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Oppenheim: Trends Continue at Keeneland January

In My Opinion

Those who were in the thick of battle at Keeneland's January sale last week will testify to the strength of the market, at least for "the right article," as the sale apparently continued the momentum that carried the North American and European auction marketplace to 10-year (post-crash) highs.

The sale's gross of just a shade under $35 million ($34,996,000 to be precise) marked a 21% gain over last year's edition, while the average of $38,499 was a 28% gain over last year. Most importantly for consignors, the 909 sales were 57.4% of the 1,583 cataloged, an increase of 6.6% over last year's desultory 50.8% clearance rate.

However, in a historical context, the 2018 figures really marked a return to the levels at which the January sale had been operating since 2012. There are two interwoven "givens" in assessing the results: first, that unlike yearling sales, the composition of the catalog can have a big effect on prices at mixed sales; but second, as Keeneland sales director Geoffrey Russell commented to me a few years ago, buyers have a certain amount of money to spend, and they will buy the best available, whatever the longer-term picture of available pedigrees might be.

No matter how the overall numbers compare to past editions, those on the ground confirmed "the ones you'd want" were rated from expensive to "clean out of range."

By comparison, though, Keeneland January's 2018 gross and average marked gains in the 20s over last year's corresponding figures of $28,785,500 for an average of $29,954. But the 2017 sale was significantly down from the previous year. In fact, the 2017 January sale gross dropped 19%, or almost $7 million, from 2016, while the 2017 average dropped 12%.

This year's gross compares favorably with last year's, but in previous years the sale had grossed: $35.4 million (2016); $35.3 million (2015); $41 million (2014); $45.2 million (2013); and a hair under $38 million (2012). This year's average was better than the $34,099 average in 2016, but was in the neighborhood of the average for the previous four years: $37,242 in 2015; $39,947 in 2014; $40,912 in 2013; and $37,878 in 2012. The message may be that the 2017 catalog, and possibly the sale itself, was weaker, but otherwise this year's sale was as much about reclaiming lost territory as it was about surging ahead. 

Through the 2017 yearling sales season, five North American and European sires marked themselves as the elite of the elite, with yearling averages over $650,000: Dubawi (IRE), Galileo (IRE), and Frankel in Europe; and Tapit  and War Front  in North America. No other sire averaged over $400,000. Medaglia d'Oro  came closest, with 44 yearlings averaging $397,018 (and gets a special commendation for having no fewer than five Eclipse Award finalists), but there is a yawning gap of over $250,000 between number five (Frankel) and number six (Medaglia d'Oro) on the list.

This year, the 2015 Triple Crown winner American Pharoah  has his first yearlings, and one thing the Keeneland January sale told us is that his yearlings are liable to average somewhere in these ranges. He had his second million-dollar 2017 foal at auction when M.V. Magnier was the signatory for the half brother to Caravaggio, which sold Jan. 9.

American Pharoah had 34 foals of 2017 (weanlings, and now short yearlings) cataloged between November and January, though only 18 of them have actually gone through the ring, of which 13 sold for an average of $467,308. Although he will no doubt have the statistical disadvantage of a massive number of yearlings cataloged, if one assesses his commercial history to date he is as exciting a prospect for North American breeding as Frankel has been for European breeding. 

American Pharoah is the headline act, but the crop of sires, which had their first foals in 2017 (I designate those as F2017 sires), appears to have a good deal of depth—especially in the U.S., where eight sires have now averaged over $80,000 for their first-crop weanlings/short yearlings—but also illustrate the polarization in the marketplace.

Lane's End stands the two-three by average: A.P. Indy's last top son, Honor Code  (10 sold, for an average of $198,500, but with 27 cataloged, and 19 through the ring); and Liam's Map , one of three seriously promising sons of Unbridled's Song who will attempt to redeem their sire's reputation as a sire of sires (the other two are Will Take Charge , who has his first 2-year-olds this year, and Arrogate ). Liam's Map has had 13 weanlings/short yearlings average $143,077, though here again he had 30 cataloged, and 19 through the ring.

The fact that the three top F2017 sires on average have only had 38%, 37%, and 43% respectively sold of those foals of 2017 thus far cataloged reinforces the view that prices are high and the market is strong—but very much not across the board. You do have to clear the bar, and the bar appears to be pretty high—especially if, as the breeder, you have to pay the stud fee once the horse is cataloged, yet you have less than a 50-50 chance of it actually getting sold.

WinStar's Carpe Diem  has averaged $112,737 for 19 weanlings/short yearlings sold (44% of 43 cataloged), followed by Hill 'n' Dale's Bayern , who has averaged $100,714 for 14 sold (54% of 26 cataloged). Airdrie's Summer Front  has had 11 sell (38% of 29 cataloged) for an average of $92,091.

Claiborne's Lea  is the real star by clearance rate, with 17 sold, for an average of $88,294, from 23 cataloged, a clearance rate of 74%. Considering that he is down to a $7,500 stud fee this year from an entry fee of $12,500, Lea has to rate as one of the big bargains of 2018.

Finally, of those averaging over $80,000, Lane's End's Tonalist  averaged $86,294 for 17 sold, which is 56% of the 30 cataloged. Taken together, the top eight North American F2017 sires have had 114 weanlings/short yearlings sold, which is only 47% of the 242 cataloged. Polarization—they either want them or they don't.

There is another group of mixed sales of mares in foal from 2017 coverings and 2017 foals (short yearlings) that will impact the mixed sales averages: Barretts' Jan. 17 sale and Ocala Breeders' Sales Winter Mixed sale later this month. Next month there are February mixed sales at Fasig-Tipton in Kentucky, and at Tattersalls, Goffs, and Arqana in Europe. Cumulatively, all the mixed sales in the first two months of the year constitute less than 5% of the annual North American and European auction marketplace; nonetheless, in their own way they are still important indicators both for the marketplace in general, as well as for individual sires.

To read other articles by Bill Oppenheim, and to see the Weekly Sales Ticker and new 2018 APEX stallion ratings for 735 sires, please visit www.billoppenheim.com.