Sale Talk: Coping in a Declining Market

Sale Talk: Coping in a Declining Market
Photo: Anne M. Eberhardt

On day four of the plunging Keeneland November breeding stock sale market, here’s what people had to say about the situation:

Patrick Lawley-Wakelin, Virginia-based bloodstock agent: “The market is obviously a reflection of what the world is doing outside the horse business. The last people to get real in this business, in my opinion, are the consignors. There are buyers here, but they are being super, super selective. You can get good money for a mare, but you may not get as much as you would last year. You’re going to have to seriously discount them in this market, and the market is telling us it’s going to be somewhere between 30% and 40%. The consignors have been slow to react to what has been going on outside of the (Thoroughbred) business. That explains the higher buy-back rate.
“Clearly, there are people here who see this an opportunity to buy. I think they are doing that and they are buying some really, really lovely-pedigreed mares. If you are buyer, I think you can get value in this market.”

Bob Anderson, Anderson Farms: “You have to operate with a sharp pencil. The truly professional people will get through it. The others won’t. It’s a major correction in the horse business and other businesses worldwide. But quality always sells well, and we’ve been fortunate to have Sam-Son, Kinghaven, and others supporting us to sell at this sale. We’ve had a pretty good sale.
"It (the market) doesn’t worry me too much. It will force the stud fees down more. They’ve got to be structured in a way that breeders can make money. Racing is the other thing that needs a little adjustment. We probably have too much product up on the (simulcasting) screen. We need a correction.”

Pat Costello, Paramount Sales: “For the mares, it's really rough. It seems like it’s Book 4. Traffic at the barn is down, I would say, 50%. Mares that three months ago I was valuing at $150,000 to $200,000 are going for $80,000 or $100,000.
“Weanlings are solid. On Tuesday, we had a very solid day with the foals. But it’s all or nothing. They (buyers) are on about three or four at the barn, and then the rest of them are finding it tough to find new homes.”

Theodore Kuster, Shawhan Place: “I think everybody cuts their reserves in about half for mares. But it looks like a well-bred weanling will sell for good money. Anything close to the racetrack sells better. It’s a buyers’ market, but I don’t know if we have enough buyers. This is only the fourth day of the sale, and it’s as quiet as can be. That bothers me because, this time next week, what’s it going to be like? That scares me.
"It’s a situation that’s all up and down the spectrum. The million dollar mares are probably off; the middle is off; and I think the lower end is going to be just disastrous.”

Len Burleson, Burleson Farms: “If you like them, you keep them. If you don’t like them, you let them go. That’s where the market is. You better like what you keep because the marginal stuff and the lower end stuff aren't going to do it anymore.
“If it’s a nice mare or a nice baby (weanling), I think they are worth protecting. I don’t think you should treat it like a fire sale. If you like them, I think you can stand behind them a little bit. But if it’s something that you don’t like or it’s something that hasn’t been having good babies or not producing runners, they need to find another home.”

Paul Tackett, Kentucky breeder, consignor: “What makes it so tough, I think, is you get your stud fees plugged in two or three years ahead of time. The market is good; you’re making money. You don’t know when the bottom is coming, and then it starts going the other way. Sure, everybody starts adjusting their stud fees, which is good, but what are we going to do about the horses we’ve already got (bred on the higher fees). The whole economy is contributing to this. Even the people who have the money are afraid to spend it. You’ve got a lot of negatives going against you.”

Suzi Shoemaker, Lantern Hill Farm: “Like everyone else we scratched a lot of horses. Anything that wasn’t perfect that was a foal, we figured we we would get hit (penalized) really hard for it. We’re optimistic that the market will turn around next year. And then, the other thing is that some of our families are set to improve, and so we figure that even if the market doesn’t improve, the individuals may sell better because of racing improvements in the pedigrees. We have quite a number of foals in that category. The young mares that we’ve just put through the ring, two of them (as of mid-afternoon) today – both stakes winners – they just brought one bid over their reserves, and we set our reserves at about half of what we thought they were worth. We often are very conservative with our reserves, and normally they kick on past that; but it isn’t happening at this sale. We don’t even want to think about Book 6 or 8 (of the catalog).”

James Keogh, Siena Farm: “I was trying to buy horses earlier on in the week, and I bought some mares. I didn’t think there were any huge bargains in them. I thought I gave fair market value for them. It appears to me that with a lot of the people who are putting the reserves on them, if they bring it, they’re content enough to sell them and if they don’t, they’re content enough to take them home.
“The market here at Keeneland has been just like the economy. At the moment, there is just a lot of uncertainty out there. People are a little unsure and a bit tentative. But we’ve had good days before and we’ll have good days again. I don’t think the market is in a freefall.”

Charlie Boden, Darley USA stallion nominations manager: “The obvious horse has plenty of play. A good-looking weanling that looks like it will be a nice yearling, the same guys follow it up here and it brings plenty of money. It might not bring as much as it brought last year, but it’s still bringing what I would call a yearling price. The mares are probably the softest part of the market right now. In the past, what’s been terribly resilient has been a young mares carrying her first foal or a maiden mare, not covered, and they’re not bringing half of what they used to bring. Just as a casual observer – I haven’t been trying to buy mares -- that’s kind of surprising to me. I don’t know who has been driving that part of the market in the past, whether it's stallion owners or people who have stallion interests who want a young mare to breed to a horse. But maybe they’re not buying these mares now, and maybe that’s why they’ve dropped half in value.”

Bill Reightler, Maryland-based consignor: “One just has to make adjustments. The bull’s eye is getting smaller and smaller. I think the moral is that we have to, as sellers, be willing to ultimately race some of these horses ourselves. And if you’re not willing to do that, then you just let them go for whatever the marketplace says they go for, and that’s probably not much.
“It all goes back to all of the (negative economic) factors going in the world right now and an oversupply of sale horses. We’ve gotten in this fix over a long period of time when we’ve all done very well at the sales. It probably got to where it was too easy, and ow we’ve gotten to the point of where we are now.”
 

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