Freakonomics Radio - 652. Inside the Horse-Industrial Complex

Episode Date: November 7, 2025

How does Kentucky keep itself atop the thoroughbred industry? Is a champion stallion really worth $200,000 per date? And how many hands can one jockey have? (Part two of a series, “The Horse Is Us.���) SOURCES:Emily Plant, thoroughbred researcher and statistician.Jill Stowe, professor of economics at the University of Kentucky.Mark Taylor, president of Taylor Made Farm.Oscar Gonzalez, vice chair of the California Horse Racing Board.Richard Migliore, head racing analyst for Fox Sports and New York Racing Association, retired jockey. RESOURCES:"Horse racing industry braces for crackdown on illegal immigration," by Ximena Bustillo (NPR, 2025)."Conceptualizing the Kentucky Horse Industry as an Economic Cluster," by Lori Garkovich (Bluegrass Equine Digest, 2009). Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Hey there, it's Stephen Dubner. Before today's episode, a quick announcement. On Thursday, November 13th, I will be live on stage in New York City in conversation with the journalist Bud Mishkin celebrating 20 years of Freakonomics and talking about what's next. We will be at the 92nd Street Y on the Upper East Side. I hope you can make it. For tickets, go to Freakonomics.com slash live shows. And now here is today's.

episode. May I give him a pat on the shoulder? Oh my gosh. I'm about to feed American Pharaoh a carrot, which is kind of highlighted my life so far. That's Emily Plant. She is a lifelong horse lover who makes her living today as a thoroughbred researcher and statistician. And American Pharaoh, he is one of the most famous and most sought-after horses in the world.

His fame comes from winning the 2015 Triple Crown. That's the Kentucky Derby, the Preakness Stakes, and the Belmont Stakes. He was the first horse to win the Triple Crown in nearly four decades. It was a huge deal for the industry because people said, oh, maybe it can't be done anymore. Maybe it's too hard. Maybe the modern thoroughbred can't handle this. And then he won. And he is sought after because in horse racing, bloodline is extremely important.

If you own a mayor that is deemed worthy of American Pharaoh, he will be happy to mate with her for a stud fee of $45,000. Back when he first retired from racing at three years old, his fee was $200,000. He is owned by a firm called Ashford Stud, which paid a reported $23 million for him in 2015. Ashford is a 2,000-acre farm in Kentucky bluegrass country, and that's where we are today. This is the American outpost of Coolmore Stud. the biggest thoroughbred breeder in the world with headquarters in Ireland. This Kentucky location is sometimes called Coolmore America. Emily Plant calls it equine paradise.

If you look at the barns, there's works of art in terms of the limestone craftsmanship, the roof, the cupola. There are 15 champion stallions in residence in these barns. Nearby, there is a modern building with high ceilings, pained windows, and big sliding doors, it looks like a really nice eight-car garage. This is the breeding shed. The boys come in this way. And they'll only bring the boys in when the mares are ready. The mares will come in from that side. Unfortunately, there's no actual mating happening during our visit. The stallions are back in their barns, relaxing, eating hay. Meanwhile,

Emily Plant shows us around the breeding shed. You notice also the walls are padded. That's for a reason. The guys are going to be wearing helmets. They're probably going to be wearing safety vests. Typically, there will be four people in here to supervise the breeding. One person prepares the mayor and holds her tail to keep it out of the way. Another person controls the stallion.

There's also a veterinarian on hand in case there's a problem. You have two giant really charged up horses, and we're basically trying to have them mate in a controlled environment. It's a very dangerous moment in time because thoroughbreds are bred with live cover, so it has to be the actual natural act. The guys that handle the stallions are best in the world. The people that do this have done it their whole life

and are very trusted. These are horses that are worth $50, 100 million. With all the risk and expense of what Emily Plant calls live, cover, that's another way of saying old-fashioned animal sex, you may wonder why thoroughbred breeders don't use artificial insemination. That is certainly common among cattle, pigs, poultry, also humans, but here it is forbidden. Why? That's what I got to wondering, along with many other questions about the thoroughbred market. So today on Freakonomics Radio, we cover the economics

of breeding and the economics of being a jockey. Minimums $100 up to $500 amount. The percentages is where you make any real money. Also, the feel of being a jockey. There's probably a hundred different versions of my hands. We ask how Kentucky has maintained its dominance over the thoroughbred economy. I've never really heard anybody else talk about that, but to me, that's just a fact. And we look at some other parts of the horse world.

I couldn't believe that they would actually pay somebody to do that. Part two of our three-part series, The Horse Is Us, starts now. Imagine for a second that you are the racehorse. Feel free to imagine yourself as a great one, American Pharaoh, or maybe his stablemate, Justify, who also won the Triple Crown and now earns $250,000 per date. Or maybe you picture yourself as secretariat, one of the greatest ever. or Sea Biscuit, the ugly duckling who became one of the most beloved horses in history. Okay, so pick the horse you want to be.

You got it? Now I have to tell you something. No matter how great a horse you are, you will never win a single race officially unless there is a person on your back when you cross the finish line, a jockey. I know, I'm sorry. Those are just the rules. And did you ever wonder what the jockey thinks about you? Horses are very much like people.

