BusinessTN

Outside of the racetrack, talk of horse competitions providing sound investment opportunities typically conjures images of exclusive gun clubs peopled by lock-jawed bluebloods with British pretensions nearly as bloated as their bank accounts. But one with such a myopic view obviously has never spent time in Marshall County, home to the central association that drives the $250 million-plus Tennessee walking horse industry.

Founded in 1935, the Tennessee Walking Horse Breeders' and Exhibitors' Association (TWHBEA), headquartered in Lewisburg, maintains the unique breed's registry in addition to orchestrating PR campaigns for the protection and expansion of the industry. It would seem to have been cruising along until a couple years ago when the industry was beset by two disastrous blows. One—a festering abuse scandal finally culminated in the U.S. Department of Agriculture toughening up industry regulations in the hopes of stemming soring, the practice of exaggerating the breed's natural high-stepping gait with caustic chemicals, painful shoeing and other techniques. The second was a expensive copyright and trademark infringement lawsuit brought by TWHBEA against the upstart National Walking Horse Association.

The fallout from the first calamity struck neighboring Bedford County hardest—shutting down the breed's crowning event, the Celebration, for a brief time before returning in 2007. Soring still continues to haunt the industry with bad publicity, but it directly fed the trouble embroiling TWHBEA, which is fighting to regain a financial foothold despite a courtroom victory announced in February.

"We had no idea what kind of economic impact the lawsuit would take," admits TWHBEA's Lori Puckett.

Puckett says the once-largest organization of its kind is in restraint mode until it bounces back.

But back from where?

"One of the toughest periods TWHBEA has ever faced," association President David Pruett wrote in his recent state of the association address. The $31,000 judgment awarded as a result of the trial hardly helped considering the fight cost TWHBEA nearly $1 million in legal fees. The lawsuit turned the solvent association red, forcing cost-cutting measures the likes of which would even frighten newspaper publishers.

TWHBEA, it turns out, did not even have enough money to finance the legal battle to begin with.

"Individual monetary contributions made it possible to continue the lawsuit," Puckett says.

It begs the question—why make the fight? What was at stake?

As of November 2006, TWHBEA had 98% market share of registered Tennessee Walking Horses, approximately 430,000 animals, in its registry. Prompted by a soring scandal that dates back more than a decade, a group of current or former TWHBEA members (including three-fourths of the founding directors) formed the nonprofit NHWA in 1998 "to promote the sound, natural gaited horse and eliminate the practice of soring," according to trial transcripts. In 2004, the upstart began its own registry. Not long afterwards, it began accepting TWHBEA certificates on its own registry.

Part of the brouhaha is due to the pedantic nature of the registry. Suffice it to say, the Social Register is easier to crack than TWHBEA.

"[We use a] DNA process to validate bloodlines for the Registry," Puckett explains.

NHWA, admittedly, didn't verify owner's claims of their animal's lineage, which TWHBEA believes injures the integrity of the breed and future viability of the industry—thus the cause for the lawsuit. It certainly wasn't because the NHWA was taking much money out their pockets—in its short life, the NHWA registry earned less than $25,000 in revenue.

But the judge did not find totally for TWHBEA. Its registry essentially is a compilation, the parts of which are not necessarily copyrightable, only its original packaging. (Just think of the difference between the Yellow Pages and the white pages.) TWHBEA maintains in its possession the pedigree of every horse registered with it since 1935, but its copyright pertains to how it packages that information in its certificates.

Though the court ruled that NWHA knew what it was doing when it accepted that information for its own online registry, the victorious TWHBEA is close to being broke. They've had to disconnect the toll-free phone line and even switch to a cheaper trash service. And they essentially cleared house, too, cutting staff positions and changing others. In late April, Stan Butt was promoted from interim to permanent executive director following the phase-out of former director, Chuck Cadle.

TWHBEA's wobbly rebound is a dicey predicament for many in Middle Tennessee.

"The Tennessee Walking Horse industry provides a very significant economic impact and much recognition for our state," says Dr. Alan Mathew, head of the Department of Animal Science at the UT-Knoxville.

Tens of millions of dollars are generated by events like the Celebration and through the efforts of TWHBEA, according to Dr. Doyle Meadows, the Celebration's recently named CEO.

Needless to say, it will be a long, albeit high-stepping, walk back to fiscal health.