John A. Bell, III
Lexington, Kentucky
March 29, 1991

(Transcript of lecture) 

     This award is presented annually to an entrepreneur who has utilized leadership and management skills to make a significant impact on the equine industry. Criteria used in selecting the award winner are as follows. The individual has introduced original, creative, and successful business techniques; has demonstrated willingness to take risks; has utilized vision and ability to make a business or organization more profitable and effective; has gained the respect and admiration of business associates.
     John W. Galbreath, a self-made man, distinguished himself as a businessman, as a horseman, and as an individual. Born in Derby, Ohio, he established a real estate company that developed major projects across the world. His global business activities include real estate developments throughout the United States and in may foreign nations. His other properties include the Pittsburgh Pirates baseball team, which exceeded Mr. Galbreath’s ambitions by winning two World Series titles.
     Mr. Galbreath headed the committees to rebuild Aqueduct and Belmont Park. In addition, Mr. Galbreath was the only man ever to breed and race a Kentucky Derby winner (Chateaugay and Proud Clarion) and an Epsom Derby winner (Roberto). He received Eclipse Awards as racing’s ‘Man of the Year’ in 1972, and as the country’s outstanding breeder in 1974. Mr. Galbreath imported such outstanding stallions as Ribot from Italy and Sea-Bird II from France. Darby Dan-bred champions and major stakes winners include classic winner Little Current, champion filly Tempest Queen, leading sire Graustark, Breeders’ Cup classic winner Proud Truth and champion Sunshine Forever. Through the years, Darby Dan Farm has bred more than 90 stakes winners. The racing industry lost a real friend when he passed away in July 1988 at the age of 90.
    John W. Galbreath, father of two and grandfather of seven, had the foresight and the leadership necessary to sustain enterprises all over the world. He provided leadership to innumerable organizations for the betterment of the Thoroughbred industry, including serving as chairman of the board for Churchill Downs.
     The Equine Administration Department of the University of Louisville is proud to honor a man who so distinguished himself as a businessman and as a friend through the presentation of the annual Galbreath Award.
    John Arner Bel, III was born in Sewickley, Pennsylvania in 1918. He is a graduate of Princeton University and attended Harvard’s Graduate School of Business Administration. He was an officer in the Army Medical Administrative Corps during World War II.
      In 1940, John Bell purchased his first yearling filly at the Keeneland Sales. In 1946 he moved to Lexington and leased land to break yearlings for Max Hirsch. He purchased the original tract of Jonabell Farm in 1954 and gradually expanded the farm to its current 840 acres. Jonabell Farm specializes in the boarding, care, and management of breeding stock as well as the preparation of horses for auction. Jonabell has produced many top racehorses including Battlefield, Never Say Die, Damascus, and Green Forest. Major stakes winners for Jonabell include Try Something New, Highland Blade, and Summing as well as the Breeders' Cup champion and Eclipse Award winning two-year-old filly, Epitome. Since its founding in 1946, Jonabell has bred, raised, or sold more than 300 stakes winners.
     In 1949, John Bell was taken on by Thomas B. Cromwell as a partner in the Cromwell Bloodstock Agency. Cromwell, North America’s oldest bloodstock agency, was founded in 1935. Today Mr. Bell is the chairman in this full-service bloodstock company. In addition to public and private sales, Cromwell performs appraisals, private insurance, undertakes research, handles seasons and share sales, and operates an advertising agency.
         Mr. Bell has and is serving the racing industry in many capacities, including membership on the board of stewards of The Jockey Club, leadership in the Grayson Foundation, and chairman of the American Horse Racing Federation and a Trustee of the American Horse Council. He has also served as president of the Blood-Horse magazine, director of the Thoroughbred Owners and Breeders Association, president of the Thoroughbred Club of America, director of the Keeneland Association, director of the Breeders’ Cup, and director of American Live Stock Insurance Company. Mr. Bell, father of four and grandfather of eight, exemplifies the characteristics on which this award is based: integrity, honesty, experience, and expertise. The Equine Administration Department of the University of Louisville is please to recognize John A. Bell, III as the first recipient of the John W. Galbreath Award.    

Copyright 1991, Equine Industry Program

Equine Industry Program
College of Business and Public Administration
University of Louisville
Louisville, KY 40292
Dr. Robert G. Lawrence, Director
Office: 502.852.7617
Fax: 502.852.7672   

Robert Lawrence: 

     The Galbreath Award is designed to recognize those in the horse world who have won the respect for their entrepreneurial success and who have also given priority to all those things we care about as human beings.
    The Galbreath Award winner is honored at a luncheon involving leaders from throughout the industry, but we have also asked the 1990 winner to address the Equine Industry Program students on campus during the spring semester.
    The 1990 winner, John Bell, was generous in sharing with our students his knowledge and experience. In turn, the university believes these thoughts should be shared with a wider audience in the horse industry. Therefore, we are pleased to present this booklet containing Mr. Bell’s remarks to the Equine Industry Program students.
   We would again like to express our appreciation to Mr. Bell for his service to the industry and to our program and also to thank the many others who helped to make the initial Galbreath Award a success.