They have their own personalities. You know, if a horse is generous, he's generous. If he's kind, he's kind. If he's lazy, he's lazy. The difference between horses and people is a horse will never hide their true identity from you. That is Richard Migliore. These days, he is head racing analyst for Fox Sports and for the New York Racing Association. Before that, he had a long and successful career as,

a jockey. On the New York circuit, he was one of the best ever. When you first start out as a young jockey, your biggest strength is your physicality, your lack of fear, and your enthusiasm. Horses feed on energy. You're giving them this positive energy. And what you have going for you is that raw physicality and exuberance. So, Richard, if I sat next to you on a plane and I told you what I do and I ask what you do and have done, give me your thumbnail biography. I was a jockey for nearly 30 years. I started professionally when I was 16 years old, rode till I was just short of 45 years old and retired because of injuries and then was offered the opportunity to start doing broadcasting. And now I've been doing that for nearly 15 years and I'm very, very blessed

to be able to do something within an industry that I love. How important is it to understand horse as well to be a good jockey? For me, it was very important to understand a horse's personality, their psyche, their strengths, their weaknesses. Some riders maybe rely more on their physicality because being a jockey, even though it's hard for people to relate to a smaller than average person as a premier athlete, you are a premier athlete. Some guys can overcome their lack of understanding of a horse's personality with their physicality.

But for me, it was a blend. And honestly, I always loved horses more than I loved racing. Racing became an extension. of my love of the horses. How did you first spend time around horses? Growing up in Brooklyn, New York, I didn't really have access to horses per se. My Little League coach actually had the pony ride concession at the Nelly Bligh Amusement Park. I saw an entree into getting close to at least ponies at that time and started working for him at nine years old. How did you go from a nine-year-old working in a pony concession to going pro as a jockey at 16?

When I was 12 years old, went out to live in my grandfather's house on Long Island, and there were a lot of horse farms. It was much more rural at that time. I would tell my grandfather about a farm that I had found in Dixiel's Long Island, hunting hollow farm. He spoke with the guy there, and he got me a job. I got $1 for every stall I mucked out, and at the end of the week I could either take money or I could take

riding lessons. I never took the money. I always took riding lessons. By the time I was 13, I had gotten involved with pony racing, and people started to notice me that I looked like I belonged on the back of a horse. And then I wound up going to a farm and a trainer at that farm, saw me galloping race horses. And by the time I was 14, I was at Belmont Park working for a man named Steve tomorrow. He had been the Eclipse Award winning trainer, meaning he was the chance of champion trainer of his day. 15 years old, I signed a five-year contract. When I was 17 and a half, I actually bought my way out of the contract because it was

starting to inhibit the progress of my career. But it gave me an incredible start. Steve DeMorrow, really, I have him to thank for everything that I was able to accomplish in this industry. Would your parents think about your career choice? I think there was some trepidation early on. I didn't grow up as conventionally as a lot. of other kids and me leaving home at such a young age was probably more of a savior than anything

else. I found my place where I belonged, where I wanted to be. Growing up in a neighborhood, I grew up in, it wasn't cool to be reading horse books or, you know, I had other interests too. I always thought I was going to be an archaeologist and I would read all these different things and I would dig up things. I founded Bone once. My grandfather took me to the Museum of Natural history and we showed them the bone and they did like a test on it. And it was a deer bone that I found in the courtyard of an apartment building, the little dirt patch in Brooklyn. It was 400 years old, they told me. Wow. Wow. And we were walking out of this office on one of the upper floors of the museum. And I was, you know, I'm a kid, I'm a little embarrassed. And I said to

my grandfather, you think they need it. So I went back and I told him, man, if you need it, you can have it. And he opened the draw. And there were like a hundred of the same bones in the draw. But those were things that, like, as a kid, I had to hide that part of my personality because my neighbor got beat up if you were different. Let's go back to that first contract. A five-year contract must have seemed in the beginning like a dream, but you said you bought your way out of it. Tell me about that contract. What were the terms of it? Why did you need to buy your way out, et cetera? It was a dream. I was in a position that any other kid, my age, that aspired to be a jockey would be envious of. And it was.

great. I made $100 a week the first year, lived in a tack room at the end of the barn. It actually was $91 after taxes. As I became successful as a jockey, my first call was always for my contract holder. So if I had an opportunity to ride a big horse in a big race someplace and he had a horse someplace else, I had to ride for him. What about share of winnings or was that included? Were you like a contract player and you didn't get a share of winnings or you did get some? Well, the first year I wasn't actually riding races. I was still training to ride races. The second year, I would get 10% of the winning shares of purses, except if my boss owned the horses, and then I didn't get paid. It reminds me of the old Hollywood studio system. It's like, we're going to write your check every month, but you kind of do everything we say.

Oh, absolutely. I was supposed to ride a horse getting ready for the Belmont Stakes. I was only 16 years old. and my boss said, no, no, no, you're going to New Jersey to ride that day, and the horse won the Belmont Stakes. I did win the race in New Jersey, but it wasn't the Belmont Stakes. So it was a blessing to be under contract, but it got to a point where it started inhibit my career. Tell me what it takes physically and mentally to be a good jockey. It's very difficult life. You're living life looking through a keyhole. You learn early on you don't eat for enjoyment or for socializing.

you eat for energy, for fuel. I was living on 7 to 800 calories a day. I struggled with it mightily as a young rider. I would obsess about food. I might fight you for a Snickers bar if I could have one. And one day a jockey who was a great role model for me, a great mentor, Eddie Maple, he's a Hall of Fame rider. He said to me, food's always going to be there.

It sounds like a very simple idea. it just struck a chord in me like, yeah, you know what? One day I'll be able to eat what I want. So I was able to kind of refocus how I looked at food and my career. And it gave me more longevity than I would have had because it was a struggle. I'm taller than the average jockey. I'm 5'7. I make a joke.

