There will be a big change at Barretts early in 2009 when one of its driving forces, president and general manager Jerry McMahon, leaves the Southern California-based auction firm less than a month after announcing his resignation. In addition, Barretts’ auction schedule has been reduced from six to four sales with the cancellation of the October mixed auction and the June sale of 2-year-olds in training and horses of racing age.
Jim Henwood, who serves as president and CEO of the Los Angeles County Fair Association (LACFA), which owns Barretts, recently discussed the future of the sale company with The Blood-Horse.
The Blood-Horse: Who will replace McMahon?
“Right now we are not going to replace Jerry. We’ve got some good management talent at Barretts that’s been involved with Jerry and the horse sale and horse racing industry for a long time and within our (the LACFA) organization. Like many companies today, we are rethinking our organizational structure to take advantage of the talent that we have and better utilize them. Jerry has developed some really, really good people -- Bill Baker (vice president and controller) and Kim Lloyd (vice president–sales) being two of them.
“We’ve asked Bill and Kim to step up their leadership involvement, and we feel very confident in their ability to move us through this next period of time. There was nothing expected about Jerry’s departure, but we have a good staff of people, and we understand our business, and we’re set to position ourselves as we move through these very challenging, not only economic times, but industry-challenging times.”
What will Baker and Lloyd’s roles be?
“We’ll be using them in an acting or interim capacity. Bill will be functioning in the general manager interim capacity. Kim will be out leading the charge -- which he has demonstrated very, very high capabilities of doing -- in the recruitment and the liaison work necessary with those bringing, and who have expressed interest in bringing, their horses to our sales. Bill Baker will be supplementing that in the background, and then he’ll take the leadership role as it relates to the office and the administrative duties with the sales company.”
You have reduced your number of sales in 2009 from six to four. Why?
“We want to, first of all, continue (pursuing) our goal of being a premier auctioning facility in the United States. Once you leave the East Coast -- and I’m speaking more particularly about Kentucky, Florida and New York -- we believe that we’re that next really, really strong sales environment. We own Barretts. It’s a limited liability corporation, and we’re focused (on conducting business) as it relates to serving an important market niche. But we have to make certain, at all times, that we maintain the integrity of our sales structure. Critical to having a great sale is having quality horses. We are of the opinion that the way in which we have positioned the four sales gives us a chance to bring a quality marketable product to the sale ring.
“The whole concept is to strengthen our other sales. In June, we were pretty much doing a dispersal and maybe a clean-up strategy on that sale. Putting it (all) in May just makes it a lot easier. Every time you turn these sale companies on, it does cost money. We’re no different from anybody else, and we do not have the luxury to operate our business in our Barretts operation when we’re losing money. The October mixed sale was, again, a grouping of dispersals, and our feeling was that by doing that (canceling the October mixed sale) we could strengthen the presentation of our yearling crop by creating a fuller catalog.”
Could you tell us more about how the California yearling sale, which has been co-sponsored by Barretts and the California Thoroughbred Breeders Association (CTBA) in recent years, will change?
“The idea of that sale is to try to bring in a better grouping of horses so we will have a critical mass that will make it of interest. We’re very proud to have our association with the CTBA. We like what they do and we wish them the very, very best as we try to improve the quality of the breed in the state. Nothing that I say should diminish what they’re doing because I think they’re trying very, very hard to do that (improve the breed). But the fact of the matter is that we in California need to take a hard look at our whole breeding operation. We need a stand of stallions that would be competitive worldwide, and we need a stand of broodmares that can respond to the caliber of foal crops that are coming all around the country. California is challenged there. We’re working with the industry now and looking at trying to increase the purse supplement for Cal-breds. We’re trying to increase monies available to stay competitive at a world standard with our breeding in California.
“We want very much for our yearling sale to be successful. We want to be the premier presenter of the yearling crop in California. On top of that, we want to make it part of the event of the Cal Cup, and by doing that we think we can create a (better) market position. We’ll create a stronger sales demand by conducting a sale that would be in conjunction with a great racing event.”
“I don’t know exactly how we’re going to structure that catalog. We’ve got discussions with the CTBA, and we’ll be working with our own team.