 John A. Bell, III:

      It’s pretty hard to condense 50 or 60 years in the horse business into a short session. Trying to put myself into your position, what would I like to hear if I were sitting out there rather than standing up here? Rather than for me to tell you how smart I am I’m making the assumption you are all interested in some phase of the horse industry. To undertake a major in Equine Administration, you’ve got to be more than interested; you’ve got to really have a love for the horse or some competition or some aspect of racing or the glamour or all the things put together.
     Today, racing is not what it once was; for years it was the only game in town where you could legally gamble on sports. In fact, it was one of the few legal opportunities to gamble, period. As such, being the only game in town, I think the pari-mutuel tax started off at 10 percent and the racetrack operators were delighted to share 10 percent with the state governments. That left them 5 percent, but in those days 5 percent was a license to steal. All the tracks made money; everybody did well. Business just went through the roof. Fortunately for me, it went that way nearly the whole time I’ve been involved in it. But today, we have competition from all angles. The states are literally our partners. We do all the work in the horse industry and we give the states a percentage of whatever we make, and they don’t do anything. They don’t even listen to our problems. The states are our partners and they take a percentage of the handle; and they love it because a tax dollar on pari-mutuel betting costs very little for them to collect. I think I once saw some statistics that it cost them maybe three or four cents to collect a dollar. It was a wonderful thing and that’s really why they like the simple way of raising money for the state to skim it off the top, and not to have to do too much to get it and it wasn’t too controversial because you weren’t hurting anybody.
     Today the racetracks are finding out that their portion of the pari-mutuel tax is really not enough to run the racetrack and to give half of what they get to the horsemen who are putting on the show. So that’s one of our basic problems. The key thing is that the legislators don’t understand the industry. Not too many people in the industry understand all aspects of racing. It’s made up of so many segments and each segment is trying to get the biggest slice of the pie that they can get, instead of trying to increase the size of the pie so that their slice would increase. It’s a complex industry; it’s made up of so many segments and I’m sure you’re aware of most of them. But it’s important for you thinking of going into this as a career to understand the complex interrelations between the various groups within the horse industry.
     As I said, times are really not as good as they have been. We are in, as most activities are today, a recession. Whereas we were once the only game in town now we have the lottery, river boat gambling, Greyhound racing, jai alai, casino gambling, and sports betting, both the legal sports betting and the illegal. There’s so much competition for the sports entertainment gambling dollar that we have to get better or else. With that background, if you’re thinking about going into some facet of the industry, you’ve got a wonderful opportunity to gain that type of understanding here at the University of Louisville.
     You should understand there are going to be fewer jobs available: the kind of jobs college graduates would hope to attain. You’ve got to be prepared; you’ve got to know something about finance, marketing, statistics, business, and government. You can learn that here. It’s unique to study here and be able to see both what’s going on within the industry and to learn sound business principles that are taught in the business school.
     The horse industry has a language of its own. It’s almost as though you have to study a foreign language to understand what people in the industry are talking about. That’s another important concept, which you will learn here. If you combined the opportunities you have here with genuine desire to be a part of this industry you’re way ahead of the competition. It’s now very difficult to get on-the-job training. During the expansion period in the 1980s that was possible. If somebody loved horses and they wanted to get in the horse business, you’d hire them and teach them over a period of time. Maybe they’d work out and maybe they wouldn’t work out but that was the way most people got into the horse business. I love horses! Well, that’s great, but today you’ve got to have a lot more than that to land a job.
     Another thing, (I think it’s in your curriculum) is the relationship between business and government. We exist at the whim of the legislator casting his vote. He can wipe us out just like that by passing legislation that either terminates us or creates an unfavorable environment. We need to understand the relationship between government and business, particularly this business because they are our financial partners, and we have to be able to get our message to them. What better way than if you are prepared to explain your position in an intelligent way so that they can understand it.
     On the way down here, Mike Nolan was kind enough to give me a sheet of questions that you had asked. To me these questions are what you’re interested in and there’s no use in me talking about things you’re not interested in. I’ll try my best to answer these questions based on my own ideas and experience. I have at one time or another done almost everything that is done in the Thoroughbred world. What I’ll do is to go through these questions, I’ll read the questions and then respond to each one. At the end of that period, if there are other things you want to know about, I will try to help you because I think that will be the best way to work this. I’m just going to take these the way they came and not try to impress you with a lot of statistics.

