Could this be the horse case of the century?

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Former Sydney Turf Club chairman Bruce McHugh has boldly gone where no man has gone before – at least in recent times.

He has stepped into an Australian courtroom to challenge what the thoroughbred industry considers sacrosanct – that mares can be bred only by being served by a stallion if the progeny are to ever see a racetrack.

McHugh, once Australia’s biggest bookmaker, is taking a crack at the industry’s restrictions on artificial insemination.

He argues that denying the use of artificial insemination constitutes a restraint on trade under Australia’s Trade Practices Act.

Should AI be accepted in thoroughbreds, the shape of the industry is bound to change radically.
Should AI be accepted in thoroughbreds, the shape of the industry is bound to change radically.

There is no question that live cover of mares is central to the thoroughbred industry’s business model.

Countless millions have been invested in the industry based around the fact that its top stallions must personally service mares.

A win for McHugh in the six-week case, before Justice Alan Robertson, would have far-reaching consequences.

The precedent set could flow to other court jurisdictions around the world, setting off challenges that could see the live-cover requirement collapse like a house of cards.

It will be a fascinating fight as the issues are laid bare in a Sydney courtroom.

Fears within the Australian industry surround the potential loss of export trade, as major overseas thoroughbred markets would accept thoroughbreds for racing and breeding only if produced through live cover by a stallion.

Concerns have also been expressed over the potential narrowing of the thoroughbred gene pool if artificial insemination was permitted.

McHugh’s position is simple. He wants to be able to produce racehorses through artificial insemination and believes the industry’s rules represent a constraint of trade.

McHugh’s argument is that by banning the use of artificial insemination, powerful interests maintain a stranglehold on the lucrative racing industry.

He says allowing artificially bred horses to race would increase competition, and make the industry more affordable to smaller breeders.

The industry counters that the ban preventing artificially bred thoroughbreds from racing also applies in other major racing countries, and lifting the ban would devastate the Australian industry in international markets.

Australia would end up with an insular thoroughbred industry that was a shadow of its former self.

There is no doubt that millions are at stake.

As McHugh’s counsel, Ian Tonking, points out, major studs such as Coolmore, Darley and Arrowfield make millions from northern hemisphere shuttle stallions, with service fees of up to $A200,000.

Under such circumstances, ownership of a top stallion was hugely profitable – provided it was not challenged by artificial insemination.

The live-cover requirement means large-scale commercial stud farms effectively had a “licence to print money”, Tonking told the court.

Ownership of such stallions was beyond the pockets of most who aspired to have a slice of the industry.

In opening the case, he said the live-cover requirement had no bearing on the conduct of racing on the track, but much to do with “the playing field that’s far from level, off the track”.

Smaller breeders – the vast majority in Australian thoroughbred breeding are small operators with an average of three mares – would benefit from not having to ship their mares to stud, and would also be able to gain access to semen from top horses around the globe, Tonking argues.

McHugh does not put much stock in the central argument from the Australian thoroughbred industry that it would become a world pariah if articificial insemination was allowed.

He has proposed a separate registry for artificially bred thoroughbreds. France, he has pointed out, allows such separate registries and it did not appear to have damaged its industry.

The whole debate is fascinating. The arguments offered by McHugh are hard to challenge.

Yes, relaxing the live-cover rules would give smaller breeders access to stallions around the globe. It would undoubtedly save them money.

Australia’s ban on thoroughbred artificial insemination goes back to at least the 1940s. The practice was banned to prevent any skulduggery, and to ensure that mare owners got the stallion service for which they were paying.

However, in the modern era of DNA identification, that argument has long since been buried.

Does the requirement for live cover effectively create a restraint of trade? If you’re a smaller breeder unable to afford a top stallion’s stud fee, but able to afford a straw or two or semen from a similarly-rated sire, it is hard to argue otherwise.

But perhaps the heart of the argument lies slightly to the side of this premise. Should the thoroughbred industry have the right to organise its sport and set the rules as it sees fit?

On that basis, McHugh could get on with his artificial insemination and set up his own thoroughbred industry. Just as, if you don’t like the rules of Formula One car racing, go off and set up your own international racing series.

Whatever the outcome, the case will prove to be a rare sight. The legal costs are certain to stretch into the millions of dollars on both sides.

About 40 witnesses are expected to give evidence, some by video from Europe.

The decision will make fascinating reading.

20 thoughts on “Could this be the horse case of the century?

  • September 7, 2011 at 12:53 pm
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    I think it has genetic diversity concerns. And the fact that the racing industry is just plain nasty in general. But apart from that I see no problem. If there were sufficient laws in place to ensure genetic diversity within the breed then why not?

