While rest of the world worries about the European debt crisis and America’s high unemployment rate, horsemen are starting to see signs that the struggling Thoroughbred market is taking a turn for the better. Heading into the Keeneland September yearling sale, auction officials, consignors, and buyers said the positives were outweighing the negatives.
Even though the erratic stock market plunged again just two days before the auction’s Sept. 11 start in Lexington, most of the sale's participants were fairly optimistic about the prospects for the largest auction of its kind in the world.
“I think the stock market angle is overemphasized,” said John Sikura of Hill ‘n’ Dale Sales. “But when there is such volatility in those investments, there can be some plusses for the Thoroughbred industry. People might be tired of seeing their portfolios go up and down on a daily basis, so they want to get into other things like horses. There are some great tax incentives this year to buy yearlings and even in a tough economy, there is always somebody who is thriving and succeeding.”
The auction will run through Sept. 24, with a day off from selling Sept. 16. The first two sessions, which will be held at night, are for select yearlings, which have superior pedigrees and outstanding conformation.
The barn area at Keeneland was busy Sept. 9, with shoppers such as Japanese horseman Nobutaka Tada, multiple Eclipse Award-winning trainer Todd Pletcher, British bloodstock agent Tom Goff, and representatives of Coolmore Stud, Sheikh Mohammed, and Sheikh Hamdan inspecting horses. Nick Nicholson, Keeneland’s president and CEO, reported that new buyers were expected from the Middle East and the Far East, but declined to provide any details.
“We were one of the few farms showing yearlings yesterday and we had a lovely, steady flow of traffic,” said Martin O’Dowd, vice president and general manager of Runnymede Farm. “Today, I’m even more enthused. Everyone you would want to see has been here looking. I’ve seen people from the big operations of Coolmore and Darley; I’ve seen people from the American racing partnerships; and I’ve seen people from American and Irish pinhooking operations. You can’t ask for any more than that.”
So far in 2011, many of the results for yearling sales have been stronger than they were in 2010. Sheikh Mohammed’s enthusiastic buying helped boost business at Fasig-Tipton’s Saratoga select auction. In addition, that sale and Fasig-Tipton’s New York preferred auction benefited from the excitement about the opening of a video lottery terminal casino at Aqueduct, which is scheduled for later this year. Revenues from the casino are expected to increase purses in New York dramatically, something that also should perk up the market at Keeneland.
“The higher New York purses won’t just benefit New York-breds, they’ll benefit every horse that runs there; they’ll be a real boon,” said Kentucky-based bloodstock agent Mike McMahon. “New York owners and trainers are a big part of the September yearling market, and they should be aggressive this year.”
Keeneland cataloged 4,319 horses for the September auction. The number is down 11.1% from 2010’s total of 4,857, but includes a group of quality offerings from the dispersal of the estate of Edward P. Evans, which is being handled by Lane's End. Among them are a full brother to grade I winner Christmas Kid and half brothers to grade I winners Quality Road and Malibu Prayer.
“We’ve reduced this sale by about 550 horses overall and those 550 weren’t the top stock, they were the weaker ones,” said Tom Thornbury, Keeneland’s associate director of sales. “Breeders have sold off their mares that were non-productive and what they couldn’t sell off, they haven’t bred. As a result, there are fewer non-commercial yearlings in the system. That’s the reason why when you look at Book Six (of the catalog) in this sale, you’ll still find depth in the pedigrees and you’ll find stallions that you recognize.”
Another development, which should make the auction better for breeders, is the reduction in stud fees that followed the American recession’s expansion into a global financial emergency late in 2008.
“We’ve finally reached our year of correction,” said Case Clay of Three Chimneys Sales. “Breeders have an opportunity to make money again.”
Last year, the September sale posted increases of 3.3% in gross revenue, 6.7% in average price, and 13.6% in median price. The upswings ended three consecutive years of decline for those statistics, which had soared to world and/or sale record levels in 2006.
The auction’s two select sessions, meanwhile, seemed to benefit from a new format that made them smaller and moved their start from morning to evening. The average and median for that portion of the sale rose 31.8% and 32.6%, respectively.
“I think people are coming here a lot more optimistic than they were this time last year,” said Bret Jones of Airdrie Stud. “The lead-up sales probably have surpassed expectations and Keeneland has done a great job getting the buyers here both domestically and internationally. From what I’m hearing, everybody is charged up about some of the faces we are going to be seeing. There is a positive feeling all around.”
Changes this year include adjustments to Book Two of the September sale’s catalog. It covers fewer days (three compared to four in 2010) and has fewer horses in it.
“I think you’ll see the usual suspects shopping at the top of the market in Book One,” said Steve Castagnola of Vinery Sales. “But we’ve spoken to several buyers who won’t be coming in and starting to look until Book Two, so I think we’ll see a ton of action then. The general buzz leading up to the sale has been very upbeat. We hope we’ve seen the bottom of the market and that we’re ready for an upswing.”
The September auction’s two select sessions will begin at 7 p.m. EDT. Selling will start at 11 a.m. each day Sept. 13-15 and at 10 a.m. Sept. 17-24.