Stud farms in crisis: Are auctions saving their financial future?

Despite good results from recent auctions, stud farms are still struggling with deep financial losses, which undermines the optimistic statements from management boards about reversing negative trends. Auctions will not save the stud farms because, with multi-million debt, the profit from a single auction event covers only a fraction of the operating costs necessary to maintain the stud farms in Janów Podlaski and Michałów. The current business model based on selling off horses is merely a temporary reaction to the crisis, not a recovery strategy capable of permanently stabilizing the profit and loss account.

The mechanism of the auction illusion

The management board of the stud farm in Janów Podlaski announced success on August 21, 2026. Information provided by Business Insider Polska and wnp.pl suggested that the financial process had been reversed. Corporate communication was dominated by a message about a breakthrough. However, an analysis of the comparison between auction revenues and the real costs of maintaining the herd shows that this interpretation is incomplete. The sale of Arabian horses, although generating high unit amounts, does not create permanent working capital.

Farmer.pl, in a publication from August 20, 2026, pointed to a key problem: Polish Arabians are finding buyers, but the stud farms as enterprises are still generating negative financial results. This is not a situation where profit from auctions covers operating costs such as feed, veterinary care, employee salaries, or the maintenance of historic infrastructure. The value of a single transaction, even if counted in the hundreds of thousands of zlotys, is dispersed by the accumulated debts of previous years.

When management boards talk about success, they refer only to gross revenue from auctions. A true balance sheet must include breeding costs, which are exceptionally high in the case of purebred Arabian horses. Maintaining a herd at the level required by the standards of national stud farms requires outlays that revenues from one or two auctions a year cannot cover. Financing the operations of state-owned companies through the cyclical sale of the best specimens leads to genetic depletion and a decline in breeding potential, which in the long term hits the value of the entire enterprise.

Balance sheet of losses: From 2025 to today

The situation of the stud farms in 2026 does not arise from a vacuum. In April 2025, media outlets, including Super Biznes and WP Wiadomości, sounded the alarm about record financial losses. This was a period when these institutions found themselves at the bottom of their operational capabilities. Analyzing data from that time, it is clear that the deficits were not caused merely by a temporary market collapse, but by systemic inefficiency.

Niezależna described the state of affairs in Janów Podlaski and Michałów in October 2025 as "finishing off" the stud farms. This assessment was not an opinion at the time, but a conclusion drawn from an analysis of the companies' financial liquidity. A year later, despite loud announcements of repairs by management boards, the financial foundations remain fragile. If the stud farms recorded losses counted in millions of zlotys in 2025, the modest profit from the 2026 auctions is merely a cosmetic improvement.

One cannot speak of repair if the company's balance sheet still shows operating debt, the servicing of which consumes most of the current income. The stud farms in Michałów and Janów Podlaski operate in a model where every month of operation generates fixed costs. These costs do not disappear after the auction ends. Management boards boast about the amounts auctioned, but remain silent about how much of that money remains in the till after paying obligations to suppliers and employees.

The true financial condition is visible only in annual financial statements, which take into account the full costs of operation. The current narrative of the management boards focuses on selectively chosen indicators, which allows for the creation of an illusion of improvement. Data from 2025 showed that these institutions are capable of generating deficits that call into question their continued existence in their current legal form. Without restructuring fixed costs, every auction will merely be pushing the bankruptcy date back by another quarter.

The politics of success in the shadow of debt

The dispute surrounding Arabian horse stud farms in Poland has a purely political dimension. On August 18, 2026, PSL politicians announced success in managing the stud farms, treating the auction results as proof of the effectiveness of their personnel and management policy. However, this narrative was quickly confronted with facts by Rzeczpospolita. The newspaper's analysis indicated that behind the political declarations of recovery lie real losses that cannot be hidden by optimistic press releases.