I was the center on the jockey basketball team. What was your racing weight? I weighed 112 pounds with my equipment, what they call tack, I could weigh out at 115. So I don't even understand then how you can have the physical energy to do that job, weighing that much and eating only 7,800 calories a day. How does that work? A lot of its willpower, just sheer determination, tenacity. Also, the calories you're putting in really means something. I would eat raw beans, raw lentils, greens with just a little bit of olive oil and lemon, four or five ounces of grilled chicken or fish. That would be basically about what I would have a day besides a vitamin drink in the morning and electrolytes through the day. My dessert would be 10 M&Ms in a Dixie Cup and watch TV and make those 10 M&Ms last for an hour.

So let's talk about your career and your record. When I look at your performance over the years, I don't really know how to read these numbers very well. But if I compare it to baseball stats or football stats, it looks like you were crazy good to me. Thank you for that. In your best years, you were winning between 17 and 19% of your mounts. Your win-play show percentage was in the mid-to-high 40s. And you did this for many years. Just describe what a career like that is like.

Because when you're that good in any competitive endeavor, whether it's sports or business or the arts, your life is very different from someone who's either not that good or just trying to break in. In a way, it's a little bit difficult because I was very fortunate. it. I got amazing opportunities, very young. I worked very hard for it, but not everybody gets the opportunities that I got. I think there are a lot of great riders that never realized their potential, not because they did the wrong things. They just didn't get their right opportunities at the right time. They didn't get the horses that you got. Right. As a jockey, you have a dance partner. You're only as good as your dance partner in a lot of respects. I've never seen a jockey get off and carry

the horse. Talk about how you communicate with the horse, how much is verbal, nonverbal. What are all the different things that you're doing to make that bond with the horse? The majority of communication with horses is feel, touch. We talk about good hands with a rider. What is good hands? It's the extension from your hands through the range to the bit to that horse's mouth so that I have this connection with the horse that's my brakes and my steering. And I know just how much hold I can take how much I have to give back, how sensitive or light a horse's mouth is. It's much more an inherent feel than it is any kind of verbal communication. What about your legs? How do you use your legs?

Well, as a jockey, you ride different than an average equestrian, right? If somebody goes out and rides English or Western, their legs are around the horse's sides. A jockey, to be aerodynamic, has to ride with basically just their calves on the horse's sides, not their thighs. A horse carries weight more efficiently when that weight is centered on their withers. So if you're kind of crunched up in a ball up on your knees, you can put the majority of weight right on their withers. Talk a little bit more just about having good hands. I mean, every sport you need to have good hands, but it's different in every sport. If I'm thinking baseball or golf or tennis, you have a style that you've practiced for years and it works for you.

But with you as a jockey, every horse is going to be a little bit different. So describe like your repertoire of your hands, because I assume that you have to be really different from horse to horse. There's probably a hundred different versions of my hands. You get horses that are very tough mouth. We call them heavy heads, where you could basically pull as hard as you want, and you're never going to reach that break point where they're going to throw their head in your face. They're just hard to handle, and you've got to be physically very strong, so you lose a lot of the nuance.

The next race, after riding a big, heavy-headed horse like that, I might ride a little tiny filly that's very sensitive. And I've got to ride her on a very light, loose line. I've got to be very aware of where that break point is. I can't get too far into this horse's mouth because I'm going to throw off their stride, their rhythm, even their breathing. Tell me about the relationship between jockey, owner, and trainer, that triangle there. The owner's the boss.

He owns the horses, he pays the bills. At the end of the day, what he says is going to go. Now, if it's a good owner, they hire a trainer they believe in, and they allow them to do their job. Now, the jockey is usually hired by the trainer, and hopefully the trainer allows the jockey to do their job and not micromanage and have the trust. You hired me to do something, allow me to do it.

I don't think Tom Brady would walk up to the line of scrimmage and read the defense blitz and not feel like he could call and audible, right? How much money did you make during your career? I'm looking at the career earnings on Equabase, but those are what the horses made. It's $160 million in earnings. Right. That's what the horses earned. The way it works with riders is you get 10% of the winner's share of a purse, 5% of seconds and thirds. A fair assessment is you make about 8.5% of what your total purse earnings were. And then there's a flat rate just, to ride. Which is like a hundred, a couple hundred dollars. Right now in New York, it's an

escalating scale depending on the purse. Minimums, $100, up to $500 a mount. The percentage is where you make any real money. How many mounts would you typically have in a racing day? Early in my career, eight or nine at Aqueduct, nine or ten at Meadowlands every day. We just did a series on air traffic controllers and they have a mandatory retirement at 56 and I asked this guy recently retired, you know, like why is that? What do you lose as you get a little bit older. And he talked about how his sweet spot was in his mid-30s, maybe to early 40s, where he was just in the flow. And then you start to notice that you don't have the picture in your head as well. You don't respond quite the same way. So when you were in your flow, can you just talk about what

it's like to be showing up to work when you are that good? When you first start out as a young jockey, you are so thrilled to be out there that you'll win on horses that other jockeys might not win on because you give that horse every opportunity to be his best. I walked into a jockey's room with Angel Cordero, George Velasquez, Eddie Maple. And I was young enough and dumb enough to believe I belong there, right? And then as you go on, you gain this experience. And there's a window where you're at your perfect blend of physicality and mentality. As you go on a little further, your physicality starts to ebb a little bit. You rely more

and more on the mental aspect of it, your experience to smooth out what you're not doing as well physically. I never got to a point where my mental reaction or the way I saw a race started to ebb. I'm sure it would have. You know, I was at an age where it was probably getting to that point where I was struggling more was with my body. And I wouldn't have retired at that. that point, but I got injured very badly. And I could never get medical clearance again, although I did exhaust a lot of leads to different doctors that I thought I could get medical clearance. You know, father times undefeated. That last injury was in 2010 at Aqueduct racetrack in New York when Migliore broke his neck when he and his horse both fell. That wasn't

even Migliore's first broken neck. That one was in 1988. They actually did a rescue 911. episode about it, which is on YouTube if you put an iron jockey in the search engine. By his own count, Migliori had six or seven concussions along with a broken ankle, a broken fibula, a partially ruptured Achilles tendon, and quite a bit more.

