CBA President Discusses Sales Integrity and Other Auction Issues

Bayne Welker, president and chairman of the Consignors and Commercial Association (CBA), answers a series of questions about the organization, sales integrity, and other auction-related issues in the Aug. 4 edition of The Blood-Horse. Following are some questions and answers that didn't appear in that story because of space limitations:

The Blood-Horse: Why is there a need for the CBA?

Welker: "Every industry that is out there has a trade association, whether it's the beef producers, the pork producers, or the egg producers. Everybody has a trade association. In the day and age that we are in, as the Thoroughbred business has turned more commercial, we need an organization that is going to focus its efforts on the auction scene, and that's what we do. We don’t have a broad-based agenda. It's very direct."

Why did you take a leadership role?
"There were a lot of people who were involved in this, but it kind of happened out of necessity. It (the need for an organization) had been something that had been growing for some time. It had been talked about in casual conversations, and then it had been acted upon as far as putting small groups together and knocking the idea off of them. It was always very well received, and so, the momentum grew. And as it grew, I guess all of us saw the need for it. I became fairly impassioned about the idea, and, when I was asked and the opportunity arose, I moved into the leadership end."

Why were you impassioned about the CBA?
"Because it was a way for us to come together, and the one thing that I did see was that it took down barriers. For once, as competitive as we are as consignors, it took down those walls and we could all get together and talk about our issues and our problems and how to go about addressing them. The one thing that we did find out is that as an army of one, we’re not as strong as we are when we’re unified. And unified we became very effective and a voice that was going to be heard."

Would there have been any significant action on sales integrity issues without people like Jess Jackson or Satish Sanan pushing for reform?
"There always has to be somebody or some group that brings you to a certain point. I'm not going to sit here and use Jess Jackson's name and I'm not going to use Satish's name, but I think there needed to be some form of trigger mechanism that brought everybody together. I think within any industry, the horse industry as well, that you get complacent in the way that you do business, so that there probably needed to be something that drew everybody together in this way."

Since the Sales Integrity Task Force (of which you are a member) was reconvened and restructured, it might seem to some people that progress has been slow. Why hasn't it moved faster?
"I think it's probably seemed to move slowly to some people on the inside of it as well. One thing that we all have to remember is that it was opened up to other breeds this time around. We have let them speak, so they have become part of the process. By allowing them to voice their opinions and by us looking into how they do business as well as how we do business and how certain legislative actions would affect all of us, the process generally takes a lot longer. There have been a lot of different ideas put on the table and every time you bring up an idea, it has to have a consensus out of a subcommittee to move forward. When you do that, it has to be broken down and has to go back to the legal committee and the other different committees to be vetted to see what the relevance of it is. Then, you bring it back you see if you want to go forward with it, if it actually has validity.

"I think we’re almost at the end of that process of vetting different ideas. And I think these subcommittees are getting close to being able to make more recommendations to the entire task force."

What is your own opinion about the disclosure of limb alignment surgeries in sale horses?
"There was a fear from the breeding community and the consigning community about two things. One is that the disclosure of these procedures was going to lead to more radical procedures that would not have to be disclosed that really had no true benefit or value to the horse. People would use some kind of an apparatus, There have been people coming around trying to sell these apparatuses that you would put on the limb in order not to disclose it (alignment correction)."

"The other problem that we had is who was going to adopt this procedure, was it only going to be the Kentucky auction houses? The board of directors of OBS (the Ocala Breeders' Sales Co.) voted that they were not going to implement that procedure, Barretts, itself, didn't truly have a true repository, and just the administrative cost of having to put something like that in place (was considerable). So, all of a sudden, you were just going to have two auction houses (Keeneland and Fasig-Tipton) complying with this.

Also, if it (disclosure) was going to be implemented, we wanted to be able to carry over (the information) to the breeder as well. It should not be (going to) just the guy who is going to buy the racehorse. So, if it was going to be an industry-wide thing, there were certain issues that would follow the horse throughout its career. It’s only fair that it would continue for the lifetime of that animal. The final conclusion on that was until we could facilitate a means to have a true medical passport that goes along with a horse, it (the issue of disclosure) was not going to go any further."

Do you think limb alignment surgery helps a horse outside of just making him look better to buyers?
"I think it does have value even though some people will sit here with me and argue against it because (they say) when you use it, you've ultimately corrupted the gene pool. At Mill Ridge Farm (where Welker works) we treat every yearling, where it’s a sales yearling or a horse that we ultimately know is going to the racetrack, the same as far as its development is concerned. If we feel that we need some type of limb alignment procedure, we don't look upon it as well this is a sales horse or this is a horse for racing. The horse for racing we might be a touch more patient with, but if we feel it needs it (limb alignment surgery), and it's going to benefit, then we’re going to do it.

