Bloodstock & Markets - The New and the Twos

Bloodstock & Markets - The New and the Twos
Photo: Joe DiOrio
Keeneland September Sale

New stallions used to be wildly popular in the Thoroughbred marketplace. Buyers and commercial breeders loved them because their progeny represented “blue sky” investments with no downside to diminish their appeal.

Then, several years ago, an American recession and a global financial crisis shook up the auction business and horsemen’s attitudes toward new stallions changed. The fact their offspring hadn’t been tested on the racetrack seemed to become a liability. Many buyers and commercial breeders, seeking to reduce their risk, flocked to proven studs.

But based on the results of this year’s Keeneland September yearling sale, new stallions probably don’t deserve to be abandoned by breeders. An analysis by The Blood-Horse of the auction’s results showed that the progeny of first-crop sires performed well in the sale ring when compared to the offspring of studs that had sired multiple crops. The calculations used took into account the stud fees in 2009 (the year the yearlings were conceived), Keeneland’s commission, and the cost of upkeep.

Of the 575 progeny of first-crop stallions offered during the September sale, 19% were profitable. The price-to-stud-fee ratio for the 434 that were sold was 1.98. As for the offspring of multiple-crop stallions, 20% of the 3,114 offered were profitable. The price-to-stud-fee ratio for the 2,487 sold was 1.94.

During the September auction’s two select sessions, 65% of the 17 progeny of first-crop stallions offered were profitable. The 13 that were sold had a price-to-stud-fee ratio of 5.01. Of the 174 offspring of multiple-crop stallions offered, 44% were profitable. The price-to-stud fee ratio for the 116 that were sold was 3.49.

For commercial breeders, sending mares to new stallions might not be such a bad strategy after all.

Juvenile Shuffle

The schedule of major select sales of 2-year-olds in training underwent a major change earlier this year when the Ocala Breeders’ Sales Co. didn’t conduct its February auction in Central Florida, reducing the number of sales in that category from five to four. In addition, Fasig-Tipton officials decided to move their South Florida sale from Calder Casino & Race Course to Palm Meadows Training Center.

There will be even more modifications in 2012. Fasig-Tipton management announced in September that it had moved the company’s South Florida sale from early March, where it kicked off the 2011 juvenile selling season, to March 26. Barretts officials, who originally had planned to conduct their select auction March 20, have decided to take the leadoff position on the 2012 schedule. The Southern California auction will be held March 5 or 6, according to Kim Lloyd, a Barretts vice president.

OBS is keeping its previously announced dates for its March select sale (March 13-14), and Keeneland officials haven’t expressed any intention to move their Central Kentucky select sale from its April 9 spot on the calendar.

“There has been a steady shift over the last few years in most 2-year-old racing programs, with the tracks pushing back juvenile races to later dates in their calendars,” said Fasig-Tipton president Boyd Browning, in a prepared statement, of the decision to change the date of the company’s South Florida auction. “Finding a window for our sale in late March is a logical move to reflect these circumstances. We will also move the sale from a Thursday spot to a Monday, which allows us to avoid any conflicts with live racing at Gulfstream Park.”

In its first year hosting the Fasig-Tipton Florida auction, Palm Meadows, which is located in Boynton Beach, received rave reviews from buyers and sellers. The March 3 sale generated a median price of $200,000 that was identical to 2010’s comparable figure. One of the auction’s offerings, a $1.35 million Empire MakerHalf A. P. filly named Betwixt, was the most expensive 2-year-old in training sold in 2011.

But there were some weak spots. The sale’s gross revenue declined 15.4% to $19,832,000. Meanwhile, the average fell 4.9% to $244,840 and the buy-back rate rose to 43.4% from 37.2% the previous year.

In consignor Eddie Woods’ opinion, Fasig-Tipton’s decision to change the South Florida sale date wasn’t a good one.

“Historically, it’s been in that place (late February or early March) for years,” he said. “It’s a boutique sale and I don’t care when you move it to, it’s always going to be a boutique sale (attracting a small group of wealthy buyers interested in fancy stock). It’s probably going to leave the sale with less numbers and make the OBS March sale a stronger event. That is fine by me seeing that I’m a shareholder in (and a director of) OBS.”

However, three other consignors—Tony Bowling, Niall Brennan, and Nick de Meric (who all are Ocala Breeders’ Sales Co. directors)—reacted more positively to the shift.

