Yearling Sale

Yearling Sale

Anne M. Eberhardt

F-T Review: What Happened to the Market?

Participants in July select yearling auction discuss why the sale struggled.

The Fasig-Tipton Kentucky July select auction got the yearling selling season off to a sobering start in Central Kentucky. The buy-back rate rose while the number of horses sold, gross revenue, average price, and median price all declined.

Following are what some of the participants in the July 14-15 auction had to say about the negative developments:

Michael Hernon, Gainesway: “The bar is high; the demand is for the good horses. People are willing to reach out with strong prices for the horses that fit their criteria, so the market is demanding. They want a really good physical horse. The horse must look the part, show well, and then vet out to the satisfaction of all the varying criteria from the various inspectors.
“Supply and demand is certainly a factor (in the downturn), and I think we’ll continue to see that through the balance of the year. The strongest part of the market will be the upper level because  the buyers are discerning; they have such a broad choice. For the very good horses, we’re seeing very strong competition and then for horses that ,for whatever reason, don’t make the cut, it’s somewhat of a freefall.
Of course, the economy is a huge factor. Did you drive here today? Did you pay $4 for gas? We’re in a bear market on Wall Street, and clearly that’s an issue. It affects the psychology of people who want to be in the game. If you look at the stock market and you see your paper wealth level has declined, it certainly is not going to encourage you to reach out to buy luxury goods in the form of sale yearlings.”

Meg Levy, Bluewater Sales: “The polarity of the market is getting even worse. Everybody wants the best and they’ll stretch for the horses that jump through the hoops -- the veterinary, the physical, and the pedigree.
“The people who have money to spend can be very choosy. There’s not really much of a middle market. Pinhookers who usually are really good at the middle market here --and middle for me is the $75,000 yearling-- they’re not wanting to buy that kind of horse this time. They’re wanting to go for the better horse.
“The stock market (being down) obviously is affecting this sale. People don’t feel as comfortable buying a luxury item.”

Stuart Morris, Dapple Stud: “To me, the market is telling us the same thing it’s always told us. The really good horses bring a whole lot of money; they sell very, very well. The horses that are deemed marginal or less are kind of left on the sidelines. I don’t think it’s any surprise.
“We’ve had as many shows and as many people here looking at our animals as we’ve ever had. I don’t feel any kind of drop-off. All the people who are at this sale every year are here. So, I wonder if it (the higher buy-back rate) is maybe because of a slight dip in the market combined with people who weren’t very realistic with their valuations. It’s the first sale of the year, and people haven’t figured out where the market is going to go.”

Barry Berkelhammer, who selected yearlings for Starlight Partners: “I think the middle of the market has certainly been affected (by the economy), and at the lower end, prices are dropping. I don’t think there is as much demand. The pinhookers are being a little more careful, and there aren’t enough racing guys for that $75,000 and under kind of horse.”

Niall Brennan, Florida pinhooker: “I’m being a little bit conservative, maybe, but I don’t think it’s a big adjustment. One thing we’ve seen is that there is a ceiling now at the 2-year-old sales. This year, $600,000 or $700,000 was the ceiling, and it means people (pinhookers) are more comfortable paying $100,000 for a yearling than they are going to be paying $250,000 or $300,000.
“I’m trying not to (cut back on quality); I don’t think you can do that. Everybody still has their opinion of what they love, and they’re not going to buy a horse that they don’t like. You’re trying to buy the best horse you can for your budget, and you still have to have stock to sell. The 2-year-old sales aren’t going anywhere, and the racing business isn’t going anywhere.
“The economy has got to have some affect on it (the sale), but I think it’s more than that; it’s the whole big picture. We don’t have enough buyers for all these horse; we need new buyers. Until we get new buyers, the marginal horses are going to be tough to sell. Everybody is doing their homework, and the very good horses, the obvious horses are bringing a lot of money.

Kitty Taylor, Warrendale Sales: “With the current economic climate in the world,  I think people are going to the safe harbor of proven sires. When I talk to pinhookers at the barn or a trainer like Ron Ellis, they say, ‘I’m not even looking at first year sires.’ You’re seeing people kind of readjusting and buying more of the (yearlings by) proven sires. They are taking less of a risk; there is no question they're taking less of a risk. Every time you turn on your TV, it would make you take less of a risk.”

Lance Robinson, Utah horseman, pinhooker, breeder, and owner: “The good horses are doing well. The ones we’re buying we’re spending plenty for them, and the good ones that we have here to sell, we feel like they’re bringing what they should. It looks pretty tough for the less expensive horses.”