“This year, the CTBA ran a yearling sale in Northern California. Our interest -- and frankly, our desire -- would be for them not to do that sale up there (in 2009). It’s their call, but I don’t mind telling you that we think it would be better for the industry -- and for the state -- to combine all of that into one sale and really make it a very, very strong sale and create a brand for our Thoroughbred Cal-bred program. The only way you can do that is by bringing the very best of the best, and you can’t fractionalize that.”
Are you committed to continuing a business relationship with the CTBA?
“Our interest is to operate Barretts in the best manner that can serve the needs of the industry. Our belief is that we’re the finest auctioning facility on the West Coast. We have the most professional staff. We are well-equipped to do it. We have a superb facility. The CTBA is a great organization and (a relationship with that organization) is what we feel is a natural marriage. We have a good relationship with them and our intent is to keep that in the future.”
Is the Los Angeles County Fair Association committed to continuing its involvement in the Thoroughbred auction business, which recently has suffered significant downturns?
“I hope that we’re talking about an anomaly. I don’t want to use the current economic environment as a precursor to what we plan to see in the future. There will be a rebound, and we’re set to play that out. We’re quality managers. We know what we’re doing; and our intent is to improve Barretts.
“We were the majority investor (originally) in Barretts. We were the leading the impetus for the reason that Barretts is in existence today. We are privately held, not government owned -- a not-for-profit corporation. We’ve had an involvement with Thoroughbred horse racing since 1922. Our purpose for being is agriculturally based. And we operate in a manner to best serve -- and we have always operated in a manner to best serve -- the needs of the Thoroughbred industry in California if not around the world.
“We were a natural connecting point for Barretts, and Jerry was the mastermind of the concept, Frankly, we owe an awful lot to Jerry. Imbedding the Barretts business into the Los Angeles County Fair Association was a like a hand in glove. It was a very natural situation. We have no interest or intent to diminish or walk away from anything in the Thoroughbred industry. We’re lifers. We are very proud of that association. We’re very proud of our involvement. And we’re very proud of the work that we have done to strengthen this industry in the state of California.
“We’ve invested considerable time, energy and talent in that regard, and we have some very, very capable people who are here with us working on that today. If you check us out, you’ll find that we have been leading in the effort to strengthen the Thoroughbred industry here in California. We have a lot of balls in the air right now. We’re a steady hand, we’re a confident hand, and we’re a very professional hand.
“We take our business very seriously, and our business is very complicated. One of the beauties of what we have is that the nature of our business, which is very diverse. We’re able to manage ourselves through this rather turbulent time because of the diversity of the business that we have. We’re vertically integrated. We run on about an $80-million revenue platform, and we have a very good bottom line. We’re, frankly, able to weather the turbulent time because of the diversity of our other business interests.”
How are you going to manage Barretts so that it can cope with the difficult economic condtions?
“First of all, we’re going to make certain that every time we open the doors at Barretts that we are operating at the highest quality standards of any Thoroughbred auctioning facility worldwide. That’s the first thing. The second thing we are doing is we are responding to very strong statements that are coming out of the (Thoroughbred) industry dealing with integrity and the transparency of our business. We want to be leaders on that, making certain than every time we are involved with a sale that we are providing the understanding and the confidence among the people that we have the good fortune to do business with. We want to be deserving of their business and as a result, our clients will be well satisfied.
“We understand the importance of that (integrity), not only in the sales environment, but throughout the Thoroughbred industry. You will see us being a high proponent of the transparency and the integrity of our business as we work through this time. We will safeguard the quality of this extraordinary industry.”
What about the future of Barretts in the short term?
“We’re gearing up for our January sale, and we’ve got a catalog out there. Kim Lloyd was just on the East Coast in Florida trying to make certain that all of our consignors that support our 2-year-old in training sales are all comfortable with the transitioning that we’re involved with. I’m getting very good feedback on that. We’re think we’re making good moves to position us correctly as we move through 2009 and we’re getting our sights set for 2010 and beyond.
“Our plan is to operate four great sales, and we’re going to come out of 2009 with some hope that we’re going to see some uptick in the market so we can increase the offerings at our sales in the future.”