The juvenile sale season is in full swing, with three of the select sales, the Ocala Breeders’ Sales Co. February sale, the Fasig-Tipton Florida sale at Calder, and the OBS March sale, in the books. The Barretts juvenile sale is March 22 and the Keeneland April sale will be held April 5.
Results so far have been encouraging…considering today’s marketplace and the overall shape of the Thoroughbred industry. The OBS February sale saw the average and median fall 8.4% and 26.7%, respectively. Fasig-Tipton’s sale, a more high-end venue, saw the average and median climb 9.3% and 33.3%, and the OBS March sale, which ran March 16-17, had an average and median that were up 10.6% and 18.6% over 2009 figures.
Mike Mulligan is the president of the National Association of Two-Year-Old Consignors (NATC) and runs Leprechaun Racing near Ocala, Fla., along with his wife, Britt. He took some time off the morning of March 22 to talk with us about the 2-year-old marketplace and answer five questions.
What were the expectations heading into this year’s sales season and how have things shaken out so far?
“I think that all of were cautiously optimistic because of the smaller inventory of 2-year-olds might get us closer to the supply-and-demand issue that was a concern last year. The averages have been up at the last two sales and even in the first sale the demand had caught up with supply. The first sale, I saw horses sell fairly well in the mid-range, in the $40,000-$80,000 range, and Fasig-Tipton Calder was more an elitist-type of sale and it was an up market. The OBS March sale was probably the fairest overall sale.
“We all live in a different world now and we realize that as compared to years past. There was demand at the $25,000 level and there was demand at the $75,000 level and there was demand for horses between $100,000-$400,000. With the shortness of supply, you have a tendency for those elite horses to possibly bring a little bit more in the March sale than they have in years past.
“I was hoping we’d get the average and median up a little bit at the OBS March sale. We knew revenue would be down because of the number of horses, but overall it was a good sale and it didn’t surprise me, but it was what we were hoping for.
“There are issues with some individual consignors, but overall it was well received. I heard one consignor say, “This was as close to a real horse sale as we’ve had in awhile.’”
Can you compare the 2-year-old market to the other markets in the industry?
“The 2-year-old market is for the end-user buyers. Some come for the elite, two-turn horses and you’ve seen that this year more so at the Fasig-Tipton Calder sale than at some of the other sales, but they’re coming for a finished product that is closer to the races.
“The buyers know that we, as a group of consignors, have gone through these horses and placed them where we think they belong.
“I don’t think there has been any strong rebound in the 2-year-old market that is going to bolster the yearling sales next year. Based on the three sales we’ve had so far, there are some success stories, but there hasn’t been enough success to sustain a large influx of investment capital or bank capital or personal capital to have a lot of confidence to go out there and be bigger than in years past, but it was encouraging that there was someone there to buy horses. I think the yearling market will continue to be difficult. I don’t believe that there is going to be enough strength in the yearling market based on what we’ve seen so far this year.
“We’re dealing with far less buyers of racehorses and that continues to be the issue.
“For the elite horse, it’s not a problem, which is not a problem anywhere you go. It’s that step-below-the-elite horse where you’d try to buy wholesale, present that horse at it’s full best, and try to make a profit off that horse. The middle market is still very shaky at best.”
What has the NATC done the last two years to get out information for the business?
“Our main mission is to sell 2-year-olds and to make sure the safety of horse is at the utmost of consideration during the breeze show and we’ve accomplished that.
“This year our campaign as been dedicated to reminding people of the success of the graduates. When you look at any of the numbers you want to compare: 2-year-olds vs. yearlings, or any other way to buy a horse, they far dominate. Last year, 27% of the winners of all grade I races were presented at a 2-year-old sale, whether it be long, short, turf, dirt, 2-year-old, 3-year-old, 4-year-old, it didn’t matter. That was very strong considering we only present 7-8% of the way you can acquire a racehorse. Those numbers continue.
“Sale 2-year-olds won both 2-year-old championships and won five out of 10 Eclipse awards on the flat and for years we’ve earned over $5 million in the Breeders’ Cup each year. That’s the kind of information we’re trying to instill in our advertising campaign—just the facts in bullet points and showing the good horses that have come out of the 2-year-old sales.
“The fact of the matter is, you have a group of very good horsemen that make their living off of buying at wholesale and selling at retail. It’s not as easy as going to buy yearlings and going on and racing them, and then having a bit more of a budget. We have to buy that horse at a presumed wholesale price and sell it at retail. We have to have the horsemanship that we know that horse will be a racehorse. It doesn’t do us any good to have horses that sell for a lot of money not perform on the race track, or we wouldn’t have the success we’re having.
“These horses have been selected by a very good group of Florida horsemen, they’ve been taken through the process, and have been separated into what sales they should go into. That culling process elevates the best horses up and our buyers have the opportunity to look at the best of the best.”
Speaking of Florida, the breeding industry in the state seems to be in distress. What is going on there?
“I really believe it’s a combination of some issues. The local purses don’t dictate demand, for one, and the second thing is with the economic problems the horse industry has seen over the last two or three years.
“A lot of it, too, is stallion quality. Some horses seem to make it in Florida the first year and then they are purchased and sent to Kentucky. There’s not enough time to have those horses continue to perservere and to breed well. There are many stallions in Florida now that if they were leaving the races now, they would not have the marketability they had two years ago. It takes a lot more ‘horse’ these days to make a stallion or stallion prospect than it did in years past. It’s a combination of all that.
“The guys who stay in Florida and try to be in the yearling and weanling levels of the game, the market has been really tough on them the last couple of years. Even if you’ve had a really nice horse you still were not getting rewarded. Five or six years ago, you’d take a $30,000 horse to March and there would be guys there who would spend $1 million and they wanted to buy 10 horses for $80,000 or $90,000 apiece. Now that same guy, if he’s still in the business, wants to buy two or three horses for $300,000 apiece, which is a product of expenses and trying to find that elite horse.”
A little more than a ago, you fell and suffered a serious head injury that has requiring multiple surgeries. How are you doing now?
I’m probably the best I’ve been. I was in a coma for a while, and then it was a long array of IVs and home nurses and things. I just had another surgery a week before Christmas and I’m good. Luckily, I never lost my business sense or that sort of thing, which they were concerned that I’d have some issues. There is still going to be a little bit of rehab just to get my strength back because I lost a lot of weight while I was in the hospital, but overall I’m the best I’ve been.
"If you didn’t know what had happened to me, other than my hair being a little short for a time this year, I don’t think you’d know that I’d been in an accident like that. It’s very good."