Auction Downturn Continued in 2010

Auction Downturn Continued in 2010
Photo: Anne M. Eberhardt
File Photo

Even though it’s still early in the new millennium, the Thoroughbred auction business already has had to struggle through two downturns. The first setback lasted only two years—2001 and 2002—and the main culprits were the 9/11 terrorist attacks and mare reproductive loss syndrome in Central Kentucky. The second setback, which began in 2007 with minor losses and was made worse by a severe American recession and a global financial crisis, stretched to its fourh consecutive year in 2010, and nobody was sure how long it would continue.

The rate of decline for prices in 2010, however, wasn't as steep as it was in 2009, leading some people to believe the marketplace's nosedive was nearing its end.

The combined results in North America for the four major categories of auction horses—yearlings, weanlings, 2-year-olds, and broodmares—in 2010 included a gross of $597,362,018 for the 14,414 horses that were sold. The average price was $41,443.

Compared to 2009’s statistics, the number sold fell 5.3% while the gross dropped 8.4%. The average tumbled 3.3%.

In 2009, the declines from the previous year were 14.7% for number sold, 32.4% for gross, and 20.8% for average.

What many commercial breeders are hoping is that the decline in the size of foal crops will lead to further reductions in the number of horses being offered commercially and, eventually, an increase in average. They’re also hoping that the drop in the costs for stud fees will someday soon allow them to make a profit with more of their young horses.

It wasn’t so long ago—although it seems that way—that a thriving auction business enjoyed a record-setting run. The gross and average for the four main categories of sale horses established North American marks of $1,225,912,327 and $59,707, respectively, in 2006. The number sold that year, 20,532, was the highest total since 1984’s North American record of 21,497.
 
After then and through 2010, the number sold dropped 29.8%. The gross plunged 51.3%. And the median plummeted 30.6%.

Another bad time for the Thoroughbred auction business was in the latter half of the 1980s and the early 1990s, when changes in tax laws hurt the industry in general.

The gross revenue for the four major categories of auction horses fell five years in a row (1988-1992) and the average declined four of the five years during the same period and was down three years in a row (1990-1992). It also was down five times in a seven-year stretch—1986 through 1992. In 1992, the 16,118 horses that were sold grossed $331,785,973 and averaged $20,585. The peaks in the 1980s were 21,497 for the number of horses sold in 1984 (as reported previously), $682,703,173 for gross in 1983, and $33,664 (in 1985).

The number sold and gross in 2010 were the lowest totals since 12,371 in 1978 and $514,337,438 in 1995, respectively. The 2010 average was the lowest since the comparable figure of $38,417 in 1997.

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