Sale Company Officials, Consignors Criticize Auction Disclosure Legislation

Recently-filed Kentucky legislation requiring the disclosure of the ownership and veterinary records of horses offered at public auction would be difficult to implement, according to consignors and sale company officials. In addition, three of the people interviewed said ownership disclosure already had been addressed satisfactorily by the Thoroughbred industry and another questioned whether it was needed to the extent that the legislation would require.

The legislation is supported by wine mogul Jess Jackson, whose high-profile lawsuit against former advisers led to his personal crusade for transparency in bloodstock transactions.

"It would be very tough for sale companies, consignors, and owners alike to list and be responsible for listing everything that has gone on medically in a horse's life," said Walt Robertson, the president of Fasig-Tipton. "I think that would be a nearly impossible task. As for disclosure of ownership, I thought that the (Sales Integrity) Task Force dealt very effectively with that. Basically, if it's important to a potential buyer, he's got every right to ask the consignor who owns the horse. And should the consignor not be forthcoming with the information that the buyer asks for, he has got every right not to bid on the horse. So, as I see it, the buyer is  holding the cards."

Keeneland director of sales Geoffrey Russell expressed similar opinions.

"Keeneland has embraced everything that the Sales Integrity Task Force brought forward, and one thing they discussed at length was ownership disclosure," he said. "The task force felt it wasn't a material thing, and we concur with them, so I don't understand why it's a big deal. On the medication issue, to be honest, I think it's a very confusing bill, and I think the procedures that they've outlined would be impractical to implement. I think it would be an additional burden on all breeders, but particularly the smaller breeder/consignor."

Russell also criticized how the bill was developed, saying it should have been discussed with more industry members before being introduced.

"The Thoroughbred industry is an important economic factor in the state of Kentucky," he said. "Anything that affects it requires thoughtful dialogue with everybody within the industry, and we haven't received that. To have something that has been thrust upon us within 20 days of the close of business in Frankfort without any dialogue, especially with its importance, isn't kosher. Keeneland and Fasig-Tipton have started a committee to look at anabolic steroids and we’ve already found out, within a month, how complicated this is and we haven't even gotten very in depth with it yet. It’s a very complicated issue. Nothing in this bill discusses testing, and that's another huge factor we have to take into consideration."

Bayne Welker, the president of the Consignors and Commercial Breeders Association (CBA), said his organization's board was not ready yet to issue an official response, but added, "We will reach a consensus on these things that have been brought forth, we will be at Frankfort Wednesday morning, and we will testify at the committee meeting. I am sure we will also reach out to other industry professionals and try to get a broad-range of consensus on this."

Regarding his own opinion of the legislation, Welker said: "Disclosure of ownership was a very key topic when it was brought up within the framework of the Sales Integrity Task Force. There simply were some people who just did not want their names disclosed, either because they were very high profile or just for personal reasons. I think the Sales Integrity Task Force respected that and that's why it wasn't moved upon at that time. I think what would happen (if ownership disclosure was required) is that you would see a lot more horses being owned under corporations or LLCs, which would put a blanket over it if people truly didn’t want their identity known."

On the issue of veterinary records, Welker said: "We (CBA representatives) have been working with Keeneland and Fasig-Tipton to look into testing for anabolic steroids, trying to put a policy in place. The thing about it is, it's a lot easier to put all this down in black and white than it is to actually formulate a plan. Now, we're talking about putting it under the oversight of the Kentucky Horse Racing Authority. An audit of the Racing Authority has already told us that it's understaffed and underfunded, and the governor's trying to get $1.2 million just to get it up to speed. It (the Authority) hasn't done a great job of regulating our signature industry of racing in the state, and now we're going to throw something else at it, of which they know nothing about."

Welker said it is sometimes difficult for consignors to know what medications have been given to horses.

"Horses come in from everywhere," he said. "If a horse comes in from Norman, Okla., in the middle of the night, and he got fractious on the van, and they had to give him some acepromazine, you're not privy to it. If a buyer asks you what he had and it’s not disclosed because he (the horse) was there one day and sold the next while it was still in his system, all of a sudden you end up having to take back a horse. But the owner of the horse didn't know and the consignor didn't know."

Welker also pointed out there is a therapeutic need for the use of some medications at a sale.

"If you take a horse out there and you show him 90-some or 100-plus times a day, he's going to be dragging, and he's going to be sore," Welker said. "It's just like when you overexert yourself on the weekend while doing something in the yard. You’re going to take some ibuprofen or Advil to try and make yourself feel better. Other animals get there (to the sale grounds), and they get fractious because it's a totally new environment. Sometimes you have to give them a tranquilizer to protect the people who work with them and to protect the people you sell them to."

Wayne Sweezey, the co-managing partner of Darby Dan Farm, also had concerns about the legislation.

"I firmly believe that whatever is in the best interest of our industry from an honesty/disclosure policy is wonderful," he said. "But I do have some concerns about the level of disclosure that he (Jackson) is requesting. I question the real viability of being able to go back in a mare's history and say she has had x, y, or z surgery done, or had this done to her as a foal, or whatever he's asking for, as far as health records are concerned.

"I think using anabolic steroids to enhance the appearance of a horse is not right," Sweezey continued. "If it's for a therapeutic reason and you need to disclose it, that's okay. But I'm a little bit concerned if I'm raising a foal and he has serious pneumonia and I have to disclose that even though the foal is perfectly healthy and he's athletic. Am I going to be discounting my horse because of a sickness as a young foal? People will be questioning that he might have a lung problem, so that opens up some doors that I would consider somewhat ominous."

Sweezey also didn't agree with all of the legislation's provisions involving ownership disclosure.

"I think ownership disclosure is probably the right thing to do because it would stop some of this trading just before a sale," he said. "However, the entry time for a sale is so early. For example, they want you to nominate for the (Keeneland) September sale by May, so there's the potential I could have the opportunity between May and September to sell a horse for a price that I think is very fair. Now that horse won't be able to go through the auction. I don't know if that's particularly fair to someone who does want to trade horses. If a horse changes ownership on the sale grounds (prior to an auction), without a doubt, it should be scratched. But prior to that, I think there should be a little leniency on trading horses. "

Sweezey added that the legislation, if passed as written, could have the potential to harm the auction business in Kentucky.

"If indeed the legislature just passes this thing carte blanche, is it going to affect the sales in our state?" he said. "If people want to use anabolic steroids or don’t want have to disclose all these issues, then they might choose to sell their horses in other states. What's that going to do to the industry in Kentucky? As much as I agree with Mr. Jackson and his efforts to clean up our industry, I think we need to be very judicious in what rules and regulations we pass for the breeders."

 

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