Anne M. Eberhardt

Keeneland Books 3 & 4: Less Is...Less

Friday offers a day off from selling...but consignors are busy showing Book 3 horses.

The “blowback” moment at the Keeneland September yearling sale came Sept. 14 during the first session with the average and median falling more than 33% from last year’s opening session. The drop in gross — 55.5% — could partially be attributed to the smaller catalog.

One major player described the first two days of the Central Kentucky sale as a “Lehman Brothers moment"…and it was almost one year to the day the investment firm went belly up, helping to fan the flames of the financial crisis that hit Wall Street and other trading centers around the world.

While it many not have been quite as dramatic as what happened to Lehman Brothers and other institutions like Merrill Lynch, the first four days (Books One and Two) of the September sale have seen some pretty rough sledding: the gross is off 42.5% from 2008; the average and median are down 31.6% and 38.9%, respectively. The buy-back rate stands at 34.5% compared to 28% a year ago.

Friday, Sept. 18, offered a bit of a respite, with its day off from selling. However, consignors were busy at the barns around Keeneland’s sale grounds, sizing up the market and showing horses from Book Three that will sell Saturday and Sunday. The 14-session sale runs through Sept. 28.

Amid gray skies and a scattered rain shower, the mood from buyers and sellers tilted toward hope of stability, but likely their reality will be more of same: less will be…less.

“I think there will be a little more stability, but it’ll be down,” said Doug Cauthen, president of WinStar Farm near Versailles, Ky. “I think there is more consistency in Books Two, Three, and Four. It might level off to where it’s only down 20-25%.”

Heading into the sale, Bill Farish of Lane’s End Farm, and many others, thought the first two books would be solid. And like many others, he’s had to readjust.

“I think everybody figured we might be OK during the first four days (two books) and then the bottom would drop out,” he said. “Since the first part didn’t play out like we thought, it’s definitely been rockier than most people thought it would be.

“I still think it is going to be thin and there might be a disproportionate percentage of buy-backs, but you might see people even more conservative on their reserves and getting them sold, but getting them sold for less. I expect we’ll continue to see each day’s gross down significantly (over last year’s)."

Sharing a similar sentiment was Craig Bandoroff, head of Denali Stud.

“It’s not going to get a whole lot better,” said Bandoroff outside Barn 5. “Book One is always tough, always tricky, but I thought the sale would level off in Book Two. We had horses that sold good; everybody had horses that sold good. You had some nice horses; it was just a little tougher than I expected.

“It can only get tougher. I hope I’m wrong. What’s to make you think it’s going to get better? The deeper into the sale you go, you’re getting to people with less disposable income. That’s where we were afraid we were going to get hit anyway.”

Many at the sale have talked about the lack of credit available to buyers and pinhooking ventures. Hall of Fame jockey and bloodstock agent Eddie Delahoussaye brought that point up.

“Somebody told me that usually in Kentucky they loan a lot of money to play this game, and this year a lot of that money is not being loaned out,” he said. “That’s having a big effect on the sales.”

Showing a bit of optimism were Francis Vanlangendonck, of Summerfield Sales, and Stuart Morris of Highclere Sales. Summerfield sold the sale-topping filly, a daughter of Medaglia d'Oro  for $1.3 million Sept. 17, while Highclere’s first horses will enter the ring Sunday, Sept. 20.

“The enthusiasm in the business is still here…there’s just not as much money,” Vanlangendonck said. “People still love going to the races and coming out here and looking and buying horses.

"What I see is about the same — the figures being down 30-40%. People will buy the solid horse, but they aren’t buying any ‘what if’ horses. The good horses are bringing good, fair prices, but people aren’t too accepting…if your horse has a problem, you’re in trouble.”

“Every buyer I’ve talked to has said it’s hard to buy nice horses,” said Morris outside Barn 26. “So that indicates to me that there is still money here, and if you have the right horse with the right credentials, and is a nice physical, you’ll get fair money for it.

“It may not be what you would have gotten a year ago or two years ago, but it’s going to be fair money, so I’m not going into this pessimistically. I don’t think we’re dead in the water.  I may have a different opinion Sunday night. But if you are realistic about what the quality of the animal is standing in front of you, you shouldn’t be disappointed.”

As agent, Delahoussaye has sold one horse and bought one horse. He’s hoping to buy a few more before he heads back to California later next week.

“Some people have a lot of horses here that are not selling, but probably the individuals aren’t vetting out,” he said. “Two years ago, a lot of guys would have taken a chance on some of those horses. Now, even if a horse has a slight problem, they aren’t going to take a chance.

“I wish I could be naïve and say it’s going to be great, but I think it’s going to drop off,” he said. “The economy is hurting. Everybody’s hurting. It could be worse — you still have people who love this sport and have the money to do it and they’re still trying to support it. It’s not all bleak.”