International Arabian Breeders Sweepstakes Task Force Report to the Sweepstakes Board of Trustees November 2005

1. International Arabian Breeders Sweepstakes Task Force Report to the Sweepstakes Board of Trustees November 2005

2. The International Arabian Breeders Sweepstakes was introduced by the International Arabian Horse Association to promote the Arabian horse, elevate its stature in the horse industry, provide a financial incentive for the breeding of Arabian horses, and broaden the income base of IAHA, which is now AHA.

3. GOVERNANCE The Sweepstakes program is led by a Commission established by the IAHA Board of Directors in 1985. • The Commission’s structure consists of: • Six members elected by the Board of Directors for three-year rotating terms in staggered years. • No more than two members elected from a Region. • The Treasurer completes the seven-member commission.

4. HOW DOES SWEEPSTAKES WORK? • Stallion owners nominate their sires into the program. • Mares are bred to Nominated Sires and the resulting foals are nominated into the program as Breeding Entries. • Breeding Entry nominations must be made by December 31 of the year the mare is bred. • The resulting foal is eligible to win Sweepstakes Prize Money for life.

5. HOW ARE WE DOING?

6. SWEEPSTAKES ENROLLMENTALL CATEGORIES

7. SWEEPSTAKES ENROLLMENTALL CATEGORIES

8. SWEEPSTAKESENROLLMENT BREEDING ENTRIES

9. SWEEPSTAKES ENTRIES

10. SWEEPSTAKESFUND BALANCE

11. SWEEPSTAKES TRENDS

12. EARNINGS VS. PAYOUTS Note: In the past 7 years, the Sweepstakes fund has spent more than it has taken in by $3,595,000

13. BREAKDOWN OF HORSE SHOW ENTRIES

14. TIMELINE OF EVENTS November 2004 - The challenge to address Sweepstakes was issued. May 2005 – The Sweepstakes Commission met and developed their first proposal and was asked by the Trustees to provide additional information. August 2005 – The Sweepstakes Commission gave a presentation to the Trustees; their proposal was not accepted. The Trustees outlined their objectives and priorities and instructed the Commission to come back with a new proposal using the Trustees’ recommendations. September 2005 – The Sweepstakes Commission came back to the Trustees with a revised proposal asking for an up or down vote on the proposal. September 2005 – The straw vote by the Trustees was four in favor and 18 against the Sweepstakes Commission’s revised proposal. October 2005 – President Krause appoints a Sweepstakes Task Force to incorporate the Trustees’ recommendations into a new comprehensive proposal.

15. The Sweepstakes Task Force members appointed are: Dan Stevenson, Chair Jan Decker Dean Meier Susan Meyer Lance Walters Utilizing the priorities from the Trustee’s survey and the information provided through the hard work of the Sweepstakes Commission, the Task Force formulated a revised program. SWEEPSTAKES TASK FORCE

16. RESULTS OF TRUSTEE SURVEY

17. RESULTS OF TRUSTEE SURVEY- CONT’D

18. Encourage the breeding and stimulate the marketability of Arabian, Half-Arabian and Anglo-Arabian horses for all levels of competition. Increase interest and participation in the Sweepstakes Program for everyone, from those who compete at the local level to those striving to breed a national champion. Create an all-inclusive Breeders Incentive that delivers a direct, continuing and significant return to participating breeders giving owners an incentive to nominate all horses into the Breeders Sweepstakes program. Reward Sweepstakes participants at our highest level of competitions. Ensure funds for future payouts and long-term validity. Make the program easily adjustable to best serve the needs of the membership. Utilize a standardized class list that makes it easy to identify, track and calculate payouts. Encourage breeding in each discipline. Encourage a limited class list providing local shows less overhead and exhibitors more time to enjoy the events. OBJECTIVES

19. Encourage breeders to realize a return on their investment by providing a breeders incentive of 10% to the breeder/nominator and 5% to the nominated sire owner. Adjust payouts on an annual basis so that the fund will not pay out more than it takes in, ensuring the financial viability of the fund. Encourage breeders at all levels to nominate into the Sweepstakes program by paying out for points earned in designated Sweepstakes classes at all levels of AHA recognized competitive events (except Community Shows). Recognize the importance of amateurs by designating new amateur classes for payout at all levels of competitions. Create a flexible program which allows for future classes to be added in addition to larger amounts available for payouts to adjust for the demands of our membership and best serve our breeders. Reward Sweepstakes participants at all levels of competitions. REVITALIZING THE PROGRAM

