Is the capacity really only 5? i put 2 in but now changed my mind seeing only space for 3 more, i need more space - i suppose i need to retire them 2 this season as i dont think i can remove them earlier?

The breeding barn automatically upgrades based on how many horses are in it. Keep throwing horses into the barn and you can hit the cap. The cap is the same as your main stable (150 in SO6, 100 in SO5 and earlier). You don't buy stalls for the breeding barn, although it's not particularly obvious how you get more stalls for it. It never has been in any version since breeding was added.

Put another way, you aren't capped at 5 horses for the breeding barn. Add a sixth and you'll see the cap go up.

As a recommendation, I wouldn't go over 75 horses if you're playing SO6 or 50 horses if you're playing SO5 or earlier in the breeding barn. Also be aware of how many outside horses you breed with. The foals in your breeding barn also count toward that cap despite it not looking like it. The game just seems to count the mares and stallions but not your foals. I lost around 20 foals learning this the hard way. That's true in SO5 anyway. Not sure in SO6 since I have yet to play it beyond the demo. Since SO6 is largely SO5 with 3D graphics, it's likely still true, though.

thanks, i have maxed out the 150 regular stalls but it said 5 in the barn, i'll throw a few donkeys in there to check on a testing save game