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    • September 7, 2011 at 7:44 pm
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      I agree Sam! works well for the Harness racing industry! i personally would love to see it and give the small breeders a go! Why should it be a sport for the rich only! Plus as an Arificial Inseminator, i could be in alot of work!

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      • October 29, 2011 at 3:53 pm
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        There you have it… Traditionally when the rich get into seige mentality they use every trick in the book to keep the “Others” out. Sadly it is a major issue in NZ and it effects sport horses as well as the Racing Industry. I support any action that creats better conditions for horses (their welfare always first not the back pocket!!) Then I support passionate people who love horses and want them to achieve their potential having the right and the opportunity to break down old and archic barriers that have been there since day dot before it was possible to check genetics… I believe the idea behind having to see the stallion cover the mare was due to perhaps the behaviour / integrity of some of the original breeds themselves…… Therefore seeing is believing. It is only so there was confirmation that the mare was covered by a particular stallion in the first place…. The Arabs had it right I think… The mares are the most important anyway (carriers of the genetic code) which is why they would not allow the sale / export of their mares in the first place:)

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    • September 8, 2011 at 12:54 am
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      I agree Sam, genetic diversity is one of the major issues in this case. However, having sufficient laws in place which protect genetic diversity would require a limit on the number of progeny produced by each donor, which in itself is a restraint of trade. No different from telling Holden or Ford they can only produce a certain number of vehicles. Currently there is no limit on the number of mares a stallion can cover other than what a stallion is physically capable of doing. The Thoroughbred breed is already experiencing a narrowing of its gene pool by breeders wanting to send their mares to successful and proven sires. AI will only accelerate this occurrence and in the process less commercial stallions will be sent into early retirement. First season sires would also find it difficult to attract mares as proven stallions would dominate the market. There’s too many “if and buts” for my liking and therefore the status quo should remain until there is some certainty as to whether it’s the best thing for the breeding and racing industry. Until then, lifting the ban on AI is like putting the cart before the horse.

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      • September 8, 2011 at 3:56 am
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        Sam, how does AI work well for the Harness racing industry? If anything it’s devalued the Harness racing industry making Standardbred breeding less attractive from a business perspective. Just take a look at Australia’s best performing Standardbreds; you’ll notice most of them are bred using imported semen from the USA. From a commercial breeding perspective there isn’t much going for it if you’re wanting to invest unless you’re only interested in breeding your own horse to race rather than sell at auction. There are only a small number of successful standardbred breeders in Australia who make a comfortable living from breeding, of which most of them retain a share of the ownership as well as holding a trainers and drivers license in order to succeed.If anything, there is more chance of making a living from the Thoroughbred breeding industry at the moment as the profit margin is potentially greater provided you know a thing or two about pedigrees and you’re lucky enough to bred a champion and wise enough to know when to sell and when retain a share in the ownership. Being rich and famous doesn’t guarantee success in this game, but at least the rich are able to afford their losses until some day they succeed and then all of a sudden we see the “Tall poppy syndrome” play its part. Every industry suffers from it unfortunately.

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        • September 8, 2011 at 3:59 am
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          My apologies Sam as the above comment I made was intended for Deb 🙂

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  • September 7, 2011 at 4:36 pm
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    I think not having AI is a good thing, as Sam said it limits genetic diversity, if AI was allowed everyone and his dog is going to have acess to the top stallions.
    I also have issue that it could raise the “throwaway rate” that is already rather high in TBs as it is. It may be just me, but I see far more throw away SBs, which have legal AI in their breeding system, than I do TBs, so I think that if AI was legalised the number of unwanted “race track rejects” could rise dramatically. Just because a horse is by a top stallion doesn’t mean it is going to be a fabulous racehorse.

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    • September 8, 2011 at 4:48 am
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      Ditto Mallory, except that everyone already does have access to the top stallions provided they’re prepared to float a broodmare across the country or overseas. The market demand has, and always will, determine the cost of service fees whether it be natural or AI. There’s no guarantee that service fees at the top end of the market will become more affordable due to AI, but lets say they do come down considerably, then mare owners will soon work out that having between 200 – 500 half siblings competing against each other in the sale ring as yearlings is not such a good thing, as it will reduce their chances of making any sort of profit unless they are rich and famous enough to own a half decent mare 🙂 AI will certainly make semen more accessible for far and away mares, which in turn will place those stallions who would have otherwise covered these far and away mares on the unemployed list. As you put it Mallory the “throwaway rate” will increase very rapidly.