Riding a horse, especially at 40 miles an hour, comes with significant risk for jockeys and horses. Jockey deaths are rare, but not unheard of. Horse deaths occur at a rate of around one per 1,000 starts. That is a historic

low, less than half of what it was in 2009. Still, some critics have been arguing for a long time that horse racing should be banned on the grounds that it is exploitive or cruel. I asked Richard Migliore what he thinks of that argument. I do think that people have the wrong idea about racing and about how the horses are cared for. These horses really do actually love to run. And listen, horses get injured and they injure themselves. If a horse injures themselves in the wild, they're going to have an agonizing slow death. A horse injures himself in a controlled environment. We're going to do our level best to save that horse,

to make that horse comfortable. And the advancements in veterinary medicine have really up the odds for a horse with a fracture to survive. But I do think we have to be more proactive to show people just how well the horses are taken care of. The majority of them love their job. And the ones that don't, they don't, They don't stay racehorses long because they're not going to be successful at it.

They'll go transition to a second career as a riding horse, a horse for therapy, a show horse, a hunter jumper. There's so many other outlets for these athletes. When you look back at your career and then you look at racing today from the jockey side, what are the primary differences? The size of the purses. The purses are so much bigger now. and other major changes. Most riders don't come up under contracts anymore. I was probably the last high-profile rider to come up under a contract.

Now riders get prepared on farms or jockey schools. The most famous one is probably the jockey school in Puerto Rico. And the one in Panama, they turn out incredible talent. Name a very favorite horse of yours, or maybe a few, and say why. The first horse that comes to mind was not a famous horse. He was a lower-level claiming type horse named Kremdelafet. Started riding him as a seven-pound apprentice, which means you haven't even ridden 35 winners yet in your career

and rode him for on and off over the next four years, won 15 races on him. He was so honest. I like my horses the way I like my people, honest and hardworking. He just always gave you an effort. If he wasn't good enough, he wasn't good enough, but he always tried. Hidden Lake was a champion mayor.

She was the easiest horse to run. A lot of good horses have a particular style. They're a closer. They're a speed horse. They don't like it inside. They don't like it outside. Anything you wanted to do, she would do it. If there was no speed in the race, she could make the running.

If there was a lot of speed, she can come from last. If there was a tiny spot in the inside, she was brave. She'd bully her way through. If she got floated wide, she wouldn't lose interest or hang on the outside. You could go to the gate with such a clear mind with her. She was a jockey's dream. And where does a jockey's dream come from? That question brings us back to breeding and back to Kentucky.

We know that less than 1% become grade 1 winners. It's coming up. After the break, I'm Stephen Dubner, and this is Freakonomics Radio. The most famous horse of the past 50 years, the horse that a lot of people have heard of, even if they know nothing about horse racing, is Secretariat, or Big Red, as he was known to friends, fans, and admirers. He won the Triple Crown in 1973, and he seemed to run at a pace that was all his own. They're on the turn that Secretariat is blazing along, the first three quarters of a mile in 109 and 4'5s. Secretary is widening now. He is moving like a tremendous machine. Secretariat is considered one of the best athletes of the 20th century, including humans. There have been books, films, there are still fan clubs, and a strong market for Secretariat collectibles.

But the best evidence of Secretariat's legacy is his bloodline. He retired after that Triple Crown season and went straight to stud, and he was kept busy for the next 15 years. American Pharaoh, the Triple Crown winner we met earlier, is a descendant of Secretariat. 19 horses ran in this year's Kentucky Derby. All 19 of them could claim Secretariat as an ancestor. He spent his stud years at Claybourne Farm in Central Kentucky. That area was the epicenter of thoroughbred breeding back then and it still is today. About 60% of all thoroughbred foals born in North America are born here in Central Kentucky.

That's Jill Stowe. She is an economics professor at the University of Kentucky. and she's been a horse person for a long time. I started riding when I was four years old when we moved to New Mexico. I was very fortunate to be able to ride horses across the desert. We showed quarter horses, hunter jumper, and 4AH eventing, and ultimately I settled on dressage. I have competed some a little bit at the regional level, mostly locally. I still do today.

I've got two horses. One is a retired race horse. These thoroughbreds are such athletic animals. When they are done with their racing career, they could be three, four, five, or six years old. They have a lot of life left, and they love to have a job. After getting her Ph.D., Stowe taught for six years at Duke, and then she saw that the University of Kentucky wanted to bring on an economist to study the equine markets. I couldn't believe that they would actually pay somebody to do that. It marries a passion that I've had since I was a very little kid.

kid with tools I was trained with in grad school. I see your school has an interdisciplinary equine program for undergrad, one of the biggest in the country. Can you describe that for me? It's a rigorous scientific-based degree program. There's no riding. There's some horse handling, but we really want students to learn both the bench science and the social science behind horses and the equine industry. Your students, describe what kind of occupations they may be headed for? You might be surprised at the breadth of careers in the equine industry. One of my colleagues, Dr. Lori Garkovich, characterized Kentucky's equine industry as an economic cluster.