The conflict between PSL and the opposition regarding the stud farms is, in reality, a fight over the interpretation of financial results. For politicians of the ruling coalition, auction success is the primary argument that state assets are in good hands. For the opposition, every piece of information about losses is proof of the incompetence of the management boards. In this dispute, there is no room for a reliable economic analysis. Instead of a discussion about cost optimization or new sales markets, we are observing a shifting of responsibility for debts that have been growing for years.

Managing stud farms requires a long-term breeding and economic strategy. PSL politicians, pushing the message of success, use the stud farms as a branding tool. However, for breeders and market analysts, it is clear that the financial success of an institution is not measured by the price of one horse during an auction in Janów Podlaski. It is measured by the company's ability to self-finance all its processes. If a stud farm must seek external support or sell off capital to cover current costs, it means the business model is flawed.

Politically "powdering" reality has its consequences. When the management board announces improvement, it creates a false sense of security among investors and employees. The scale of debt mentioned in reports is too large to be offset by temporary inflows. Every attempt to cover up these losses with political success pushes away the chance to carry out real changes that would allow the stud farms to emerge from their financial collapse.

Infrastructure devastation as a hidden cost

Financial issues are only one side of the coin. The other is the physical state of the facilities, which is a direct reflection of the financial condition of the companies. Business Insider Polska raised the topic of the devastation of the stud farm in Janów Podlaski as early as January 3, 2026, demanding answers about the state of the infrastructure. Neglect in this area represents costs that will have to be incurred in the future, which are not currently being discussed.

Maintaining historic stables and paddocks requires constant investment. If a company generates losses or balances on the verge of profitability, the first budget cuts are to repairs and modernizations. This leads to the degradation of assets. When infrastructure deteriorates, not only does the market value of the stud farm fall, but so does its prestige, which directly translates into less interest from horse buyers. The circle closes.

Niezależna pointed to the fatal condition of Michałów and Janów as early as October 2025. These warnings did not receive an adequate reaction from the managers at the time. Today's announcements about reversing negative trends are silence in the face of these problems. A management board that focuses solely on sales results ignores the fact that without efficient infrastructure, it will not maintain the quality of breeding that is the basis for success at auctions.

One cannot separate finances from the technical state of the facilities. If a stud farm loses the quality of its resources, it will soon also lose its standing in the auction market. It is a system of communicating vessels. Lack of investment in infrastructure in 2025 means higher repair costs in 2026 and subsequent years. The strategy of short-sightedness, consisting of grabbing cash from auctions while simultaneously allowing the degradation of assets, is a direct path to the complete loss of value of these national institutions.

What this means for you

The outlook for the taxpayer and market observer is worrying. The horse stud farms in Janów Podlaski and Michałów have been transformed into a political testing ground, where sales successes are used as a smokescreen for structural problems. As a taxpayer, you are financing the deficits of these companies, while the management boards – instead of carrying out deep restructuring – focus on PR victories.

If the stud farms remain permanently loss-making, their prestige will continue to fall, and the best horses will go to private breeders who are able to provide them with better conditions. The loss of the Polish Arabian brand is an irreparable damage that cannot be valued in the millions of zlotys from auctions. The real catch is that as long as management boards can hide losses behind the facade of auction success, there will be no real pressure for changes in the business model.

Questions and answers

Did the 2026 auctions save the stud farms?

No. Although the sale of horses brought in revenue, according to experts, these amounts are insufficient to cover the accumulated operating debt from previous years and the costs of maintaining the infrastructure.

Why are politicians arguing about the results of the stud farms?

Stud farms are treated as a national symbol. Therefore, every piece of information about their financial condition becomes a weapon in the ongoing political struggle between PSL and the opposition, which hinders a substantive discussion about their future.

What is the main cause of the financial problems?

The main cause is the accumulation of multi-year operating losses, which reached a record level in 2025, while simultaneously lacking an effective recovery strategy and suffering from the degradation of infrastructure assets.

What do management boards not report in their statements?

In their 2026 statements, management boards omit the scale of debt, the fixed costs of maintaining the herd, and the long-term financial consequences resulting from the need to repair devastated infrastructure.