Dan Liebman: Editor-in-Chief

Dan Liebman: Editor-in-Chief

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Commentary: By the Numbers

Usually, if sales of young horses are up, so too are sales of broodmares and broodmare prospects. As this issue devoted to the auction market shows, 2007 was a bit different.

Gross revenue at North American yearling sales was down 3%, amounting to a drop of $17,329,937; the money spent on weanlings was off the most percentage-wise, 13.9% ($13,952,594); and sales of 2-year-olds decreased the most by dollars paid by buyers, $24,024,970 (11.1%).

But on the positive side of the ledger, sales of broodmares was up for the sixth straight year, reaching $370,099,831 in 2007, an increase of 12.5%, or $41,187,557.

The difference between the increase in dollars spent for mares and the combined decrease for yearlings, weanlings, and 2-year-olds was $14,119,944, only a 1.2% decline in a year in which, despite many global economic challenges, bloodstock buyers still spent $1.2 billion at North American Thoroughbred auctions.

Of course, like any year, there was a large percentage of horses that were sold, but not for a profit. And there were always horses that were bought back by their owners for one reason or another.

While in any business profit is the name of the game, breeders have had to look at profit for their entire consignment, rather than each individual. A breeder with 15 yearlings to sell is not likely to make a profit on all 15. Instead, perhaps he can hit one home run to cover the costs of those that don’t sell for more than it took to produce them.

There is nothing wrong with this line of thinking. These are living and breathing animals, not assembly-line products. Buyers are often unforgiving on conformation faults, despite studies showing many of these horses do just fine on the racetrack. But imagine wanting to buy a ceramic bowl and looking at a shelf filled with 20 that are nearly identical. The paint is a bit light in color on one; another has a little flaw; yet another is a bit smaller than the others. Finally you select one to purchase.

Similarly, when looking at 20 yearlings (or 80) by the same sire, a buyer may select only a few he is interested in bidding on. Should most buyers pass on the same yearlings (or weanlings or 2-year-olds), a breeder must decide to either take a loss on the horse or take the horse home. Often, this decision is not made until the horse goes in the ring.

The difference, of course, is that the ceramic bowls all have the same price tag on them, while bidders determine the price of any auctioned item. As has been said many times before, the best place to appraise your horse is in the auction ring.

It is staggering to think that from 1997 to 2007, the number of horses sold increased by only about 2,000, but the gross went up by more than $500 million. This has driven the overall average up approximately 54%. Similarly, during this period, the average is up for yearlings (44%), weanlings (38%), 2-year-olds (42%), and broodmares (86%). At the same time, inflation increased 28%.

Certainly, there are markets that have risen more dramatically over the past 10 years. Assuredly, there are many others that have declined or no longer exist.

The bottom line is that despite many important issues facing the Thoroughbred industry, as we enter 2008 we can clearly see there is demand for the product produced by breeders. These are the men and women who take the initial risk in the industry by purchasing a mare they hope will carry a foal, planning a mating they hope will still be in fashion when it comes time to take their crop to market, and hope as they watch a baby take its first breaths it will become a runner they can be proud of.

Here’s hoping there is enough profit for all to continue in the game another year.