Ray Paulick<br>Editor-in-Chief

Ray Paulick

Stuck Market

What has happened to the top of the yearling market, the sector that outpaced all others during the boom years of the late 1990s and into the first year of the new millennium?

The sale of million-dollar yearlings was a rarity at this year's Keeneland July sale, with just nine reaching the seven-figure mark, compared with 16 in 2001 and 24 in 2000. It was the lowest number since just four million-dollar yearlings were sold in 1997.

Fasig-Tipton's Saratoga sale on Aug. 6-8 saw an even steeper plunge at the top when compared to the 2001 auction that many consignors said was the best sale they'd ever witnessed. Only two sold for seven figures this year, compared with nine in the record-breaking 2001 sale. The number of yearlings selling for $500,000 or more at Saratoga was halved, from 28 in 2001 to 14 this year. Keeneland saw a similar decline in $500,000-plus yearlings, dropping from 41 to 24.

We should have seen it coming. The two biggest buying forces at select yearling sales--Ireland's Coolmore and Dubai's Godolphin--figured to become more selective at some point, given the number of mares the two operations breed on their own. Also, as Coolmore's Demi O'Byrne noted, the deaths of notable sires like Mr. Prospector, Seattle Slew, and Unbridled have resulted in a scrum among the next tier of young sires that are the heirs apparent. For a million dollars, O'Byrne added, you want to have everything in a yearling, including sire power. With a few exceptions, that is in short supply. O'Byrne said Coolmore doesn't mind sitting on the sidelines and waiting for the next big sire to emerge.

With those two players not competing for more than a handful of the top lots at Keeneland and Saratoga (combined with the death of Prince Ahmed bin Salman of The Thoroughbred Corp.), the price ceiling was lowered considerably on many horses. That left it up to domestic horse owners to fill the void, and that group undeniably has been wounded by the falling stock market. A consignor said some buyers who may have spent $500,000 on a yearling in 2001 were budgeting half that amount this year. The lack of competition at the higher levels meant, in many cases, that the buyer was able to get what he wanted within budget or for considerably less money.

In addition to the absence or abstinence of key buyers, a number of horsemen complained that the individuals catalogued to the two sales were not up to previous standards for Keeneland July and Saratoga. One leading agent said he put only 15 yearlings on his short list at Saratoga this year, compared to roughly 40 in recent years. "I don't know where all the good yearlings are," he said, "but I sure hope they're at Keeneland in September."

The current weakness at the top of the market will put pressure on stud managers to reverse the trend in stud fees, which traditionally rise too quickly in a bull market and fall too slowly when yearling prices are down. Farms setting stud fees before the Keeneland September sale either know they have the goods (i.e., Overbrook Farm's Storm Cat), are clairvoyant, or are willing to take a risk.

If there is good news in the market, it's that the middle shows some signs of stability. Fasig-Tipton Kentucky was a very strong sale, and the drop in the average paid at Saratoga was steeper than the fall of the median price. Furthermore, two regional sales that came on the heels of Saratoga got off to very good starts. Both the Fasig-Tipton New York-bred sale at Saratoga and the California Thoroughbred Breeders Association's Del Mar yearling sale showed vitality in their opening sessions on Aug. 11.

Million-dollar yearlings may get the headlines, but strength in the middle of the market will keep most breeders happy.