“I think it might not be a bad move,” Bowling said. “Most of the horses in the sale are high-dollar horses, and it gives them more time to develop.”

The date change also will allow Bowling to spend additional time with his OBS March sale 2-year-olds, which he prefers because he typically consigns more juveniles to that auction than he does to the Fasig-Tipton South Florida sale. Previously, Bowling had to rely on his staff to oversee the care of the March sale horses while he traveled to South Florida to supervise the training and showing of his Fasig-Tipton auction stock.

De Meric also liked the opportunity to have extra time to prepare his 2-year-olds for the Fasig-Tipton auction.

“It’s probably a good thing in terms of physical maturity for the horses and the additional time to train them,” he said. “Those are definite positives.

“However,” de Meric added, “the sale will be right in front of the (Emirates Airline) Dubai World Cup (UAE-I, scheduled for March 31 in 2012). A lot of racing’s dignitaries will be focused in that direction instead of on Palm Meadows. But you can also say (in the sale date’s defense), ‘Just how many of those guys do we actually sell 2-year-olds to other than, of course, (Dubai’s ruler) Sheikh Mohammed?’ ”

Brennan didn’t see “any negative for anybody” in the Fasig-Tipton auction’s later spot on the select juvenile auction schedule. The surface of the track where the horses train, not the dates, he believed, probably will be a more important factor in consignors determining where to send their better 2-year-olds.

“There is a very good dirt track and a turf course at Palm Meadows,” Brennan said. “OBS has a very good synthetic track that is consistent and doesn’t get raced on all year. It might come down to whether you feel like your horse is a true dirt horse or is bred for the turf in Europe, so you would want to take him down there (to Palm Meadows). To me, both sales (the OBS March and Fasig-Tipton auctions) are excellent and their timing in the middle of March and the end of March is fine.”

Browning said he is anticipating that the number of horses the company will offer during the 2012 edition of the South Florida sale will be about the same as it was in 2011. The closeness of the Dubai World Cup, he added, wasn’t a concern “because the sale is on a Monday and the Dubai World Cup is the Saturday following that, which allows ample travel time for trainers and owners who have horses participating in the race.”

Tom Ventura, who serves as the general manager and director of sales for OBS, didn’t believe that company’s March auction would be impacted negatively by the shuffling of the juvenile select sales’ order. Earlier this year (before OBS adjusted the results, as revised by Florida law, to reflect buy-backs that weren’t recognized immediately), the number of horses sold at the March auction increased 46.7% to 245 (the most of any select juvenile sale) while the gross rose 44.2% to $25,613,000. The average fell 1.7% to $104,543 and the median dropped 6.7% to $70,000. The buy-back rate declined to 23.7% from 29.5% in 2010.

During hard financial times, the March auction, which is held in Central Florida, grew more appealing to consignors because many of them are based in the area and it costs less for them to remain near home than to travel to South Florida or California.

“The quality of the March sale has improved over the years, and there is depth at the top,” Ventura said. “Consignors feel like they can get top dollar for their horses, and they don’t hesitate to put any horse in the sale, whether it’s by A.P. Indy or an unproven sire. We also have enough quantity that buyers with different budgets feel like they are going to be able to buy a horse they like. We’ve worked hard to get to that position, and we’re at the point where I feel like we’re firmly established, so the order (of the sales) isn’t going to affect us.”

Lloyd expressed satisfaction with the Barretts March sale’s opening position.

“We wanted the lead date; we see it as an advantage,” he said. “It will make it easier for consignors to come out here, get their business done, and then go back to their home base in Florida before the sales there start. We thought we had good horses last year, and we think this gives us an opportunity to recruit more of the better ones this year.”

The early March date also will put the Barretts auction close to the running of the Santa Anita Handicap (gr. I), which “brings in a lot of people” to Southern California, Lloyd said. “Our sale will tie in well with that weekend,” he added.

The shuffling of the select juvenile schedule will be a boost for the Barretts March auction, according to Woods.

“It will be an injection of life for Barretts,” he said. “The first 2-year-old sale of the year is an occasion, and people, both buyers and sellers, look forward to it. It will be a unique situation for Barretts to be first, and I think its March sale will benefit.”

The average at this year’s Barretts March auction grew 11.1% to $100,709 while the median increased 16.7% to $70,000. The gross declined 11.4% to $5,539,000. The buy-back rate fell to 23.6% from 31% in 2010.

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