeding and Development Fund have helped improve the quality of our racehorses such that they deserve greater recognition on the racing calendar. On Empire Showcase Day in October, NYRA not only put up $1.25 million in purse money for the 10-race, seven-stakes card, it also celebrated the Fund’s agricultural roots by hosting vendors who featured New York State agricultural products and many New York-based artists. REVENUE AND AWARDS SET RECORDS According to the December year-to-date financials in this report, the Fund set new highs for revenue and award payments. During 2013, the Fund received more than $19.4 million in revenue. Leading the way was more than $10 million in revenue from Resorts World New York City, a nearly 45% increase over 2012. This more than offset the declines in handle (-7.52%) and breakage (-5.66%) experienced in 2013. Breeders, owners and stallion owners earned more than $15.8 million in award payments, as every category saw double-digit increases in 2013. Amount Earned Increase % of Revenue Breeders $11,256,329 18% 57.92 Stallion 2,787,553 26% 14.34 Owner 1,787,863 48% 7.24 The Fund has improved its processes to such an extent that we now send award payments for each period at least four weeks earlier than in the past. This speed-up in award payments is in recognition that our stakeholders generally need the payments as soon as possible, as they use the money to help pay school and property taxes, feed bills and vet bills, and to help pay the thousands of people who work on the state’s farms or at racetracks and training centers. And as you can see in the map below, we send checks to farmers, suburbanites and city dwellers who invest in the Thoroughbred breeding and racing industries in the Empire State. STALLION ROSTER GROWTH In 2013, the State’s stallion roster added an additional 12 stallions to the 64 who stood here in 2012, bringing the total to 76. When you look at our chart of leading NYS stallions you should note that it does not include promising young sires such as Darley’s stallion Girolamo, who was recalled for stud duty in Kentucky based on the success of his first crop in the sales ring, or young stallions such as Desert Party whose first foals were born in 2012, or Mission Impazible and Boys at Tosconova, whose first foals will hit the ground in 2014. GROWTH IN MARE & FOAL POPULATION For the second year in a row, New York can report an increase in both the mare population and number of foals born.
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