The need for it is debatable. Many horses live out their lives without ever having the sheath cleaned and have no health issues. There is mounting evidence that many inflammations, lesions, and infections are actually caused by excessive cleaning of the sheaths. There is no viable evidence that cleaning the sheath actually prevents infections or lesions.
Breeding stallions, btw, are cleaned to protect the mare's genital tract, and not because it benefits the stallion.
The oils that form smegma (oils mixed with dead skin cells that shed) are protective. They maintain a layer of pH balanced protection from microbes and insects that can enter the sheath from the environment when the horse lies down, etc. The pH aids in preventing microbes from colonizing and developing into infections. There is also a protective bacterial flora on the skin of the sheath. These bacteria compete against pathogenic (disease-producing) microbes and help to maintain the pH, and they are essential to the prevention of infections.
Anything that kills the microflora increases vulnerability to infections. This can include antibacterial agents or drowning of the microflora with excessive rinsing.
Cleaning of the sheath can disturb the natural oils and microflora, which leaves the skin more vulnerable to infections. The cleaning agents can irritate and cause inflammatory changes in the skin which can then encourage development of lesions.
There is a risk of developing a hardened "bean" of smegma within the pouch surrounding the urethral meatus where urine is passed from the tip of the penis. If one enlarges sufficiently, it can obstruct urine flow. So this pouch should definitely be checked regularly for a bean, and if one is found it should be removed.
If your horse drops and you see lumps or excessive accumulation of debris, then a cleaning is in order. I only recommend use of plain water, or of K-Y jelly to lubricate and remove excess debris. K-Y is water soluble, so if it isn't rinsed, it won't hurt anything. It won't kill the microflora or disturb the natural oils. It will allow you to soften and remove the excess smegma and debris without irritating the skin of the sheath. K-Y is a medical lubricant that we use when needed for delicate procedures like insertion of urinary catheters, and is safe to use for sheath cleaning and removal of the bean.
So, I recommend cleaning the sheath only when you observe an obvious need for it, and not according to any arbitrary schedule and only using K-Y jelly, and to be sure to check for a bean periodically.
Add....Excalibur is an unregulated (not researched and approved under FDA protocol) product. It can cause skin and eye irritation, gloves must be worn when handling it, and it must be rinsed fully when used. Tea tree oil is the only ingredient the manufacturer lists, while the others remain unrevealed for public scrutiny. I never like to use products on my horses that can't be fully researched for safety and efficacy, and/or have not been FDA approved. Here is the MSDS on it.................
http://whatsinproducts.com/msds.php?brandId=6694