Stud Dog - What it’s worth?

If our dog has produced 348 litters in his first three years at stud, at a service fee of $2200, that gives a return of $765,600 which we will all say sounds great ... fantastic even.

At the time of writing, how many race dogs earn $765,600 in three years on the track. None in Australia so far!

But we have costs. The studmaster today does deals to stand the dog. It used to be half the service fee. Now it is generally a more reasonable 25%. If that's the case with our stud dog, then our studmaster will take $191,400 for his expertise.

From this, the studmaster will have to accept a number of his own expenses which may include costly progesterone testing, collection and storage of frozen semen etc.

And there is always the promotion of the dog. Once he goes to stud, it's like a race all over again to advertise and promote him.

A full page advertisement in two weekly greyhound publications for a year will cost you another $28,000 per year or $86,000 over the three-year period. Advertising can be much more in the first year but obviously less in the second and third.

Which leaves us with a profit for the owner of our stud dog in the first three years of $487,000. Sounds great, doesn't it!

But if we then look at our rule of thumb that no business should be bought for more than two or three times the profit it generates each year, then our stud dog is only worth about $240,000.

That's right ... $240,000.

So why are these offers of $1 million being made?

Obviously the people with the cash are expecting these stud dogs to go on and make huge profits for them in the time after the first three years.

Considering the statistics that show 95% of dogs that go to stud fail, it seems to be folly on their part.

For our study, we did not go into such other costs as the collection and storage of frozen semen, fees, vet bills etc that might be incurred.

And that does not even take into account the tax (generally 48%) the owner will have to pay because a stud dog is now a commercial enterprise, not a non-taxable windfall as is the case during its racing career.

But, if our dog is a success, his fee rises and that's great. The figures say you are up against it to be in the 5% of dogs that do reach great heights.

And with all these unproven dogs going to stud at big service fees, is the greyhound breeding game in Australia strong enough to support so many of these high fees?And what if the dog has fertility problems?

Sure, the rules appear to be ready for change. Frozen semen sales will bring in more cash, specially with splitting soon to be available.

But it hasn't happened yet. And it's sure to bring its own competition and more problems. Try getting insurance for a greyhound stud dog for $1 million ... it just won't happen.

And even with the advent of semen splitting, is it going to double profits ... that's very doubtful. And if it does, that still only makes a potential stud dog worth $480,000.

Maybe some of these cashed-up buyers should do their sums. Some it seems have been led up a garden path or two!

And, while our stud dog at the end of three years might be worth virtually nothing if his first progeny are not exceptional, our bread shop is still going and making profits with a value in excess of its purchase price.

As one trainer pointed out, stud dogs are flesh and blood ... here today, gone tomorrow.