So if you think of the horse farms and the racetracks as the nucleus of that cluster, you think about all the different types of professions that support the horses. You have professional services like accounting and marketing and insurance. You have veterinarians, ferriers, equine dentists, rehab facilities, transportation companies that specialize year-round and transporting horses across the United States. I don't know how many miles of fencing there are out here, but there's a lot of landscaping involved. Muck removal. There are professional organizations that help make.

manage the different breed and discipline organizations. We have laundromats that have special washing machines for horse blankets. Jill Stowe and her colleagues recently conducted a study which found that Kentucky has 31,000 equine operations on 3.5 million acres. An earlier study by the American Horse Council Foundation found that the industry supports 60,000 jobs in Kentucky and generates $6.5 billion. So yes, that's a lot of jobs. and a lot of money for one industry in one state. And there is one star of this industry, one star that shines way brighter than everything else. I am, of course, referring to the horse. Yeah, you need to come out here sometime for one of the September yearling sales. They've got

4,000 yearlings over the course of two weeks. They bring the horses out one by one. They look at their confirmation and they watch them walk and they look at their demeanor. And they can also go to the veterinary repository and look at radiographs. So even with all that information, I'm guessing it's still really hard to predict the value of a thoroughbred at one year old. It's a big gamble. It's a little bit like buying a house, except you can't go inside. Yeah, but you want this house to run around the block really fast. Okay, so let's go to someone now who doesn't just study the thoroughbred business, but is a high-level practitioner. My name is Mark Taylor,

and I'm the president of Taylor-Made Farm in Nicholasville, Kentucky. I'm glad to be here because the thoroughbred horse world is Freakonomics. What makes you say that? Well, it's very volatile. There's not many industries

or economies that it's a living, breathing creature. So your firm, Taylor-made, just give me a sense of what it is. We have approximately 125 employees full-time, and we cover almost all aspects of the thoroughbred industry. The backbone of our operation is we're a service company. We manage other people's horses. We board them on our farm.

We care for them. We also are focused on marketing and promotion for horses that do not live on our farm. We still provide services to help bring them to market either privately or publicly and help them maximize. their return. We do racing partnerships, which is our outreach to bring new people into the racing and breeding game. And then we have a stallion operation. We're the largest farm and marketer of horses in North America. On the stallion side, we're more of a boutique operation. As you speak, my mind is starting to understand just how many facets there are to this industry, how many different players, how much nuance there is. I'm also starting to understand.

Mark, how it is that the horse industry, which is not super visible to many people who don't care about racing or equestrian events, why it's still a pretty big industry. How would you describe the size and scope of the thoroughbred industry? So at Taylor Made, we roughly sell, on average, $150 million worth of bloodstock a year. I would say $120 million is going to be public auction transactions. 30 million is going to be private. Now, this has nothing to do with stallion breeding sales. That's just a different category. This is physically selling a horse. And I understand that a lot of that physical selling for you and for many others happens at the famous Keenland auction house in Lexington. What does Keenland represent for a company like yours? So Keenland is, I would say, the heartbeat of the whole horse industry in North America. They have two primary sales. They're September sales.

sale and their November sales. September is focused on yearling horses who have never been to the racetrack, never raced, totally unproven as athletes. They accumulate the best of the best there at Keenland. I think their gross in that sale was over 400 million last year. So, I mean, if the market's good, Keenland September's got to be good. If it's down, it hurts everybody. You don't sound like a person who likes to brag, but I know that Taylor made is a major player in the Keenland sales. Yes, we like to consider ourselves a microcosm of Keenland. We range between 10 and 12% of their market share.

It's basically quality and quantity is what we aim for. Let's say you have a new client or just a friend that you're advising or whatnot. How do you advise them to think about the ROI, the return on investment of a horse? It strikes me as though every horse is a long shot when you haven't seen them run yet. But I don't know. Maybe you'll tell me that there's more predictability than we think. So if I can, just to differentiate the breeding side to the racing side, the breeding side has more of a component of predictability to it. It's still unpredictable, but we've got a lot of experience in saying, hey, if we go buy this broodmare and she's carrying a foal, she's pregnant when we buy her, and we look at her pedigree, we look at her confirmation.

We look at the stallion who her foals she's carrying is by. We can create a pro forma that says we want to try to get this mare paid off through breeding foals out of her in, let's say, three years. So three babies. It doesn't always work out. Sometimes that first baby might pay for the mayor. Sometimes the first baby is small and it doesn't bring a lot. And so you're kind of behind on your projections, but you catch up on the second one. It's definitely not 100% predictable, but it is more so.

When you're buying a potential racehorse that's completely unproven, we know that less than 1% become grade 1 winners. So your chances of that happening are slim, but you can still put yourself in a position to get lucky. Perses in Kentucky are so healthy right now that you don't have to get a superstar. You don't have to be sovereignty who is the best three-year-old colt in the country right now to have success. When you look around the world at all the different markets, like real estate is one that almost everybody is interacted with at least a little bit. You recognize that the incentives between the different players can be at cross purposes sometimes, right? A broker who's representing a seller may have an incentive to encourage the seller to take the first decent offer rather than hold out for a higher one because the broker, share of that sale is relatively small. What about in your business? What are some incentives that

may be at cross purposes or things that you have to look out for? Your analogy about the real estate market is the exact same one that exists in what we do. We're incented to get horses sold for our customers. Now, sometimes when you're trying to determine your reserve price, the minimum you will take when you put the horse through the auction, you turn that number in with the auctioneer. It would be easy sometimes for us to always recommend a very conservative reserve number and to push for that because it does us more good if we just get the horse sold, right? But we give our customers three numbers. We give them a green light number. If you want to be conservative, you're going to get your horse sold if you put it in at this. We give you a

yellow light number. We can't guarantee it, but it's above 50-50. And then we have a red zone that we're like, hey, you might get this. Chances are that you won't, but you could get it. If you don't mind retaining that horse and you want to push for maximum return, you could set it here. There's a lot of other things in the business, honestly, that are, there's room for people to be self-serving. One of our mottos at Taylor Made is to always be more interested in the relationship than the transaction, walk away from the short-term profit. if you can help this customer have long-term success because new customers are very hard to find. If you can keep the one you have, you're much better off.

