While many questions regarding the Coronavirus pandemic remain unanswered, and with a stock market experiencing extreme volatility, there is continued uncertainty as to what could happen in our industry over the next few years. But many people in the industry have been through such ambiguity before. We sought the advice of industry leaders who successfully made their way through the Great Recession, and we asked what they learned from it and how they will use their experiences to advance through the coming years.
DONALD LITTLE JR, Centennial Farms
Our partnership started in 1982, so it seems like we've been through everything–9/11, 2008, the change in tax laws in the late 1980s, and we're still here. I think the thing we do consistently is we buy solid, stallion prospect-type horses that are attractive to not only horse people but also to potential new owners.
We are diligent in not overextending our boundaries. We have a budget and we stick to it. We have a line of credit, but we don't use it a lot. We like to stick to a formula where the expense side is never any greater than 35% of the total capital raised. Once you get over that, the expense takes over the value of the horse.
You have to be diligent on your business plan, running projections every year. Despite it being the horse world, which is a sport and entertainment industry, we are all trying to run a business. Don't overextend yourself and stay within your budget to the best of your ability.
There will always be horses to buy. My father always said that if there are good horses, people will show up to buy them. The market may fluctuate, but there will always be a competition. It's like any business in that it goes in cycles and, in my opinion, that's healthy. It's a self-mitigating, self-regulating process. But you definitely have to stick to your budget and be diligent about your plan. Always be aware and accepting that this is a business of risk.
We've been fortunate enough to have three stallions in Kentucky now. We buy the right type of horses, we're diligent about our business plan, and we've got good people working for us.
Things are different this year. Markets will change. The people that are good business planners will be fine. For the ones that overstretch their boundaries, it will be more difficult. They may be people who leave the business. But I think there are also going to be opportunities for new people to get involved. I look at this as an opportunity. I haven't seen horse racing on the cover of a newspaper in years, but I saw the Florida Derby make the cover. So that part is good. It might expose some new people. If we market it properly, we can spread the word that we're still around. We will remain as a sport that people can get excited about and we should remain optimistic
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