QUESTIONS:

Q: What do you feel should be done about the simulcasting issue? It was designed as a tool to assist in expanding racing’s fan base and to help the horsemen and not to replace live racing and deprive horsemen from receiving their full share of simulcast profits. 

Bell: I think this may be the one most important question facing racing—Standardbred, Quarter Horse, Appaloosa, or Thoroughbred. It’s a very tough question. You probably know the American Horse Council is a group in Washington D.C. that represents all horsemen from the Pony Club to racing—every breed, every organization. They have the American Horse Racing Federation, which is an arm of the council. It deals with racing issues. The federation has the most brilliant minds in our industry working on this very question. They have formed a subcommittee to study the simulcasting proposals made by the Thoroughbred Racing Association’s “1995 Committee.” The federation hopes to come up with an answer within a year and I’m supposed to come up with an answer now.
     I think the main thing is to realize that change is with us all the time. Everything changes, nothing stays the same. Racing is changing. It’s pretty hard to recognize racing from what it was when I first saw it in Great Falls, Montana where I went to my first race and what it is today.
     Simulcasting has been in Europe, France, Japan, and Australia and many other foreign countries. Simulcasting is a tool to increase the handle, which in turn increases the money available for purses, the track, the state, and other things. Also from the government’s point of view, it’s better because the more money wagered, the more tax revenue they get.
     Does everybody know what simulcasting is? Simulcasting is simply a spot away from the track to flash a picture up on a screen and have betting facilities so you can bet in the simulcasting parlor just as you would if you were at the racetrack. As a matter of fact a lot of people at the racetrack just watch the television anyhow; they don’t bother to look at the horses or go out to see the race. Simulcasting is presenting the race live from one state to another or within one state from the track to another outlet.
     There’s no question that as of 1991 it is certainly a marketing tool to increase the sale of our product, which is the outcome of a race and people betting on it. Everything in the horse industry that I’m talking about depends on the guy that walks up to the mutual window and says, “Give me two dollars on number two.” That’s where it’s at, everything builds on that. This is a gambling business. If they don’t bet, the tacks haven’t got any money, no purses to run for, there’s no reason to buy horses for big amounts, there’s nothing. I think that simulcasting is a must; as a matter of fact, there’s no way to stop it now. There are horsemen’s groups that are fighting this because of the fact that they’re worried nobody will be coming to the racetrack and the racetrack might dry up. I think there are plenty of racetracks drying up now anyway, with or without simulcasting because they are presenting an inferior product than say the Greyhound track up the road somewhere. There’s going to be a certain amount of attrition with the number of tracks. But the overall picture of the future of horse races is that you’re certainly going to see simulcasting in it in some manner. It’s very comforting to know that what I believe to be the best minds that we have in racing are working with the American Horse Council on this American Horse Racing Federation and they realize how complex this problem is and they’re not trying to solve it today or tomorrow, they realize it’ll be a long-term pull. I think that it will replace live racing at certain marginal tracks. It’s not going to deprive horsemen from receiving their full share of simulcast profits. I think the horsemen will undoubtedly get what is equitable and fair of their share of the simulcast profits. Horsemen have got to think not just, “I want more of this;” they’ve got to think, “tracks have to survive so I can earn something. Hopefully, it will be enough to make it profitable for me.”

     That’s question number one. We can come back to any of these but let me go through all the prepared questions, and then you can ask more.

 Q: Who has been the most influential person in your horse career?

 Bell: That’s a tough one. I guess the answer to that would be a trainer by the name of Max Hirsch who trained Assault to win the Triple Crown. When I was around your age, I was uncertain about what I was going to do. Remember I never had a job; I went to college. I worked during college, don’t misunderstand, but I never had a career job because I went right from college into the army and then I came out in 1946. I didn’t really know what I wanted to do. I was kind of tired of people telling me what to do and that’s why the horse business appealed to me because I think it’s almost the last frontier of rugged individualism. You can do almost anything you’re big enough to do in the horse business.
     Max asked, “What are you going to do?” I’d known him before because he had trained some horses for my father. I said, “Hell I don’t know what I’m going to do.” He said, “Well, you rent a place and I want you to break my yearlings.” These were yearlings that he had bought at the Keeneland sales. I said, “I don’t know anything about breaking yearlings.” He said, “That’s why I like you. You’ll do what I ask you to do. You’re not one of these wise guys who has all the answers. I don’t want to fool with tem because I want them broken the way I want them broken.”
     That was the way he started me in the horse business. He was a wonderful man; he ran away from home when he was 14 years old in Texas. He got a job as a jockey; in those days you could ride 14. He’d done it all and he was probably the most thorough horseman I’ve ever known. He had a great influence not only on getting me started but teaching me about what actually makes a horse run and what doesn’t, and what makes people run. He was a great influence on me without question. 