Mark, I'm just wondering, are you a big sports fan outside of horses? Yeah, college football and college basketball, I would say mainly. So especially if you follow college sports, you're well aware of second generation, even third generation athletes coming along, right? Their dads or moms were players. If you look at the NFL and the NBA, of course, you see that there as well. Where do you think genes matter more? Human athletes or horses?

That's a very interesting question. I think that they probably matter more in humans because all these horses are bred to run, right? Not all humans are bred to be athletes at all. People don't get together and say, hey, how fast was your 40 time before they start dating. So I think that if you get a really prolific athlete, they've probably got a bigger edge over the general population. If you take the thoroughbred industry, every single stallion was a very good racehorse. Now, some were better than others. And every mayor was bred to run. What's fascinating is on the stallion side, all these stallions were good race horses, but some of them were great

race horses and they command the best mayors when they go to stud. If you take a horse like Curlin, Curlin was horse of the year. He was a champion. He was just amazing. He was well-bred. The population of mayors that were bred to him, they weren't going to accept anything but really, really quality, right? So he's done great. He has turned into one of the best stallions we've seen in the last 30, 40 years in America. But then you look at other stallions. We have a horse at our farm named Not This Time. He's 11. He started off with a modest stud fee. It was only 15,000. We couldn't be picky. He got bred to just whatever mares people would send in. I mean, we had some preferences on what they looked like and bloodlines and stuff. But he's risen from 15,000 to 175,000 in stud fee. His genetic switch is flipped on. I'm not a geneticist, but some of these horses, they have the ability to pass on their talent. other horses don't for whatever reason. It's a great mystery. What is the lifespan of a stud then? Most of the time they get over 20. Their fertility starts to wane and usually their popularity is going

down by that time as well. The prime for a horse is in that 10 to 17 range. And for a horse like not this time or the others that you've had that were successful, how many dates can they have in a year, let's say. I'll give you a little bit of history. Back when my dad was working at Gainesway farm, they were really pioneers in breeding mares. They were the first breeding shed to actually breed mares on Sunday. Everybody else used to take a day off, and they were like, hey, if you're putting up your money and your mare needs to be bred, we're going to breed them on Sunday. I remember my dad would drag us to 6 a.m. Mass before he headed to the breeding shed. Their heyday was the 70s and the 80s. Back then, horses could breed a max of maybe.

60 mares. They did not have the tools, ultrasound, to predict exactly when the mare was going to ovulate. Now they've come up with hormone therapies that can trigger ovulation. If the mare is close in her cycle, maybe she wasn't going to ovulate for three more days, but her window of availability for the stallion, she needs to be bred today. They can give her this shot and it will trigger ovulation. The number of breedings per conception has really gone down. It used to be maybe three and a half or four, and now it's like one point two. One stallion can breed a lot more mares with the same amount of physical breeding. It's really staggering. Some of these stallions can breed over 200 mares. Lifetime or year? No, per year. Wow, that's a busy social calendar. Yeah, they've gone from 60 to 200 plus. So if each of the popular stallions can breed three and a half times what they used to breed, it's pushing out some of the next tier down prospects. So fewer stallions breeding more mares each is what we're dealing with, which then puts pressure when you take those babies to market. You've got maybe 120 or 140 in the

September sale all by the same stallion. You better hope that you're one of the best ones or you're going to get picked over. When you've got a stud who's working with 200 mares a year, what is that horse's state of mind? Is it enjoyable? Is it exhausting? What do they do to relax afterwards? Okay. So my dad had no formal education, but he was this constant learner, intellectual curiosity, I mean, beyond belief. So he put a lot of thought of this. How do you keep a stallion's psychological state where you want it to be? If you go back to when these horses were wild, stallions are violent with one another in the wild.

They're protecting their herd of mares. So this is hardwired into their DNA that I don't want any other males around my mares, and I'm going to be very aggressive and drive them away. So at Gainesway, one of the flaws when they first started was they had one big barn that would house like 30 stallions. And these horses get smart, right? okay, I just heard a trailer pull in. I heard a mayor knicker, and there's my buddy across the hallway, and he's heading out. The other 29 are thinking, that's supposed to be my mayor, and they're

showing their teeth and pinning their ears, and they're getting all worked up. So that was not good for the psychology. These horses would become more aggressive towards humans, aggressive towards other horses. They were unhappy. So my dad redesigned that stallion complex. He made the barn smaller, and more accessible to turn out. My dad's thing was horses are meant to be outside unless they absolutely have to be in because of their breeding schedule or because the weather is so bad

that we just need to give them some shelter. So we put a lot of thought to that in tailor-made. Each stallion just has one roommate and each horse has a small little holding pin. You don't even have to hook a lead shank onto them. You can just open their back door and they walk outside. They can eat grass, get sunshine, roll around,

So that's what they do between breedings. You know, it's their version of smoking a cigarette. They go out there. They roll around, eat grass, sunbathe. And where does the breeding happen? We have one breeding shed that's designed for safety. We've got cameras in there. We've got a lab that has a microscope for checking semen count and all those kind of things.

