Yearling inspection at the 2008 Keeneland September sale.

Yearling inspection at the 2008 Keeneland September sale.

Joe DiOrio

Keeneland a Big Test for Yearling Market

North America's Thoroughbred yearling market faces its biggest test in September.

It’s crunch time for North America’s Thoroughbred yearling market, which faces its biggest test when the Keeneland September sale gets under way. There are more horses cataloged than ever before, 5,555, and they will be offered over 15 sessions beginning Sept. 8 in Lexington.

So far, the demand for yearlings in 2008 has been shaky. With the American economy slumping and financial woes spreading to other parts of the world, already picky buyers have become even more discerning. Auctions of young horses have suffered plenty of downturns, and the percentage of buy-backs has risen.

“I think you’re definitely going to see a correction this year at Keeneland,” said Martin O’Dowd, the vice president and general manager of Runnymede Farm. “The top end will be fine, as usual, but maybe not as strong. I don’t expect any records to be broken. I’ve talked to some agents, and a lot of them have said their orders are down. There is a hesitancy to go out and spend a lot of money at the moment, and I think buyers are going to be back off the horses a little bit.”

Last year, the Keeneland September auction showed a surprising resilience. Even though Dubai’s ruler Sheikh Mohammed, through his bloodstock manager John Ferguson, spent $42,165,000 less than the previous year, the sale was able to generate its second-highest-ever gross revenue and median price. The auction’s average price was its third-highest ever.

Many people said the enthusiasm from other overseas buyers, who took advantage of favorable exchange rate, kept the September sale from crashing and burning. But what will happen this year, with the dollar strengthening and the economic health of some foreign countries weakening?

“It’s a different world from last year, but I still think you’ll see a lot of foreign buyers here,” said Geoffrey Russell, Keeneland’s director of sales. “While the exchange rate is not as favorable as it was last year, it’s still very much in their favor. The American-bred horse in the English breeze-up sales has been very successful, so I think the people who bought those horses to pinhook will be back again. I also think we’ll have some good representation from the Far East, and there will be Latin American buyers here later on in the sale.”

Shoppers looking at Keeneland horses Sept. 6 included representatives of Sheikh Mohammed, John Magnier of Coolmore Stud, English trainer Brian Meehan, English sales agent Ted Voute, and English bloodstock agent Hugo Merry.

“We’ve all got recession in the back of our minds, so we’re going to be more careful,” Voute said. “But when there’s an economic crisis for someone, it always creates an opportunity for someone else. I’ve come over here because I think maybe I can get something to pinhook into the December sales. Maybe I can get one for a breeze-up sale next year or maybe I can buy a big-pedigreed filly for not a lot of money.”

Merry also was upbeat.

“There are too many horses and we’re running into a slowing economy, so it’s going to impact the middle market; it has to,” he said. “But the good side is that there’s still a lot of demand for a very nice horse. Racehorses are making as much or more than they’ve ever made in purses.”

David Hager of Idle Hour Farm was cautious in his pre-sale projections.

“I’m guarded in my feelings,” he said. “The effect of the economy might not show up the first week, but I think it will hurt the deepness of the market as we go on. If we get away from here down 12% or 15%, I think we’ll be very lucky. We could live with that kind of correction.”

Pat Costello of Paramount Sales joined Hager in expressing uncertainty about the overall health of the yearling market.

“Everybody, I’m sure, is a little on the nervous side,” he said. “All year, the good horses have been bringing plenty of money, so I hope that will continue on. But with the economy on the iffy side, we’re going to have to work harder and watch our reserves.”

The September auction will start each day at 10 a.m. (EDT). There will be a break from selling Sept. 12, with the auction resuming the following morning and continuing through Sept. 23.