Published in the March 24 issue of The Blood-Horse
On March 12, the Nasdaq composite index sank below 2000 and the Dow Jones industrial average experienced a staggering 436-point drop. The following day, Barretts conducted its select sale of 2-year-olds in training and suffered one of its worst financial beatings ever. The gross, average, and median all declined sharply. The buy-back rate climbed to its second-highest level in the auction's history. And the sale failed to produce a seven-figure horse for the first time since 1996. Just a coincidence? Gerald McMahon didn't think so. The Barretts president saw a direct link between Wall Street's crash and his California-based company's plummeting fortunes. "This is the reality of holding a sale of 2-year-olds in training in the middle of a financial crisis," he said. "Anybody who has money in the stock market has to be looking at their portfolios and thinking about their discretionary spending. And is there anything more discretionary than a racehorse? I think the stock market had an effect on our American buyers, and based on what their stock market is doing, our Japanese buyers were affected as well." Barretts also continued to grapple with problems resulting from a shrinking catalogue. The company depends heavily on the support of Florida pinhookers, but their reluctance to ship horses to California is growing. At $2,500 to $3,000 per head, the cost of air travel is expensive. And Barretts has lost its reputation as the country's premier marketplace for fancy 2-year-olds that are expected to bring big prices. With the number of juveniles offered this year falling to an all-time low of 130, many buyers complained there were not enough horses to make their trips worthwhile. The attendance of Japanese shoppers fell dramatically; they blamed the small catalogue more than their country's struggling economy for their lack of interest. "Because their budgets are limited, the Japanese need a lot of variety," said Naohiro Goda of the Tokyo-based Regent Co. "Because of its size, the catalogue here is very, very selective, and they think the market will be too strong for the horses that they want." Japanese buyers ended up spending at least $990,000 for no fewer than seven Barretts horses this year. But both totals were the lowest ever for the auction. In 1996, the Japanese paid $19,267,000 for 77 horses at Barretts. Their expenditures accounted for 58.4% of the sale's gross compared to only 9.8% in 2001. Just last year, the Japanese spent $4,515,000 for 19 horses. "We have a big supply problem, no question," McMahon said. "It's a California dilemma, and I don't know what we can do about it. One thing that we have found is that you can't 'sell' a consignor on coming across the country to support this market. They either want to, or they don't. If you're from the East, this is a risky environment." The final figures for 2001, along with their comparisons to last year's results, were as follows: * Number sold: Down 9% to a sale record low of 71. * Gross revenue: Down 33.8% to $10,085,000, the lowest total since 1993. * Average: Down 27.2% to $142,042. * Median: Down 44% to $70,000. * Buy-back rate: Up from 40.9% to 45.4%. Since 1999, the average and median have decreased 44.4% and 58.8%, respectively. Gross revenue has declined 51.3%. (The statistics above do not include the results from special California-bred sale sessions conducted by Barretts in 1999 and 2000 in conjunction with the March select sale. Last year, the 18 California-bred juveniles sold grossed $2,060,000 and averaged $114,444.) While the downturns were substantial, they did not shock most consignors. They were prepared for the worst after seeing sparse crowds at the under tack shows and fewer lookers at their barns. "We're all disappointed," said consignor Mary Knight, "but I don't think anybody is very surprised." The number of horses sold for $100,000 or more dropped from 46 in 2000 to 30 in 2001. The number sold for $200,000 or more fell from 23 to 15. Colts by Cherokee Run and Saint Ballado each brought this year's top price of $750,000, which paled in comparison to last year's peak of $2 million. "The buyers still are being very, very selective," Knight said. "They want the whole package--pedigree, conformation, and performance. If your horse doesn't have all three, then you won't get him sold." A Dominating PrinceDomestic shoppers purchased 20 of the 30 horses sold for $100,000 and up, eight of the 15 sold for $200,000 or more, and two of the four sold for $500,000 and up. The leading buyer both in terms of gross expenditures and number of horses purchased was The Thoroughbred Corp., which is headed by Saudi prince Ahmed Salman. Huddled for most of the afternoon in a private conference room, Salman and his associates paid $2,675,000 for five juveniles. All will be trained by Bob Baffert, who already has The Thoroughbred Corp.'s top Kentucky Derby (gr. I) prospect, Point Given, in his barn. That colt won the San Felipe Stakes (gr. II) on March 17 in his 2001 debut. "We got everything we wanted," said Baffert, suggesting that Salman faced little competition at the top of the Barretts market. "The prince came here armed, he was ready, and he was never outbid." The Thoroughbred Corp.'s purchases included the $750,000 Saint Ballado colt. Named Fancy Frolic, the robust chestnut juvenile worked an eighth of a mile in :10.3 on March 5 and a quarter-mile in :21.5 on March 11. He was produced from the 12-year-old Green Dancer mare Fanny's Frolic, who is a full sister to grade III winner Fabulous Frolic and a half-sister to grade III winner Lindsay Frolic. "He's a well-bred horse, and he's got a beautiful way of moving," Baffert said. "He didn't work as fast as some of the other horses, but he worked fast enough. He looks like an athlete." The Jerry Bailey Sales Agency consigned Fancy Frolic to the Barretts auction. Kentucky bloodstock agent John Moynihan purchased the colt for $475,000 at last year's Fasig-Tipton Kentucky July yearling sale. "I'm a little disappointed with the price," Moynihan said. "Last year at Barretts, this horse certainly would have brought more than $750,000. But there was a lack of spirited bidding in the upper end of the market here this year. I haven't seen David Shimmon, and Demi O'Byrne didn't buy anything. The prince has been very aggressive, and I think he has made some very good buys. There is no one competing with him." Moynihan, Florida horseman Martin Cherry, and the Jerry Bailey Agency topped the Barretts auction in 2000 when they sold Gotham City, another Saint Ballado colt, for $2 million. On Moynihan's advice, Cherry had purchased Gotham City privately as a weanling. "A lot of people thought Fancy Frolic was Martin Cherry's horse, too, but he wasn't," Moynihan said. "He was owned by a partnership of guys who didn't want their names mentioned." Continued. . . .