20. DESIGNATED SWEEPSTAKES CLASSES FOR ALLOCATED PAYOUT

21. DESIGNATED SWEEPSTAKES CLASSES FOR ALLOCATED PAYOUT-CONT’D

22. The proposed Sweepstakes classes were selected based on discussions the Task Force members had with both breeders and owners. In addition, these classes were also deemed as core breeding classes by the Sweepstakes Commission. With the flexibility of this proposal, additional classes may be added as funds are available. DESIGNATED SWEEPSTAKES CLASSES

23. 65% of payouts to Arabians - 35% to Half-Arabians/Anglo-Arabians in all National and Regional allocated money payout classes (based on approximate percentage of nomination into the Sweepstakes program) . National – Approximately 20% of total collected funds for selected allocated money payout classes. U.S. – 16% - 28 total classes 15 Arabian 13 Half-Arabian/Anglo-Arabian Canadian – 3% - 16 total selected classes 9 Arabian 7 Half-Arabian/Anglo-Arabian Sport Horse – 1% - 6 selected classes Regional – Approximately 25% of total collected funds for selected allocated money payout classes. 18 regions – 16 classes 9 Arabian 7 Half-Arabian/Anglo-Arabian ALLOCATED PAYOUT PERCENTAGES

24. Of the total collected funds for selected allocated money payout classes, placings at the National and Regional levels will be paid accordingly: 30%     Champion   20%     Reserve Champion      50%    Top Ten or Top Five The 50% payout for Top Ten will be divided equally among the remaining eight. For Top Five, payout will be divided equally among the remaining three. ALLOCATED CLASS PERCENTAGES

25. Points can be earned at all AHA recognized competitive events (except Community Shows) that hold designated Sweepstakes classes and rides. Approximately 55% of total collected funds will go to into this pool. Total points earned each year (needto determine beginning and ending date to earn points) in designated Sweepstakes classes and rides will be divided into this $ pool to arrive at a $ per point figure. Eligible Sweepstakes horses earning points in designated Sweepstakes classes will be paid at the end of the designated year. To ensure the stability of the fund and guarantee the highest dollar payout per point an annual enrollment payment of $100 is necessary to be paid ONLY the year competing for point prize money payouts. POINT PAYOUTS AT AHA RECOGNIZED EVENTS

26. ESTIMATED 2006 PAYOUT

27. PROPOSED ENROLLMENT FEE

28. PAYOUTS TO ALLOCATED MONEY CLASSES

29. PAYOUTS FOR POINTS

30. SUMMARY COMPARISON

31. Breeders Incentive: A Breeders Incentive is paid to the Breeding Entry Nominator, who is defined as the person nominating the Breeding Entry (original nominator), and to the current Nominated Sire owner. The nominator of the Breeding Entry will be awarded payback equal to 10% of the prize money awarded through points to the Breeding Entry at National and Regional Shows and points earned and paid at designated Sweepstakes classes and rides earned at AHA recognized competitions (except Community Shows). The Nominated Sire owner will continue to receive 5% of prize money awarded to the Breeding Entry as noted above. Payback will be calculated each calendar year and will be made annually as a lump sum within 60 days of receipt of all supporting records from appropriate governing organization of the year’s last event. Current AHA Membership is required in order to receive Sweepstakes payback. BREEDERS INCENTIVE

32. As participation increases and AHA returns the interest income to the Sweepstakes fund, money will be available to add classes, increase payouts and increase fund balance and interest income. With the exhibitor’s quest for qualification points and a standardized Sweepstakes class list, show management will adjust their show schedules to fewer classes which should encourage more participation (and points) in each class and provide more time for exhibitors to enjoy the show. ADDITIONAL CONSIDERATIONS

33. HURRY, DON’T MISS IT! INCENTIVE PRICING UNTIL MARCH 1, 2006 Original Entry now $3,500. (this entry will be increased to $15,000 after the incentive pricing special) Nominated Sire discounted from $3,500 to $2,500. Non Arabian Nominated Sire discounted from $4,000 to $3,000. Discounted Nominated Sire discounted from $2,500 to $1,500. CURRENTSWEEPSTAKES ENTRY EXTENSION

34. DON’T WAIT AND MISS YOUR OPPORTUNITY! EXTENDING THE 2006 SWEEPSTAKES IN-UTERO FOAL DEADLINE TO MARCH 1, 2006 DEADLINE EXTENSION