Doug Emerson contacted me yesterday, wondering if I had a good feel for where the equestrian market is headed. I don’t, but I have been watching this closely! Please chime in if you have something to add.
Back in January, when inflation was relatively tame, and gas was only $3.25 a gallon, I met up with the Langers (of Langer Equestrian Group) at the USEF annual meeting. Larry postulated that this year was gong to be ok, but 2009 was going to be really tough. His assessment (one that I might add I agree with) is that owning and showing a horse is not something that people can start – or stop – whenever the price of food or fuel changes.
I have guessed that many people showing competitively have invested at least upwards of $250,000 between horses, their stable, a truck, a 5th wheel, maybe an indoor ring and land for all of the above. Sure, there are people who compete from their backyard and haul a two horse trailer behind the pickup truck (it is what we used to do!), and this is a large part of our business, but larger shows like those run by Larry or Bob Bell attract competitors with greater expectations. Land, barns, trainers, horses and professionals to haul animals do not come cheaply. If you have made this kind of investment in your riding career, you do not stop just because the price of diesel went from $4 per gallon to $5.
Lets look at this differently; I own a motor boat which I keep on a mooring. I figure that every year, between commissioning, the mooring, decommissioning, local fees and fuel it costs several thousand dollars to have this boat. Last year fuel cost $4 per gallon. Last week boat gas was going for $4.99/gallon. I burn about 150 gallons/year, so the cost of owning the boat will go up another $150 a year. As a percentage, this isn’t a lot, but the psychological damage is huge. I use the boat much less. I expect that we will see the same thing in the equestrian world.
People who own an equestrian estate won’t (or can’t) sell the property if they want to. For them, this is a liquidity crisis. No one wants to purchase their vehicles, or their horses, or their farm, since everyone else has the same problem. Some equestrians will be able to weather this storm, others will have to stop showing and hunker down for a while (or worse).
This will all blow over folks. Within a year or two market forces will bring new fuels to market. Vehicles will become more efficient and new technologies will begin to enter the marketplace. However, as it takes some time for everyone to put the brakes on, it may take a while for everyone to come back to the table, so if we see lots of folks exit the industry, it could take a while for us to return to the same level of activity.
From the standpoint of a ribbon manufacturer, I do not expect that we will see a huge fall off in order activity. As long as each class still has at least 6 competitors, 6 ribbons will be awarded. However, my guess is that classes with less then 15-20 entries are money loosers, and no show manager can afford to have too many shows that are money losers without doing something about it. Frequently that something will be cutting marginal shows – and that is something that we will certainly feel the effects of.