Q: What impact do Japanese investors have on the Kentucky horse industry? 

Bell: Of course it makes a difference on what year you’re talking about because the Japanese came on the scene about 25 years ago and started buying horses. At that point the horsemen were all glad to see the Japanese. If you had a horse you didn’t know what to do with you said, “We’ll sale it to the Japanese.” It was great because they bought everything. They thought if they bought a horse from Kentucky that it had a good label on it. It was like buying a designer dress. If it had the right label, it was good.
     They got really burned in many instances, so they just stayed away for a long time. Now they are just beginning to come back, I’d say in the last three or four years. Each year it’s a little more. They are now taking advantage of two things: the weakness of the dollar verses the yen, and also the fact that our prices have come down. So they’re coming over here and they’re buying lots. Probably their most significant buy was when they bought Sunday Silence who won the Derby down the road at Churchill Downs. I think they paid $11 million for him. That is an impact. But that’s only going to help one guy, or three guys in this case: Whittingham, Gaillard, and Hancock. But they are our best bet because that’s the new money on the horizon now because the Arabs can hardly come over here and throw their money around while their people are starving and their oil wells are burning up in the Middle East. I would say the Japanese are what the summer sales are about. They come to the select sale and that’s like going to Tiffany’s or something. But they are not going to take a meaningful number of horses but they are going to spend money. 

Q: What effect does a major racehorse retiring to your farm have upon the bookings of other stallions at your facility? 

Bell: I think a major racehorse coming to one’s farm indicates that somebody has faith in your farm to send a major horse there, so the farm can’t be all bad. There’s not too much spin off except that you pick up a few seasonal boarders that might ship mares in to breed to that horse. You might pick up the odd mare that when you fill up the major horse’s book you might say, “We don’t have any more seasons to that horse; how would you like this one?” We’re out of butter pecan today but we’ve got some lovely cherry jubilee down here. I think it’s got to be a plus but it’s not earth shattering.
     I will say a major horse, we hope, is Housebuster who was voted champion sprinter. He is coming to our farm next year, which is nice. I hope he’ll spur the bookings on the others who aren’t quite so popular. 

Q: What is the best method of entering the business side of the horse industry? 

Bell: I don’t think entering the business side of the horse industry is any different from entering the business side of any occupation. The same criteria applies going into any enterprise. The best thing I can think of is to be prepared and have as much on your resume that sounds and looks good that you possibly can. The business side of the horse industry: it’s nearly all business today when you’re talking about racing. I’d have to know more specifics on whoever submitted this question as to whether you want to go into the farm or some of the many service industries. If you stop and think about it, there’s hardly anything that doesn’t touch the horse business: I mean the hotel business, the airplane business, the rental car, the veterinarian, feed, van, you name it. There are an awful lot of allied activities so I’d have to know what you’re talking about here. 

Q: How common is in-breeding in the Thoroughbred industry? Do you agree with the practice of in-breeding? 

Bell: That’s a nice question but it is not really a very practical question. There are still a few people around that are involved with breeding for fun and the sport, not many, because Uncle Sam has taken care of that. You have to show that you are in business or they are not going to allow you to write off this, this, and this against your income if it isn’t a business. If you are doing too many experiments with in-breeding and your yearlings are not selling well as a result of your somewhat unorthodox practices you could be in trouble. I don’t think there are too many of that kind of breeder around now.
     In the old days there used to be people say like Bob Kleberg of the King Ranch, who incidentally Max Hirsch trained for. Kleberg developed a new type of Quarter Horse and they came out like peas in a pod. They were in great demand. He had done that through in-breeding. He came out with a new breed of cattle, the Santa Gertrudis cattle, which are good for the tropics and sub-tropics. He did that through in-breeding. He tried in-breeding with his Thoroughbred horses but he wasn’t as successful with the Thoroughbreds as he was with the cattle and the Quarter Horses. When you’re breeding racehorses you actually have to breed for soundness because if a horse isn’t sound for racing you’re running the risk of some transmissible structural conformational defects by in-breeding and they pop out when you’re not really expecting them. In-breeding is good if it’s used properly and not to the exclusion of other things.
     Actually, we bred a horse called Battlefield that we sold as a yearling. He was in-bred to Fair Play but actually what we were doing was in-breeding him to a mare called Fairy Gold which appeared three times in the first three generations. That was what we were trying to do because she was such a good mare. Battlefield was a champion two-year-old and one of the best three-year-olds, it worked in his case. But for every Battlefield there are about ten thousand that aren’t. 

Q: Do you think the horse racing/breeding industry has hit rock bottom? 

Bell: I think we have a way to go. I think we can go further down and I’m afraid we probably will. 

Q: What to do you think is the single biggest problem facing the horse industry today? 