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  • September 8, 2011 at 8:37 am
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    I don’t think small breeders are going to be able to afford the top stud fees. It may actually reduce the unwanted population over time by increasing the average performance level.

    I think if you can access stallions globally, it could also reduce the incidence of breakdowns. Hardier genes would win out.

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    • January 17, 2012 at 1:49 pm
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      AI is being done by a lot of breeds around the world and makes the ‘best’ stallions available to breeders around the world, therefor deepening the gene pool. Currently most TB breeders are limited to stallions standing relatively close to them. This opens up the entire world (US, European, etc) of standing stallions to breeders. How exactly is that going to ‘limit’ your gene pool? Of course a lot of people will want to breed to the best horse in USA and then others will want to breed to the best stallion in UK-that just is not possible (realistically) to do with current restrictions. Wouldn’t having the power to pick your stallion based on performance and bloodlines (anywhere in the world) be preferable to breeding to a stallion simply because he stands on your continent? NZ and Australia are likely more limited geographically than any other country. I hope the judge sees what the rest of the breeding industry does- to be competitive you need to breed to the best and produce better stock. Additionally, some stallions pass away in the peak of their breeding life and leave few off-spring behind. Semen in the freezer ensures that line will continue.

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  • September 9, 2011 at 9:58 am
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    If you wonder about the effects, just look at the American Quarter Association where not only do they allow AI, but also embreyo transplant. The result is multiple “full brothers & sister” all produced in the same year. Talk about increasing the “throwaway rate”

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  • September 9, 2011 at 11:46 am
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    The top stallions have always dominated. AI won’t change that, and won’t make those stallions more accessible to small breeders. For example, if Northern Dancer had been available via AI, the little breeders still wouldn’t have been able to afford him. In fact, AI, (in the US, with QHs and Paints) has INCREASED the genetic diversity by allowing mare owners access to a wider variety of different bloodlines than what they were limited to nearby. Breeders are still going to use the top stallions regardless of method of breeding.

    Also, the increased number of foals by a stallion will not alter the overall percentage of SWs. There are good and bad from any group of siblings no matter how many there are. The cream will rise to the top no matter how they were conceived. The Quarter Horse racing industry in the U. S. has proven this. The top yearlings still bring top money at the sales. Larger quantities of well-bred horses have allowed many new breeders to get closer to the top of the game.

    There are also huge benefits to ET, one of which is speeding up the process of determining if a mare will be a successful producer. She can be bred to more than one stallion each year. ET also provides a job for lower quality mares (as recipient mares) that would otherwise go to slaughter.

    Personally, I use AI and transported semen exclusively. It drastically reduces and/or eliminates the transfer of disease, I don’t have to board outside mares, the risk of injury to personnel is reduced drastically, and mare owners don’t have to transport mares (possibly with foals at their sides) long distances. It’s just a cleaner process, one which I can do by myself, at either end. As a small breeder and mare owner, I now have easier access to any stallion in the country, and vice versa – mare owners have easier access to my stallion.

    Genetic diversity is always a good thing.

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    • September 9, 2011 at 9:17 pm
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      Susan I agree with everything you mention on the benefits of AI and ET. However, the court case is not about the benefits of AI or ET in the breeding barn. It’s about whether or not the ban on AI is a restraint on trade under Australia’s Trade Practices Act. McHugh is claiming that the costs of natural covering restricts him from being able to send his mare to any stallion he wishes. Well hello, that’s life and we can’t always get what we can’t afford. The odd thing in this case is that McHugh is one of the few who can afford to send his mares to any stallion in the world. There are rules and regulations in every sport and industry and changing the rules to even out the playing field doesn’t seem like good economics to me. Does one individual have the right to devalue an entire industry? McHugh wants to make TB breeding more affordable for every Tom, Dick and Harry, but at the expense of those who have invested heavily into the TB industry and who contribute millions of dollars towards the Australian economy. This case should not be about making breeding more affordable for hobby breeders, it should be about whether McHugh is being deliberately disadvantaged or restricted in being able to produce a champion racehorse. The fact is he is no more restricted by the ban on AI than any other breeder big or small. We all play by the same rules of racing and if McHugh or anyone else can’t afford to play the game then they should consider something else more affordable like Harness racing or Greyhound racing, etc.

