Wither the Equestrian Business?

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.

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10 thoughts on “Wither the Equestrian Business?

  1. Great point about the investments made by the serious horse show crowd. Their investments are significant: tens and hundreds of thousands of dollars in horses, tack, trucks trailers and real estate. Higher fuel prices, as painful as they are, are just part of the entire financial commitment made by competitive horse owners.

    Uncertainty and caution will prevail for a period, but I suspect, like you, that the fuel problem will be solved. Profit is a wonderful motivator for innovation.

  2. I’ve read this blog and I have a question? what about those horsepeople who don’t show, what does the economy look like for them? And people like myself who are looking to get into the horse training business?

  3. Horse owners, whether they board or keep horses at home, are in for higher costs of ownership. The rising tide of expense increases mean higher costs for hay, grain and bedding. It will be a tipping point for some; the additional costs of ownership will cause them to sell. Others will find the money and accept the increased cost of ownership along with the increased costs of everything else.

    The need for horse trainers will never go away; the ability to pay for horse training will be affected by disposable income available. As owners feel a need to “cut back” in tougher economic periods, the trainers, tack retailers and horse show industry will feel pinched by tighter spending.

    Starting in the training business will be tougher than ever. But, a trainer with talent will always be able to find work.

    _______________________________________________

    My blog: http://douglasemerson.blogs.com/

  4. This whole discussion started around the cost of fuel. I was thinking last night after I talked to my sister, who lives in South Carolina, about the changes they made at their farm last year during the drought. The price of a bale of hay increased to $7.00 – and that was if the feed store had any to sell that week. As a result they did not breed their sheep or cattle like they planned. There was no way to make money if it cost that much to feed the animals.

    Now that the cost of fuel is headed downward ($3.86 a gallon sounds so much better than $4.11 doesn’t it?), we need to be mindful of the other costs like these involved in the horse business.

    So far the largest effect that Hodges has seen is with shows becoming more economical and trying to save money on awards by combining ribbon orders to get volume discounts. A couple of shows have been canceled, but this happens every year and it is difficult to tell if this is due to the economy or other reasons – like sickness or change of ownership.

    I expect that during the winter of 2008/2009 we will start to see if the current economic problems are going to have a major effect on the equestrian business. If our winter sale orders are well below historical norms, then I can tell you that things are trending downward. At the moment however, business seems to be no better, and no worse than in the past.

  5. I use to show on the “AA” circut but when show managers started raising stall fees from $130-145 last year to $160-195, as well as adding an office fee, grounds fee,schooling fee and other additional fees that adds another $95-100, before the class fees is it worth it??? The USEF and other governing entities need to step in or the true competition will only be for the extremely wealthy-and that is selective discrimination!!! Ks-Dallas

  6. I second Kendra – the price of the AA shows is like the Housing Market – overinflated, and if they don’t become more realistic it will continue to be like the Housing Market – DEAD! I already feel like competition is only for the truly wealthy, and not only is it selective discrimination, it’s no fun because it becomes a competition between pocket books instead of between talent!

  7. Well it is a year after I started this thread, and is still not clear to me where we are headed. In the past 10 days we have exhibited at four different trade shows – two equestrian and two for other parts of our business. Attendance at all of these events was reported to be lower than in past years, but none of them were bad. In fact, we had a number of excellent contacts at all of the shows.

    At the USEF annual meeting, no one reported that they were cutting back on shows. At the Maryland Horse Expo we heard that participation at shows was off about 15%, but not enough to cancel events.

    It does appear that cash flow concerns may be affecting the horse show community. Our customers are placing orders with less lead time than usual, and they are reluctant to part with money up front – to take advantage of our winter sale.

    If you have anything to add or personalknowledge of where the show business is heading – please reply so we can all see where things are going.

  8. Today is February 11th. We are just four days from the end of our winter sale, and it looks like we are going to meet or beat last year’s numbers for orders entered and ribbons purchased.

    Some shows are coming in smaller than last year, and an equal number are coming in with larger orders than before. Most are unchanged. Over optimism? Not from what I am hearing in the field – entries remain strong, and few if any events are being canceled because of bad entry numbers. I will update this again when we are done with all of the winter sale numbers for this year.

  9. I personally run two “local” open horse shows here in North Carolina. I have been running one show for 10 years and the newest show for only 1 year. This will be our second year. We are seeing people swinging from the more expensive shows to the local smaller shows for practice and schooling. Instead of hitting a rated show for schooling they are hitting the open shows. Entries at both shows are steady, but I can tell that people are starting to pick and choose. I will have a better feel this weekend because the first show of my 1 day circuit show in on Saturday.

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