Bell: To hang a label on it, I think the single biggest problem is the same with horses as it is with humans, chemical abuse. I firmly believe it’s the biggest problem in humans in the United States. Horseracing is grappling with the medication issue. One of the big problems you should realize is (it took me a long time to realize it) that there are approximately 50 different racing jurisdictions in racing and there are no tow places where racing is the same. In basketball you’ve got the same dimensions on every court.
     Racing is a different environment; you have a different climate. You have different types of owners, you have different types of trainers, you have different tracks, different veterinarians, different racing commissions, and no two of them are alike. It is so hard to say that something that works in New York will necessarily work in Omaha, Nebraska. Something that works in Longacres in Washington doesn’t necessarily work at Louisiana Downs. Almost every state has a different rule on medication, which is very confusing because horses travel to a lot of states. The good ones, at least, go race in various places and they’ve got to race under one set of rules here and another one there. Sometimes they just have to cross the river to get a whole new set of rules.
     The biggest problem is racing’s image; public perception of racing is not good. The public thinks that there are a lot of crooks in racing, and they think a lot of strange things are done to horses. We have to get a uniform rule, we have to have a uniform policy, and we have got to get laboratories that can find what’s in the urine sample and the blood sample. This is a tremendous problem and it won’t go away. 

Q: What is your position on Equitrack? 

Bell: I don’t really have a position. I would say that some of our racetrack surfaces are not good. At times they are unsafe and cause an awful lot of unnecessary breakdowns. Obviously, Equitrack is an effort to improve that situation. I would say if we can improve our racing surface, we should do everything possible to make those improvements. I wouldn’t say as of yet I think Equitrack is the answer, but I’m not “anti.” 

Q: Are all your horses homebreds? Do you buy any through the sales or privately? 

Bell: We have a farm and we have usually 100 to 125 broodmares on the farm. At least 80 percent of those belong to other people. They’re absentee owners and we keep their mares, raise the foals, and either put them in the sales or break them on the farm or send them to trainers or do whatever the owner wants done. Basically that is our business. Our own average broodmare band is about 20. Most of their foals are headed to the sales; occasionally we’ll keep a special one to race. The ones that don’t do well in the sales we’ll sell out of the racing stable. I’ll buy a horse anywhere if I think it needs buying. That would be through a sale, privately, or whenever or whatever or as in-utero or as a ten-year-old or whatever. I’m very flexible on that. I buy them wherever I can find them if I have the money to pay for them. 

Q: What do you think about top U.S. breeding stock being sold to the Arabs and Japanese? Do you think this will be detrimental to the U.S. horseracing economy? 

Bell: Again I’ll go back to what I said earlier: This is the last bash in free enterprise. If somebody has a horse and somebody wants to buy it; it doesn’t make a difference really whether if it’s an Arab, Japanese, European, or whoever. If you have a willing buyer and a willing seller, you sell them a horse. I don’t think this is going to be detrimental to the horseracing economy. I mean, go back again to what I said: everything is changing. There was a time when we went to over to England and we collectively, that’s we all over the United States, bought breeding stock abroad and brought it over here when we the price was right. When their economy was down and the dollar was strong and their pound was weak, we bought their horses. Now they’re coming back and buying our horses. The good thing about the horse is you can pick it up and move it. You can put it in an airplane and take it to Japan. You can’t do that with a skyscraper or a parking lot or something like that. I just think that’s free trade, and thank God it is. I don’t think it’s damaging the industry. 

Q: What is your opinion on the use of Lasix in the racing industry? 

Bell: We could spend a whole week on that one. For a long time I was a hay, oats, and water man. I’ve come off that a little bit racing in California. We have had a couple horses that raced well on the grass and we’ve taken them to California. After you choke on that smog out there around Hollywood Park and the sea level humidity around some of the other California tracks, you realize that Lasix isn’t all bad.
     There’s a school of thought that says if you have controlled medication that you reduce the temptation to use illegal prohibited medication. I think the California experience has shown that you can use Lasix. The horses are better for it, performance is more uniform, and the public knows when a horse is on Lasix, and no one is getting a competitive advantage. That has gotten me to reconsider my philosophy about the Lasix issue.
     As an owner you can have 50 thousand dollars in a horse’s training so quick it’ll make your head spin. When an owner has that type of investment and the difference between a shot of Lasix and no Lasix means his horse is able to compete or the horse goes to the riding academy, there is only one option--Lasix. When you multiply that investment by 10 or 12 horses there’s an economic factor to the owner. The owner is best when he wins a race. Right away 22 percent is gone: 10 to the trainer, 10 to the jockey, 1 ½ to the horsemen’s organization and stable help, and ½ to the backside pension plan. If the economics of racing and the present tax laws make it so unattractive to being an owner then you take Lasix away from him or her on top pf everything else, you might not have any owners.
     This is a very tough question. It can’t be answered in just one word “pro” or “anti.” There are crooks in everything. There are crooks in the shoe business, crooks in the grocery store, everywhere. There are a certain number of crooks in racing. We are not any different than anybody else. I don’t think we’re any worse than anybody else. I’ve talked to a lot of veterinarians out there and they seem to think California racing is much better with Lasix than without it. From first-hand observation I think that is probably true.    

