The Keeneland September yearling sale begins Monday, September 14.

The Keeneland September yearling sale begins Monday, September 14.

Anne M. Eberhardt

September Sale Poses Challenge for Sellers

Buyers hoping for big discounts at Keeneland in a down market.

Consignors at the Keeneland September yearling sale were bracing themselves for one of the most daunting auction challenges of 2009: Finding new homes for thousands of young horses at a time when the weak economy is causing buyer demand for Thoroughbreds to shrink.

The weekend prior to the auction’s start in Lexington Sept. 14, sellers had modest expectations and shoppers were anticipating big discounts. If the results at most other recent yearling sales are any indication, key business figures will fall 20% or more during the Central Kentucky auction’s 14 sessions of selling.

Traditionally, a yearling is considered profitable if the price it brings is 2 1/2 times the stud fee paid to produce it. But seller Wayne Sweezey of Timber Town Stable will be satisfied with less.

“The goal for us, as I explained to my clients, is to get the stud fee back --  and maybe a little more -- and be happy with what we can get,” he said. “If we can double the stud fee, then I’m going to really feel like we did super.”

Greg Goodman has a handsome chestnut son of the great stallion Storm Cat in his consignment. The colt is a half-brother to champion Dreaming of Anna, but Goodman was trying not to let his hopes get too high.

“You’ve got to figure that the horses that would have brought $500,000 in the past aren’t going to do that this year,” he said. “They might bring just $200,000, or $150,000, or $100,000. You don’t expect that huge number of $3 million or $4 million anymore. If you’ve got a great horse, maybe you’ll get $2 million for it and that will top the sale. You just put your reserves at someplace reasonable and hope you can find a buyer.”

Even though the number of horses cataloged, 5,189, is down slightly from last year’s September sale record total of 5,555, the auction retained its crown as the largest sale of Thoroughbred yearlings in the world.

The auction will kick off with two select sessions, featuring horses with the best pedigrees and conformation. There will be a day off from selling Sept. 18.

“We’re approaching this sale very aggressively,” said Elliott Walden, WinStar Farm’s vice president and racing manager. “We’re looking because we think it might be a good opportunity to buy a horse. We’re working the sale hard.”

Drew Rayman, another shopper, also was excited about the possibility of bargains.

“I’m looking at the sale this way: Everything is going to be cheaper; I’m going to save money; and it’s a good time to buy,” he said. “The government has reacted very well to people buying Thoroughbreds; we’re getting better tax breaks on that. I think if you can race in the New York-bred program or where there are other good state-bred programs like that, you can do well, so I very much believe in buying right now. But I’m going to be looking for value.”

Selling will begin at 10 a.m. (EDT) each day.

“So far, the traffic in the barns has been really good,” said Legacy Bloodstock’s Mark Toothaker. “I think everybody’s consensus is that the second week of the sale is going to be very rough. But we’re holding out hope that the first week isn’t going to be too bad. I’m keeping my fingers crossed. If we’re down 10% to 15%, I think that’s going to be a victory.”

The nation's recession was well under way and a correction in the horse auction business had already begun when last year’s September sale was held. But the auction’s first week was finished before Wall Street nearly collapsed, and the impact of the rapidly deteriorating financial crisis, which spread around the world, wasn’t really felt until later in the year in the Thoroughbred marketplace.

The 2008 September sale’s gross fell 14.8% from the previous year to $327,999,100 for the 3,605 yearlings that sold. The average price dropped 10.2% to $90,984. The median price declined 11.9% to $37,000. And the number of horses sold for individual prices of $1 million or more fell from 32 in 2007 to 18.

The buy-back rate rose from 22.5% in 2007 to 24.8% in 2008.