It's about a 50-yard walk from each of the barns. Now, each horse is different. Our horse, not this time, he's got a great libido. He likes his job, and he's very fertile. The joke is all he has to do is look in a mare and she gets pregnant. I mean, it's just amazing how fertile he is. So it's not as burdensome for him. When horses get older and their fertility goes down, they just get tired of it and they don't want to do it. Not this time can breed three, possibly even four mirrors in a day if he absolutely has to. Whereas some horses, it's one a day at max, and a lot of times they need a day off. So we spent some time with an economist who imports and sells dressage horses, not race horses. And in that realm, most of the transactions are private, whereas in your business, there are these big public auctions and there's much more information available. Why do you think there's so much transparency in your market and so little in his? I can't speak for why there's not in their realm in our world.

It's about efficiency of the marketplace. Keenlam will sell 4,000 yearlings. It's kind of like the NFL draft. And the show days leading up to the auction is kind of like the combine. Everybody's looking at it. They're studying the metrics. They're watching videos. They're doing DNA testing, heart scans, veterinary checks.

It's very efficient on the thoroughbred side. And maybe it's our volume that requires that. But, you know, if we were charged with going out and selling these horses ourselves and we didn't have that marketplace to take them to, it would be impossible. There's just no way. The beautiful thing from my perspective about the thoroughbred industry, it's a big tent. There's room for all demographics and socioeconomic levels. There's people who are working for tailor-made as grooms for the first 75% of the Keenland-September sale.

They tell us, hey, my last day is on this day and I'm going to be gone. And then the next day after they leave, you go up to the ring and they're back there using the money that they just earned to try to buy a horse that they're going to resell the next spring. So what I love about our industry is everybody rubbed shoulders from the grooms to the billionaires. The starting gate is the great equalizer. It doesn't care if you spent $5 million on the horse or $5,000 on the horse. A lot of times the little guy can upset the apple cart. I don't think that happens in the show jumping world. I don't think some guy comes in with a $2,000 show jumper and wins one of these things.

It is a nice romantic notion to think of grooms and billionaire is united by their love of fast horses. But grooms usually make minimum wage, and a lot of them are immigrants. ICE, the U.S. Immigration and Customs Enforcement Agency, recently raided a Louisiana racetrack, arresting 80 people who were said to be in the country illegally and four more on additional charges. Coming up after the break, what's it like to be a backstretch worker today? And how does one old breeding rule keep Kentucky on top of the thoroughbred industry? I'm sure there's other states that would love to have these stallions. I'm Stephen Dubner. This is Freakonomics Radio. We'll be right back.

Oscar Gonzalez is vice chair of the California Horse Racing Board. The California Horse Racing Board is a regulatory agency charged with ensuring that our equine athletes and jockeys and other personnel are safe. Before that, he held senior positions in the U.S. Department of Agriculture. And before that, Gonzalez worked at Delmar Racetrack in California alongside his grandfather. An immigrant from Mexico, a hardworking individual who really loved horses. Oscar started young at Del Mar before he was even a teenager. I distinguished myself as a really good groom, taking care of four or five horses. And then from there, you really learn about other ways to fill other roles, whether it's night watchmen or holding horses for the shoer, the farrier, or the veterinarians.

So there's always a way to make an honest dollar around the racetrack. A lot of track workers today are immigrants, most of them from Central America. The trainers who employ them have to apply for visas. The primary type of visa that is being used on the backtrecht are H-2B visas. H-2B visas are subject to a cap, and there is a definite need for an expansion of that cap For a certain allocation for industries like horse racing, a trainer can sometimes have different parts of their operation in multiple states, each state requiring different things from pay to housing to transportation. The standard visa program, unfortunately, it almost is like a one-size-fits-all.

To get an H-2B visa, an employer has to show that no American workers want the jobs they're hiring for, and an H2B is only good for a maximum of three years, at which time a worker has to leave the U.S. for a few months before they can be readmitted. Oscar Gonzalez, like many people in the racing industry, is eager for immigration reform. In fact, he sees the racing industry as a potential model for reform. I really believe that if we were to tackle the immigration challenge for horse racing today, that within five years, measures of success would be a well-year. trained workforce that allows his or her employer to expand. It would also provide workers the opportunity to engage in their community to start businesses to go back to their home country when an emergency happened. But it would also allow for these workers to be able to train

the next generation of racetrack workers coming from places like East Los Angeles where I grew up or Baltimore, or Brooklyn, or Queens, because we have seen moments in horse racing where Americans do not want to do the job. But it is also going to require the industry to step up its game and how much we pay workers. I believe we could very well come up with a model program to show other industries, how it can be done. I went back to Mark Taylor of Taylor-made farm in Kentucky to ask him about the horse industry workforce and about President Trump's immigration policy. It's definitely put a lot of fear out there for people that are undocumented.

Those people are a big part of our industry and they're vital to our ability to function. And during Trump's first administration, we actually started participating in the H-2A visa. These individuals are screened in advance. Most of the people that we bring into the program have a referral from somebody who has worked for Taylor Made in the past. And so they're from usually Guatemala or Mexico. And we bring up a huge portion of our labor force and they stay for 10 months and they go home for two months. Now, the government sets their hourly rate, and they've been bumping it up every year, I think, as a disincentive to hire foreign workers. But in our case, we can't find enough domestic workers to fill these spots.