Q: How much use of anabolic steroids is there on yearlings preparing to go through the sales? Does its use damage the integrity of the breeders? 

Bell: I would say I’ve seen yearlings going through the sale’s ring that I imagine had a little help. I think it does damage the integrity of the breeders. Maybe the day’s coming when we’re going to have to have some rules and some conditions of sale which reveal a little bit more than the “caveat emptor” philosophy. There are so many losses now on everything and there certainly are in the sale’s ring. I think if we can get the consignors to agree to a certain set of standards and then if the yearling doesn’t meet those standards the buyer can throw it back. And if it does meet the standards, the buyer can’t throw it back. 

Q: How do horses react to transportation? Is flying long distances better than driving? Is there a better way to transport horses? 

Bell: I would say the air transport is a huge factor in improving racing. You’re able to fly them back and forth across the ocean and you have better horses coming to compete in our races because of the air transport. I think it’s better to fly a good horse from Florida to compete in California and one from California to New York. Horses can fly and they love it. They really do. I think it’s the best way to transport a horse a long distance. It’s much better than driving. The odds of the horse getting there and being in good physical condition are greatly improved. I don’t know of a better way to transport horses.
     That’s the end of the written questions but if you have some additional inquiries, I will try to answer them to the best of my ability or elaborate on some of the ones you already asked. 

Q: The one about the Arabs and Japanese buying U.S. horses, and if it will affect the economy of racing: Do you think it will affect the breeding operations in Kentucky and the United States? Will it be detrimental to the breeding operations if we’re selling our breeding stock to foreign countries? 

Bell: You must remember this is a very small percentage of our base of breeding stock, say in Kentucky. The breeding stock that goes in the sale is usually in there either because a guy is trying to avoid Chapter 11 or he is selling a used car. The breeder says,  “I’ve seen enough of this mare,” and he can take her into the sale and here comes the foreign buyer who feels this is a great mare and takes her away. In that case, that certainly isn’t going to hurt. 

Q: What about the good stallions like Sunday Silence? 

Bell: We don’t know whether he’s good or bad. I don’t get too worried about it since we have so many horses retire, we’ve got to do something with them. The other side of that coin is that the Arabs are now bringing back these high priced yearlings that they bought from us to stand here as stallions. They’re coming right back to Kentucky.
     There’s a guy across the creek from me that lives in Dubai and he is building a stallion complex where he’s putting four studs in each barn. Each stud is going to have two paddocks, one each of which is five acres. He has all his utilities underground and it is beautifully landscaped. The roads on the farm are better than the Kentucky highways. He’s bringing back over here the ones that we had sold to him as yearlings. He’s going to stand them in competition with us.
     This is now global; I mean, racing is global and thank God it is. He’s going to compete with us in selling seasons and I imagine he’s going to compete with us in the sales ring. You’ll see lots of them are now the horses in the sales that belong not to U.S. citizens but to Frenchmen, Japanese, and the Arabs and every place in the world. This is a very international business. The people that come here and buy aren’t going to clean us out and take all our good mares and our good stallions because in the first place many of those aren’t being offered to them. 

Q: Has it been determined to what extent the Kentucky lottery has affected Kentucky racing? 

Bell: About 11 percent decline in pari-mutuel handle. 

Q: Can you highlight some of the methods that made your bloodstock business successful? What did you do that other agencies emulate now? 

Bell: The bloodstock business I hope is near rock bottom because I don’t know where else it can go. We’ve been in business since 1935 with our bloodstock agency. It was established by a man by the name of Thomas B. Cromwell, a fine gentleman who asked me to come in as his assistant. Eventually, I bought half of the company through whatever it earned. I didn’t pay money because I didn’t have any. Gradually I bought all of it as he got older. He established the standards that were very simple. They were all the highest standards. In other words, the Golden Rule, no secrets to that. I simply tried to continue what he had started. I treat clients like I’d like to be treated. I must say there are a few agents running around who never give a sucker an even break. 

Q: What so you think of having a national racing czar to govern all the states in racing? 

