Weathering the Storm: Tommy Eastham

Tommy Eastham Fasig-Tipton

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.

TOMMY EASTHAM, Legacy Bloodstock

The effects of 2008 were of course devastating to the value of our horses. But with tough times, there are lessons to be learned and things you can take away with you.

In 2008 we took a financial setback. As horseman and based on how we chose to operate our business, we went forward with a very conservative business plan. We decided to be very careful with growth, expansion, and managing expenses.

One of the best pieces of advice I ever received came from Dr. Jim Morehead of Equine Medical Associates. Back in 2008, I remember sitting at his truck one day and he saw how our business was starting to gain traction and have success and he said, “Low overhead puts kids through school.” So we took that to heart and try to live by it still today. There has been opportunity for us that would have added growth and risk to our business and we have declined to go through with them because we want to stay with that principal and not overcommit ourselves financially on things that aren't necessary. As we go through this economic event now, we are very grateful for the position we are in today and not completely worried about every bill that comes in the mailbox.

Looking forward, we're reminding our clients that there is still a point of quality that you need to have in order to compete in this market, no matter how unprecedented it may be. There is a fine balance when it comes to horse inventory. We have been trying to advise our clients to ride that edge, meaning still breeding to the nicer horses but also being conservative in their investments.

Taking advice from Cot Campbell, if an investment does not go your way and it is a financial fatality for you, don't do it. Cot had a book called Lightning in a Jar, and at one point he talked about bringing investors and partners into his business. He told them that if it was an investment that they couldn't afford to do, don't do it. So that's what we're doing right now.

In the last few years, we felt like the market has had a bubble, that maybe things were going a little too well at sales. So we've been advising our clients on keeping expenses low and waiting for safe opportunities.

Looking towards this sales season, we are putting an emphasis on female families. During all of the market corrections that I've been through, the importance of the stallions and demand for freshman sires is still without a doubt part of the business plan you need to implement. Always give the buyers what they want. But I've noticed that during the corrections, there's an emphasis on female families. The buying population's risk tolerance drops. So as we look at our client portfolios, we are putting a focus on female family. The old saying was that if a mare produced two foals that were unprofitable, she might not be the best for your program. Now, we all know she could be a stakes winner five years from now. But we advise to be quick to walk away from investments that aren't working out. Put your money where you have the best chance to be successful.

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