So it's costing us more, but we're getting a better job done because we have very reliable workers who are happy to be here and they have legal status while they're here. So it's been a big win for us. And there's no annual cap on H2A visas, I believe. Is that right? Not that we've ever encountered. We've increased our amount annually. Let's pull back for a second. Can you explain how Kentucky has been able to retain its hold as the epicenter of thoroughbred breeding? I know there are other places around the country and around the world that do it. But Kentucky, especially the Lexington area, seems to still be the place that either sets a standard or maintains a great deal of momentum. It's a market. that people can trust, even new entrance to the market can trust. But beyond that, can you talk about why Kentucky remains the epicenter? There's a lot of people who will say it's the land, right? We've got this limestone soil, and it is a lot easier to raise a good horse in central

Kentucky than it is most other places. Now, modern nutrition that you can get out of a feed bag has helped, but there is just something about it. The bone is better. The horses are stronger. Other states, you know, Florida, I have a lot of respect for Florida horsemen, a lot of good horsemen down in Ocala. And that's the epicenter for the two-year-old sales, the people that buy our yearlings and go down there and resell them in sales where the horse has to do a workout. I think it's a more difficult place to raise a good horse, so you have to be a better horseman down there. Difficult why? Yeah, the heat. I just don't think the soil is as good. The other thing that springs up in central Kentucky, we've got

the best vet clinics. We've got the best blacksmiths. We've got every modality of horse care you could imagine. We've got acupuncturist and masseuses and chiropractors. If your horse has any problem, you're just a phone call away and services can be provided that day. The number one reason is location of the stallions. My dad worked for John Gaines out at Gainesway and Mr. Gaines, for anybody who wants to Google him, he invented the Breeders' Cup. He started He started the Kentucky Horse Park. He started an organization that's now a lobbying group called the N.TRA National Third Road Racing Association. My dad was the horseman.

He was the business guy. They made a good team, but he was a visionary, just brilliant, brilliant guy. And he said, stallions are the reason Kentucky is the epicenter of the business. If all the stallions moved to Nome, Alaska tomorrow, the new epicenter would be Nome Alaska. The mayors would have to follow. So, Mark, I understand that artificial insemination is forbidden in thoroughbred breeding, even though it's common in many forms of animal husbandry, including most forms of horse breeding. So why is it forbidden in thoroughbreds? I don't know exactly why it is, but my father, he was in the standard

bread business as a young man before he converted over to thoroughbreds, and they have artificial insemination. When I was a kid, I can remember my dad saying. and after I'm gone, never let them do artificial insemination in thoroughbreds. It'll ruin the breed. And I was like, why? And he said, well, they'll be able to overbreed these stallions, and it shoves out all the little stallions. You know, one horse can breed an infinite number, basically.

Ironically, even though we don't have artificial insemination, technology has allowed us to breed 200. He couldn't even imagine that at that point. So we've gotten there naturally. It sounds as though Kentucky breeders have had a big incentive to forbid artificial insemination because that could destroy the concentration of stallions in Kentucky. Is that the case? Yes, I would say I've never really heard anybody else talk about that, but to me, that's just a fact. And the tax revenue that comes from that, I'm sure there's other states that would love to have these stallions and they might cut favorable tax deals if they could read. relocate these things and bring the business to another state. So yeah, I think that that's a big part of

why it's here is because the mayor's got to stay with the stallions. Can you give me a preview of this year's Keenland sales from your perspective? What are you anticipating? What are some things you know and some things you don't know? What's a total dollar amount you're hoping to come away with? This time last year, there was tons of uncertainty because we're in a presidential election year. And we also had the depreciation laws at this point last year was you could write off 60% of a yearling purchase in the year you bought the horse. And it was on a 20% annual decline. That's the way the schedule was going to go. So in 2025, it went down to 40%.

Now, the so-called Big Beautiful Bill actually had language in there that boosted the bonus depreciation on equine purchases. equine assets investment. So I think that's a really good just driver of more investment. And there just seems to be a lot of energy in the business right now. I have a really good feel about the September sale. I think last year they set a record 400 million in change. I'm hopeful that they can get there again. Here's an interesting statistic. There's 1,400 yearlings by Sires who this This is their first crop of babies. Last year, there was only 800. So in that crop, you've got flight line.

You've got Life is Good, which are the two highest-priced superstars. But you've got a lot of other good horses, Cyberknife, Jack Christopher, and then a horse like Not This Time who's coming up through the ranks. So I feel good. I'm always nervous, but I'm pretty optimistic going into this year's edition of the Keelan-September sale. Coming up next time in the third and final part, of our horse series. We go to the Keenland-Septemberg sale.

If you make the right decision, you can end up with essentially a living, unlimited ATM machine. Cheers. Cheers, cheers, cheers. And the King. Cheers, guys. But does a strong sales market mean that the sport is strong? The racetracks in the industry themselves spend as much time lobbying politicians as they do worrying about their fan base. That's next time on the show.

Until then, take care of yourself. And if you can, someone else too. Freakonomics Radio is produced by Stitcher and Renbud Radio. You can find our entire archive on any podcast app, also at Freakonomics.com, where we publish transcripts and show notes. This episode was produced by Augusta Chapman and edited by Ellen Frankman. It was mixed by Eleanor Osborne with help from Jeremy Johnston and Jasmine Klinger. Special thanks to Nick Nevis for field recording in Kentucky, thanks also to Kevin Crosby and the whole Coolmore at Ashford Stud team. The Freakonomics Radio Network staff also includes Alina Cullman, Dalvin Abouaji, Elsa Hernandez, Gabriel Roth, Greg Ripon, Elaria, Montenicourt, Morgan Levy, Sarah Lilly, Tara, Tara, Tara, Tara, Sarah Lilley, Teo Jacobs, and Zach Lipinski.

Our theme song is Mr. Fortune by The Hitchhikers, and our composer is Luis Guerra. Beer for my horses. Is that a country song? Whiskey for my men and beer for my horses. Can you sing a little bit of it? No. The Freakonomics Radio Network, the hidden side of everything.