Bell: I don’t think it’s possible. It would be wonderful if it happened but I don’t think it’s possible because each state licenses the participants. Each state sets its own rules. You’ve got 50 sets of rules. It’s not like the NBA, the NFL, or the Major Leagues because they are dealing with a few people comparatively and standard rules. They’re all the same dealing with private individuals not dealing with governments. How are you going to get a national czar to tell the state assemblies what to do? I think it’s impractical; it sounds good.
     We’re in trouble and everybody’s looking for somebody to come save us because we can’t save ourselves. The closest thing to it is the American Horse Council, which is an association of associations and there are individual members as well, and they really try to work for the common good. I think that’s the closest thing. 

Q: As the percentage of your farm revenues increase, do you increase marketing expenditures to promote your stallions? 

Bell: If I can make the farm break even I’m doing a hell of a job. The way we make it is not on boarding per se like a hotel charges so much for rooms. We charge plenty. In fact we charge $22.00 per day for a mare; you think you could make money on that. In fact it costs us a little over $23.00 per day. It’s not just like that people come and go. On the farm, the idea we hope is to make money when we take their horses to a sale through a commission charge.
     It used to be when we syndicated a stallion we’d get four nominations per year for doing the job. We had a built-in client base so that we were able to successfully syndicate a stallion. We are also in the insurance business and we insure horses for those people tat keep the horses on the farm if we can. As they say, what you lose on grapes you make up for on the bananas. It’s that idea to provide an all service operation with these people and you hope you wind up in the black. Believe me, it’s getting tougher and tougher and tougher. 

Q: Do you do any marketing through advertising companies? 

Bell: We just happen to have an in-house advertising agency, which is run by our youngest daughter. There are two quick ways that people save money when they call in the accountant and he looks and says, “Oh stop insuring; self-insure and stop advertising.” We thought we were covering all the bases but we really aren’t, so now we’re trying to branch out to all lines of insurance because livestock insurance isn’t going to cut it because values are way down and people are self-insuring. People are cutting way back on their ads and we’re getting into other things like brochures and things like that.
     You have to go along: You have a plan; you have a budget; you constantly are updating it. I’ll say this, we have four children in our family and all four decided that this was such a wonderful business that they’d go in it. No doctors, no dentists, no lawyers; they’re all in the horse business. We meet every week for two or three hours and go over all the different entities. They are all under the same umbrella. The funds flow this way, not this way—what funds there are to flow. It’s tough and you really have to work at it. That’s where you guys will be better prepared because we didn’t have anybody. Of our children, one majored in French, one in Intercultural Studies if you will—that’s a good thing to have on the farm. It’s nice to say you plow back 10 or 7 ½ percent in promotion. We do not do that. 

Q: I’ve noticed Churchill Downs has increased their advertising through television media because of the increased competition in the industry. But you’re saying people don’t do advertising? 

Bell: No, the people in the breeding business; we were talking about the breeding, the horse farms. Some of the ‘biggies’ are continuing to do it. There for a while people made so much money that they didn’t know what to do with it. That’s what made the business so attractive. We have gotten up to where we have 50,000 foals per year whether we need them or we don’t. The truth is we don’t need them. We have over production. A lot of people got into the business that were attracted by the quick buck, the glamour, and all that stuff. We’ve got to work our way out of that. People now see our costs continue to go up and our revenues are going down. Some of our old insurance customers and some of our old advertising customers have either cut way back or stopped completely. Churchill Downs has a different thing than we have on the farm. 

Q: When do you think two-year-olds should start racing? 

Bell: I think probably about May. They used to start in January. As a matter of fact, we had horses that I had broken that were born and raised on our farm that won the opening race in Florida for two consecutive years that were out of the same mare and they won their first two-year-old race in February. A horse that we raised and sold, Battlefield, won his first two-year-old race at three furlongs in February and he won the Belmont Futurity in the fall of the year. Those were exceptions.
     Two-year-olds are unreliable because they get sick. I mean they get respiratory coughs and it goes right through the entire barn. The racing secretary doesn’t like to card a lot of races for two-year-olds. I think horsemen in general prefer not to run until May. The best two-year-olds you see never come out until August. Take Charlie Whittingham, he might run one once or twice at two then run it at three. 

Q: Do you think they benefit from racing as two-year-olds? 

Bell: It depends on the horse, his conformation, temperament, his physical condition, distance of the race, whether you think he’s really a good horse or precocious, and you better get it now because you won’t get it later. I can’t make a broad statement like that. 

Q: Have you found that insurance claims have increased since the recession within the industry from the livestock side? 

Bell: No, again there were crooks in the business when times were good and they’re still there. You’re going to have a certain percentage that would just as soon sell their horses to the insurance company as they would to someone else. Unfortunately, there are such people but I haven’t seen any great increase in our claims, and I haven’t heard about any. 

Q: What do you think the ramifications are of the timing of the Breeders’ Cup as far as the trainer’s campaign of a horse will go? 

