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I don’t have much experience on this since I’m still working on gmting my baselines, but I’ve heard the further into the generation you get the harder it is for foals to pass. I would send all that paper the same to auction or sell off

I'm in the same boat, I can't afford to comparison test so I'm doing a lot of guess work. I do keep the foals in my second and third generation who didn't move up a paper level but still inherited all of the genes I wanted them to. I've then been breeding them for a couple seasons and keeping track of which ones have produced a foal that papered up. If they aren't producing foals that paper up, then I spay them for showing. But I have no idea if that is a good strategy or not... very easy to run out of barn space. It is good to know that you get a lot of 3rd gens who are the same paper level but still comparison testing superior, DarkFrost.

Before I was able to afford comparison testing everyone, I only kept 2G and 3G foals who papered higher (unless they were from expros, but I definitely should have still kept the rule because that line kinda fizzled)

Then, I would cull every season or every other based on AFPT. Lower producers got spayed and either put in a show barn or auctioned. I also occasionally retired mares who already gave me intact keeper offspring and mares who hadn’t given me any after a number of seasons.

Now I can comparison test more and raise standards more, but that kept my line moving forward until I could afford it.

You can have two, even three generations of blue papered mares that comparison test superior to their dams, so ONLY keeping ones that paper higher will rapidly mean you don't have any mares left.

There honestly is no faster, cheaper way than comparison testing with a premium upgrade.

You can make arbitrary decisions about who to keep and who to spay but at some point they're going to be arbitrary decisions, and that's not necessarily a bad thing but it is a recipe for flatlining your quality. I know, I've been there. XD

The next best solution is what we used to do before dam-line comparison and SBA, when you had to use AFPT to judge breeding quality and even that was a little hit or miss. It's also not cheaper, and it's definitely not easier on your barn space because you really need to breed a mare a couple of times to see what kind of foals she gives you, and even then you're still making your best guess at whether she's better or not. (I used to do this pretty religiously. Then dam comparison came out and I ended up spaying about half of my intact mares because, surprise, they weren't actually significantly better.)

When you breed a perfect foundation horse to a perfect foundation horse, you end up with foals whose PT scores are between 8.9 and 10.4. You can breed the same mare to the same stallion 10 times and get 10 foals with different showing abilities (and different breeding abilities, probably in that same range, but we rarely see that.) When you breed an exceptional producer to an exceptional producer, the average goes up half a point, to something like 9.5 and 11. That half-point jump is, ideally, what you want to see in each subsequent generation.

I still have a formula for what I used to want to see as a mare's 3 foal AFPT saved in my personal notes:

2nd: 11 : A/Blue
3rd: 11.5
4th: 12 : *Star
5th: 12.5 Gold
6th: 13
7th: 13.5

But 3 foals plus papering plus barn space is a huge investment of time and money, and you just said you don't have that, so... :)