"I think it just makes the structural integrity of that limb better You're not going to take a grossly offset knee and do a limb alignment procedure and have it not be offset. In its most basic form -- and this is really making it very simple --you either push that limb out or you bring it in, one of the two, that's about as technical as it is. There's different ways of doing that, but that's really what you're doing. You’re not really changing the physiology of the way the limb is put together."

Do we have the technology now to create equine medical passports using microchips?
"Well, the technology is there. It's being implemented. Japan uses it on a very regular basis. It's being utilized in other areas (of the world). We're as close to it as when The Jockey Club decides that we’re going to use it as a means of registration. It (micro-chipping) has other implications that can go a lot further than that. But at least by doing that, it gives us the ability to ID a horse prior to going into a vet clinic. It gives us the ability to ID a horse at the sales and at the races. The thing about the microchip is there is a world of information that you can include on it."

How do you personally feel about the disclosing the owners of sales horses to buyers?
"I think everybody has a right to privacy, first and foremost. If it's material to you that you want to know who owns a horse, these things are being addressed by the current task force and there will be recommendations that come out.

"It's the ultimate card game that gets played in the auction process. Nobody wants to show their hand. The buyer doesn't want the seller to know that he has an interest in the horse because he might think that the seller is going to value the horse higher and he's going to have to pay more. The seller wants to know who is interested in his horse because he has kind of an idea about the kind of money that buyer will spend and that lets him know where the horse is in the marketplace.

"But I still think it all gets back to communication. If it’s material to you, ask the consignor. I would say probably nine out of 10 are going to tell you unless they have a direct mandate from the owner not to disclose it. (If they won't tell) and it's material to you, then you move on to the next horse.

"If you go out and do any research, you'll see that people who sell perishable goods into the food market are the only ones that are truly mandated to have to disclose ownership. That's so if something spoils, they can go back to the owner or the producer. But in just about every other market, you are not required to disclose ownership."

What do you think about licensing consignors and agents?
"It's not a bad idea in theory, but I think ultimately it has too many other consequences and would be more of a deterrent to trade. Nowhere in the world does anyone have to hold a license (to sell horses). We have a large amount of foreign interest coming in here, and the license doesn’t mean the same thing to everyone. In some areas of the world, it's an exclusionary process and some people would not feel comfortable coming in here and having to hold a license. And, if you’re going to be licensed, there's going to have to be some type of regulatory board, be it either private or state run. If you have to do it privately, it's going to be very expensive. If it's state run, you have state regulation over the auction process."

In your opinion, should the use of medication in sale horses be allowed?
"First and foremost, we're not conducting pari-mutuel wagering. There is no gambling on the outcome of what happens at a sale. We're also bringing a crop to market, and we have one window of opportunity to be able to do this. We are talking about some horses that are shown 100-plus times. It's like me or you going home and doing too much on the weekends, which we're not used to doing. You're definitely going to be sore.

"We have horses coming in from all different areas to an environment that they've been put into for the first time. There are some that need tranquilizers. We've had horses that shipped in (to a sale) without ears clipped and manes pulled, and you just can't put your help in a position of peril where they're going to being risking their lives just because you can't use a certain kind of medication. I'm saying medication (should be allowed) under certain circumstances.I truly don't believe that we have consignors out there masking crippled horses with anti-inflammatories or corticosteroids. If that is happening, then it is fraud and there is civil recourse."

What change or changes would you like to see in the Thoroughbred marketplace?
"If I could (make a change), it would be better introductory steps into the marketplace and an increased unified educational effort (for new buyers) One of things that the CBA is trying to do is to be able to work with all the associations out there- the Kentucky Thoroughbred Association, the Thoroughbred Owners and Breeders Association, the sales companies -- because everybody has some good resources we would able to use together in a system of synergy so that we could better educate new buyers.

"My number one goal is to have an industry-wide marketing plan that you could throw money into and that you could have a tag line for the racehorse industry or a slogan. Historically, if we look back (at other industries), we all know that works."

Where, in your opinion, is the Thoroughbred marketplace headed this year?
"We’ve been carried along because we are fortunate enough that this area (Central Kentucky) is a global market. Even though we are increasing our product, we've had enough outside influence from other countries coming in here to be able to hold it together. It's my hope that these (foreign) markets will continue to emerge, and foreign buyers will continue to come in here and bolster the median and gross. But I have a feeling we are getting to that saturation point. That's what common sense tells me."

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