Bell: You have to go back to what the Breeders’ Cup is intended to do. It was created to have a championship event that would get media attention. An event that would get on television, that would be comparable to the World Series, Super Bowl, NCAA Final Four, NBA play offs, or the Stanley Cup. That’s what it’s intended to do. I think it has been successful and I hope that it will continue to be successful.
     Television is the main thing. The question is: When can we get on television for four hours on a Saturday afternoon? NBC tells you when you can get on. You don’t worry about some trainer trying to get horse of the year honors with his horse; that’s his problem because Breeders’ Cup is putting on the big show. The trainer has to make up his mind whether he’s going to run in the Man o’ War or save his horse for the Breeders’ Cup or what he is going to do. I don’t have too much sympathy for the individual trainer when you consider what the Breeders’ Cup has done for the racing world. 

Q: Would you say that an owner who has had the good fortune of winning a Breeders’ Cup race before, would you say he started out with that goal in mind? 

Bell: I start out the year hoping number one that she’ll get to the starting gate and, number two, that she’ll win a race somewhere, anywhere--Turfway, River Downs. You take it one day at a time. 

Q: You don’t think that the Breeders’ Cup being at the end of the year has changed people’s goals and overall campaign that they had before the Breeders’ Cup came around? 

Bell: I don’t think so because you’re dealing with flesh and blood. You’re dealing with horses. It’s impossible to know. You can say, “I’m going to run in this race and this race,” but that’s a joke. How does anybody know that? Because when you go to the barn in the morning your horse might be standing on three legs or he might be dead. I don’t think people plan a campaign. If they say they plan they’re kidding somebody because you just don’t know. That’s the reason nobody has tied up this game yet because you’re dealing with flesh and blood. If you could figure all those things out the whole thing would be over. That’s why Paul Mellon or Sheik Mohammed or somebody doesn’t own all the horses and nobody has a chance. The way it is now, everybody has a chance. 

Q: Do you think the Breeders’ Cup should determine who gets the Eclipse Awards?

Bell: It has tremendous outcome on who wins either consciously or unconsciously. Our little filly, Epitome, won the two-year-old race and she was voted the championship filly. There were those, particularly Wayne Lukas, who didn’t think she should because she did it all then. But she beat five of Wayne Lukas’ fillies in the race. I can see why he disagreed. But the people who voted thought there they were. I don’t know how many Grade I fillies were in the race but she beat them in spite of the fact that it was her first Grade I race. She got it.
     Do you know how they get the championship Eclipse Awards? The racing secretaries and the media vote and whoever gets the most votes wins the Eclipse Award. They’ve been watching them all year. They are naturally influenced by late performances, the same as in baseball or football or anything else. 

Q: Do you think artificial insemination (AI) will be used in the Thoroughbred industry? 

Bell: No, not as long as The Jockey Club controls the studbook. They use AI in Standardbreds and many Standardbred breeders wish they hadn’t. They do it in other breeds, but not Thoroughbred. I don’t think AI will ever be utilized. 

Q: Barry Weisbord was in a few weeks ago and spoke to a class. He feels the American Championship Racing Series (ACRS) will have more of an impact on the public than the Breeders’ Cup because of the format. What are your feelings about that? 

Bell: I hope he’s right because one of our problems has been horses after they race, some only four or five times, become more valuable in the breeding shed than on the racetrack. One of our needs is to create stars that the fans can identify with over several years and the ACRS is going to keep them in training another year, so they get more identity. People won’t have to talk about the jockeys; they can talk about some of the horses for a change. In that sense, I think it’s very important. Now a horse can earn more at the track than he can in the stud barn, and that is a very good thing. 

Q: Do you think there should be similar series for horses in other categories? 

Bell: This is the first time that anything like this has been tried and I just hope it works because I think it’s a good idea. If it does work, I think they might try the same thing in other categories for another age group: for fillies and mares. I think that anything that increases fan awareness, fan appreciation, and fan participation is good because we depend on them. The whole thing is that if they don’t bet we don’t have any game. I don’t know if there will be any more; it depends on how successful the currant series turns out to be. 

Q: What can you tell us about John Galbreath? 

Bell: I think he exemplified the American dream of what is possible to do in this country through hard work, dedication, and the highest possible standards. He didn’t always have what he ended up with. He was a very kind man, a considerate man. He was as interested in the sable groom just as much as he was some celebrity that would come to the farm. I had a few business dealings with him and they turned out very well. Being born in Pittsburgh, I was a fan of the Pittsburgh Pirates. I thought he had done a good job there. He did things all over the world. He was tireless. He was a very, very hard worker, exceptional but never overbearing or a bad guy. 

Again, thank you very much.  It has been a real pleasure.

Copyright 1990, Department of Equine Business, CBPA, University of Louisville, Louisville, Kentucky.