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      • September 18, 2011 at 8:19 pm
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        “McHugh is claiming that the costs of natural covering restricts him from being able to send his mare to any stallion he wishes… McHugh is one of the few who can afford to send his mares to any stallion in the world” That is the gist of his argument. He can afford to sent his mare anywhere but why is there a need to do that when semen can be shipped. It’s animal being bred and AI is used in all animal matings except thoroughbred’s. It’s safer for the mare to stay at home, no need to shuttle anywhere, it should reduce some costs but has to be safer as well for both mare and stallion. Diversity and access to stallions anywhere, Indian Ridge sons in Europe, Sunday Silence from Japan, Monsun from Germany could increase. The only argument I am hearing is that the stud farms don’t want it (they want to keep control) and the status quo need not be changed.

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  • September 15, 2011 at 11:00 pm
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    I am a veterinarian,equine practice,and am inclined to favour AI.At present the premier sires and those able to purchase and support them are favoured.
    Allowing AI would provide access to a wider range of sires and stimulate competition:indeed I can foresee valuable mares being vigorously courted by progressive studs.Ian

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  • September 28, 2011 at 3:47 pm
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    If McHugh wins I personally stand to benefit. My stallion HEROICITY was one of Australia’s top racing thoroughbreds winning over $1,000,000 on the track.He came to stand at stud in NZ which did him no favours.
    When I bought him I decided to send him to the USA to stand at stud thereby giving greater access to better mares.
    Unfortunately without my permission a vet administered a drug to him which he had a fatal reaction to and was dead within 36 hrs.
    Prior to going to the USA I had collected semen from HEROICITY and had it frozen.
    Since his death his progeny have gone on to prove them selves numerous times on the track in particular over fences. Recently a 10 year old mare Ima Heroine won NZ’s prestigious Great Northern Steeplechase against all odds.
    Sadly I am unable to use this frozen semen to produce more thoroughbreds due to this archaic rule.
    I have no other option open to me which validates McHugh’s argument that it is against the Fair Trade Act.

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  • December 6, 2011 at 10:28 am
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    I think a lot of things need to be changed in the thoroughbred industry. Allowing AI is just one of them.
    This organization has always been and still is in a lot of ways a male orientated organization. In New Zealand, women are not allowed to be stallion handlers, ( I have handled stallions for years and I think that women actually handle them better than most men do).
    I could go on about things but it would be opening a big can of worms and I don’t think that would be constructive in this matter. I am not 100% sure but I think: ALL OTHER BREEDS ALLOW AI SO WHAT MAKES THE TB BREED DIFFERENT!!!!

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  • December 6, 2011 at 7:16 pm
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    Well all of you have made arguments centred around how much money the breeders and breeding farms can make out of live covers. I haven’t heard anyone talk about horse welfare or bio-security issues relating to the unnecessary transportation of stallions and mare either interstate or overseas.
    If anyone cared about the horses then they would recognise that this is a high stress activity that results in various health problems and in extreme cases death.
    During the EI outbreak it seemed like a no brainer that AI and ET were both part of the solution if we wanted to minimise horses travelling. I hope for all our sakes that the next disease to escape quarantine is not hoof and mouth disease.
    To claim that it will result in less genetic diversity and more wastage is not evidence based… just a convenient argument from the vested interests.

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  • January 16, 2012 at 6:03 pm
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    The previous comment by Kerri has hit the nail on the head, the welfare of the horses should be paramount. If AI had been accepted in the TB industry I’m thinking that Australia wouldn’t have had horses die from EI back in 2007-08, that was a terrible time with huge costs for the horse people there, and also caused a great cost to us here in NZ with having to send our imports/exports into quarantine. There is still quite a lot of paperwork involved when you are considering AI so everything has to be above board and go through MAF.

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  • January 17, 2012 at 8:19 pm
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    For all the talk about genetic diversity without AI-75% of all modern TBs have Northern Dancer in their pedigrees. Given that he raced in the late 70s, that’s a very rapid incorporation of his genes into the vast majority of the 80,000 or so TBs bred world wide today. That was all possible without a straw of semen being collected. The fact is, the vast majority of mare owners are unlikely to be able to afford the likes of Redoutes Choice or Storm Cat, so if the owners of these stallions are concerned about producing too many babies and devaluating the price of the youngstock they can continue to charge $300K per covering/conception and set limits on their covering books as they do now. It is highly likely that AI would increase the genetic diversity of TBs as small breeders in say NZ or Australia could access semen from less fashionable sires in France or Italy the likes of which would never shuttle. The intro of AI into warmblood breeding in Aus and NZ has vastly increased the diversity of genes and the quality of the horses. There is no reason to think that anything would be different in the TB world. This is about hanging onto to privilidge, not saving the breed from inbreeding.

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