'A blatant abuse of power' - major studs take legal action against stallion cap

Three of Kentucky's biggest stud farms have filed a lawsuit challenging the US Jockey Club's rule to restrict thoroughbred stallions from breeding with more than 140 mares each year, branding the decision to introduce a so-called stallion cap a "blatant abuse of power".

In the 27-page document, the plaintiffs, Spendthrift Farm, Ashford Stud and Three Chimneys Farm, contend that the stallion cap "serves no legitimate purpose and has no scientific basis," and allege that the 140-mare per stallion ruling has been adopted to "serve the economic interests of a discrete group of participants in the Thoroughbred industry to the detriment of the more competitive participants".

In a press release circulated by Spendthrift, Ashford and Three Chimneys on Tuesday, the group asserted that "Membership of The Jockey Club is by invitation only, and the decision was made by its Board of Stewards without discussion or a vote at the Club's annual general meeting.

"The Jockey Club stewards making the decision had clear conflicts of interest given they also represent or own various breeding and racing entities who stand to benefit now that owners of mares are being denied their first-choice stallion."

The lawsuit alleges that "Many of the stewards that adopted the stallion cap and that currently serve on the Jockey Club Board of Stewards themselves have conflicting economic interests – owning and/or representing various competing racing and breeding private entities, such as Stonestreet Farm, Cheyenne Stables, St Elias Stables, Jump Sucker Stable, TIC Stables, Ocala Stud, Darby Dan Farm, and Lane's End Farm."

In May last year the US Jockey Club announced it had adopted the Rule 14C amendment of the American Stud Book, which states: "The total number of broodmares bred per individual stallion whose year of birth is 2020 or thereafter shall not exceed 140 per calendar year in the United States, Canada, and Puerto Rico.

"The Jockey Club shall limit the number of stallion service certificates for such stallions to a maximum of 140 per calendar year."

The US Jockey Club said the rule reflected the organisation's goal of preserving the long-term health of the thoroughbred while addressing a declining and concerning degree of diversity within the thoroughbred gene pool.

However, as well as calling into the question the scientific basis for the move, the lawsuit filed by the plaintiffs contends that Rule 14C will have a significantly negative impact on the entire economic structure of the bloodstock industry, undermining the value of thoroughbreds across the US, which in turn would have profound consequences for jobs and livelihoods.

The lawsuit states: "As a result [of the stallion cap], the highest quality thoroughbred horses will be bred less times than market economics would otherwise dictate. Hundreds of millions of dollars of stud fee revenues will be impacted; all owners of mares will pay higher prices to breed their mares; and less well-connected owners of mares will be precluded entirely from access to high quality stallions.

"In addition, owners of the premiere thoroughbred stallions and stallion prospects will potentially move or sell their horses out of Kentucky to other countries whose thoroughbred registries do not impose any stallion cap (every other country in the world besides the United States)."

The complaint also argues that the Kentucky Horse Racing Commission (KHRC) has unlawfully delegated power to the US Jockey Club, and that the new rule breaches the constitutions of Kentucky and the United States as well as federal and state antitrust laws.

KHRC chairman Jonathan Rabinowitz and the organisation's executive director Marc Guilfoil have also been named as defendants. Although the two KHRC officials were not directly involved in the decision to impose the stallion cap, the lawsuit contends that in their official capacities the pair are responsible for overseeing how the state delegates thoroughbred registration authority to the US Jockey Club.

B Wayne Hughes of Spendthrift FarmCredit: Fasig-Tipton Photos

The three studs are seeking unspecified compensatory and punitive damages against the US Jockey Club, and also want "an injunction requiring The Jockey Club to repeal its Rule 14C or, in the alternative, permanently prohibiting The Jockey Club from enforcing its Rule 14C and from denying registration on account of the number of mares covered by any horse's sire."

The suit has also sought "an injunction requiring the KHRC, through its chairman and executive director, to permit thoroughbreds to race in Kentucky regardless of their inclusion in the Jockey Club registry."

The plaintiffs are also seeking a court declaration stating that the alleged property rights breaches by the defendants are "arbitrary and capricious and violates the due process rights and the equal protection rights guaranteed to Plaintiffs under the Kentucky and the United States Constitutions."

Commenting on behalf of the plaintiffs, B. Wayne Hughes of Spendthrift Farm said: "The introduction of the stallion cap by The Jockey Club is a blatant abuse of power that is bad law, bad science and bad business.

"A handful of individuals from a private club in New York have been allowed to make a decision that will negatively impact the future of thoroughbred racing and breeding both in Kentucky and the whole country.

"We have filed this complaint to defend the industry from anti-competitive, un-American and arbitrary decision making that is not based on scientific evidence.

"If they can limit the number to 140, what's to stop them from limiting it to 100 or 80 or any other number down the road? What if your mare isn't one of the 140? We are really concerned about the small breeder's ability to survive this."

For stallions born in 2019 or earlier, there continues to be no limit to the number of mares reported bred in the US, Canada, and Puerto Rico.

The lawsuit was filed in the United States District Court, Eastern District of Kentucky, Central Division at Lexington.

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