2012 yearling sales: Optimism heading into Fasig-Tipton July

Barbara D. Livingston

The Fasig-Tipton sale pavilion in Lexington, where the boutique yearling sale season begins July 10.

LEXINGTON, Ky. − The yearling market turned a corner in 2011, when the auction season’s overall average and median, freed from the ballast of excess supply, rose dramatically. With 12 percent fewer yearlings cataloged, total gross for North American yearlings rebounded by 12 percent, and the average and median sale prices grew by 19 percent and 50 percent, respectively.

That, of course, was last year, before this new round in the Eurozone crisis, before new political turmoil rattled such slots-rich racing centers of New York and Canada, before the current debate over race-day Lasix, and before an ongoing New York Times feature series brought horse racing’s least-flattering side − injuries and drugs − to the front page.

The question now is, Can the yearling market sustain or build on its 2011 gains in this newly fraught atmosphere? Perhaps surprisingly, the answer among buyers, sellers, and sales executives is yes, and the optimists point to recent market momentum as supporting evidence: this year’s 2-year-old sale results.

“There seems to be a renewed interest in the buying public in 2012, and I think we’ll see some people who may not have bought horses in recent years emerging again at the yearling sales, just like we saw some familiar faces returning at the 2-year-old sales,” said Boyd Browning, president of Fasig-Tipton.

The company conducts the select yearling season’s bellwether auction, the Kentucky July sale, on July 10 in Lexington.

“All the market signs indicate that we’ll see interest and activity,” he said. “I have every expectation that we’ll have solid yearling sales and, hopefully, build on the strength of the 2011 yearling sales and some of the positive momentum that was created in the 2-year-old marketplace this year.”

On June 20, the Ocala Breeders’ Sales Company closed out the year’s large domestic juvenile sales with hefty gains and set records for top price ($350,000), average price ($25,947), and gross ($10,249,100). Those were plus signs for the middle market, and the season’s earlier boutique auctions also generally performed well. The Barretts March, OBS March, Fasig-Tipton Florida, and Fasig-Tipton May sales all increased average and median this year; the exception was Keeneland’s April auction, where average was level with last year but median dipped 8 percent.

“Anytime you have a 2-year-old market as successful as this year’s was, that puts confidence into the yearling market,” Keeneland sales director Geoffrey Russell said. “The increased purses at the moment at certain tracks also helps. Yes, there’s some upheaval at NYRA, but as long as the purse structure is going to remain the same, that is a good thing.

“I think there is a little bit of a boost in the economy, and I think that will help in the market,” Russell said. “Europe is in a serious situation, and that can always turn around to hurt us. I’m not quite as confident in the international market as I have been in the past. I’m more confident in the domestic market.”

Still, Russell points to some international buyers to watch. Those interests from South America and the Gulf states, especially booming Qatar; Russia, where racing is poised to expand; as well as regular supporters Japan and Korea.

Rick Porter, whose Fox Hill Farms campaigned 2011 Horse of the Year (and $380,000 Keeneland September yearling graduate) Havre de Grace, says he’s preparing to pay more for his sale picks this year.

“The broodmare market’s gotten stronger, the quality yearling market is stronger, and I think it’s going to be worse this year because there’s less horses and less good horses, and it seems that the same players are still out there buying at the top end,” Porter said.

As foal crops continue to shrink, Russell expects Keeneland’s two-week September sale, scheduled for Sept. 10-21, to offer fewer yearlings again in 2012. But Fasig-Tipton will see larger catalogs for both its season-opening Kentucky July and Saratoga select sales. The July auction will offer about 12 percent more stock than last year with its 338-horse catalog, and the Aug. 6-7 Saratoga sale catalog is up 18 percent in numbers. Fasig-Tipton’s Browning doesn’t think that’s a negative at a time when overall supply, as measured by foal crop, fell about 23 percent between 2008, the year the financial crisis hit, and 2011 when the current crop of yearlings was born.

“Both sales were coming off successful efforts in 2011 from a sales standpoint, and both sales have performed well from a graduate standpoint in the last 12 months, so I think people had a high level of confidence bringing us a quality horse,” Browning said. “The level of increase is not wild or dramatic. The increases don’t concern me at all. In fact, I think it can be a positive to attract a few more people to come to the sale with a little bit larger catalog.”

The new balance between supply and demand is a big plus to consignor Carrie Brogden, who plans to sell 180 yearlings through Select Sales, the agency she owns in partnership.

“I’m very optimistic, and the only thing that scares me is what’s going on in the world economy,” she said. “But I think supply versus demand has finally met a bit, and I think there will be a lot of demand for quality yearlings. Our market is changing, and there have been a lot of positive steps to rein in some of the longstanding issues in the Thoroughbred industry. Handle is very strong, and racing is becoming more about events. I went to two Churchill night-racing events, and it was fun and energetic and everything racing should be.”

Brogden said he isn’t too worried about possible winds of change in New York and Woodbine, where CEO Nick Eaves recently said the track could shutter in 2013 if the provincial government cancels slots there. Brogden has three Canadian-bred yearlings to sell this year but says she hasn’t seen large premiums for many Canadian-breds in the past, especially as compared to the higher values for New York-breds since slots went online at Aqueduct in 2011. In the Empire State, Brogden says, there is still a relatively low supply of New York-breds to meet the demand, and she expects those yearlings to hold good value even through uncertainty over the state takeover of NYRA.

“I think they’re paying a premium right now, because there still aren’t enough New York-breds to go around,” she said. “I really targeted the New York market this year based on the supply-demand issue. I bought into 23 New York-breds this year.”

And Brogden sees some positive buzz for Kentucky-breds, too, including increased advertising by the Kentucky Thoroughbred Association and good racing performances, such as Princess Highway’s recent Group 2 Ribblesdale Stakes win and Ian’s Dream’s close third in the Group 2 Norfolk Stakes at Royal Ascot.

“I think it’s going to be very strong, but not crazy,” Brogden said. “I think it will be good for the good horses that jump through the hoops, and the good thing for the lower-end horses is that there are a lot of international buyers looking for value.”

Buyer Rick Porter shares Brogden’s view that the market will be strong for better quality. Even though he’s got concerns about the wider economy and the current state of Thoroughbred racing, he says he’s planning to buy about 15 yearlings again this year, as he usually does for his high-end stable.

“There’s too many racetracks, there’s a lot of confusion as far as medications and particularly Lasix, and we still have no commissioner or central governing body,” he said. “I think that will hurt racing, particularly at the lower end, in the long run. But I’m not going to let it stop me from doing the same thing I’ve been doing. I wish things were a lot better, and there are a lot of things I’d like to see changed that I don’t think are going to change. So I’m going to make the most of things and try to have the most fun I can and try to get another good horse.”

Yearling Prices: 10-Year Summary

For horses sold at public auction in North America.

Foal Crop: Steady Declines

North American registered foals.

*Estimated
Source: The Jockey Club