08/01/2015 1:41PM

Competitive yearling market looms in 2015

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Barbara D. Livingston
The Fasig-Tipton Saratoga yearling sale on Aug. 10-11 is the first boutique sale of the season.

As the commercial breeding industry was climbing out of its recent recession, the phrase “cautious optimism” was used to describe the state of the yearling market as frequently as a good horse was deemed to have “ticked all the boxes.”

With the 2015 yearling season kicking into gear, “cautious optimism” has often been replaced by the phrase “it’s tough to buy the good ones.” The focus is not on the past today but on what many buyers and sales officials suggest is a solid market fueled by demand that may continue to move higher.

North America’s overall average yearling sale price climbed to an all-time high of $60,091 in 2014, while the number of horses on offer was fairly steady from previous years, meaning there was increased competition in the market for quality offerings. Meanwhile, the North American median price hit a record high of $25,000 last year. Both average and median price improved on record performances in 2013.

Since individual yearlings no longer inflate the figures with multimillion-dollar hammer prices with the same frequency as they did in the mid-2000s, the record average and median figures show the strength among the elite offerings, as well as the increased depth for those in the tiers just below the top. It’ll be a fight to get a good horse this year, but one most see coming.

“I would think the top end of the market’s going to be very strong,” said Jack Wolf of Starlight Racing. “It’s sort of the herd instinct of us idiot horsepeople, but I would think it’d be good.”

The North American yearling market got off to a strong start during its first major sale, the Fasig-Tipton Kentucky July yearling sale, in which revenues reached their highest point since 2009 and the average and median sale prices were the highest since 2007.

While the July sale provides only a small slice of the middle market and it’s early in the season, the results there suggest that the North American yearling market will continue its four-year run of increased average sale prices and overall growth in gross receipts.

“There’s nothing in the marketplace that would lead me to believe that we go anywhere but keep ticking upward at the moment,” said Kerry Cauthen of consignor Four Star Sales. “I think we’re primed for a nice further improvement. We’re close to the same number of horses, so supply hasn’t gotten out of hand at this point, and I think there’s more interest.”

Another factor that suggests that the yearling market will continue its recent upward momentum is the results of the recently concluded 2-year-olds in training portion of the auction calendar.

All three of the Ocala Breeders’ Sales Co. juvenile sales – which comprise the majority of 2-year-olds sold in that market – set records for gross, average, or median price in 2015, and the auction company sold its most-expensive offering ever during its spring sale in April. Meanwhile, the Fasig-Tipton Midlantic 2-year-olds in training sale, considered a non-boutique but fast-growing and proven market for juveniles, posted its strongest sale in its history, with record returns and its first seven-figure graduate.

“I feel like the juvenile sales went well, and there’s more optimism among the pinhookers,” said Meg Levy of Blue-water Sales. “It seemed to me a little like we went back to 10 years ago where they could really sell a good physical and a lighter pedigree as long as it performed well and was a really good horse.”

Buyers looking to resell yearlings as 2-year-olds make up a large portion of the buying bench, often participating in the middle to lower ends of the market. While they must buy with a certain ceiling to leave room for profit on resale, their results from earlier this year suggest they collectively come to the yearling sales with well-replenished capital. The Fasig-Tipton July sale provided good early results for pinhookers.

The current yearling season is unique in that it’s the first one in 37 years to be held in the wake of a Triple Crown victory. Because of the space between the two historic events, there is little on which to base how the yearling market will react to a Triple Crown win, if at all.

The changes in the industry between the times of Affirmed and American Pharoah are plenty, with advances in technology, shifts in commercial breeding and sales philosophies, and new international players, among the factors. Additionally, the yearling population in 2015 is about 8,000 horses less than the summer after Affirmed won the 1978 Triple Crown.

Perhaps the most interesting variable tied to American Pharoah’s Triple Crown win will be how much it drives interest in Thoroughbred ownership through the auction process. Much has been written about American Pharoah’s effect on drawing new casual fans to the sport, but the conversion rate for those who participate further, to become owners or breeders, will be closely watched in the coming years.

“I don’t think we’ve gotten any specific people that you could say, ‘There’s a new one and that guy’s coming in,’ yet,” Cauthen said. “I do expect them, and I do expect there are people who are more interested in what’s going on in our business. He’s a fantastic horse to make that happen. Events like that are what start to move the needle.”

The upcoming Fasig-Tipton Saratoga select yearling sale is of particular interest in that discussion because American Pharoah was offered during the 2013 renewal, bought back by owner Ahmed Zayat, through Ingordo Bloodstock, for $300,000.

“I think it’s impossible to identify or isolate the ‘American Pharoah effect,’ ” said Fasig-Tipton president Boyd Browning. “Clearly, what’s happened is it’s gotten people enthused, both within and outside the industry. It’s created additional interest. It’s always good when you’ve got a big star out there.

“We live in a world of stars,” Browning continued. “People like to see them, whether it’s LeBron James playing in the NBA finals or American Pharoah running in the Haskell and being a Saratoga sale graduate, those are always positive signs. It’s impossible to quantify the impact, but it’s sure nice to be able to pick up the cover of the Saratoga catalog and see a horse of the magnitude of American Pharoah. It shows you what you can find at Saratoga.”

The two-day Saratoga select yearling sale will be held Aug. 10-11 in the Humphrey S. Finney Pavilion in Saratoga Springs, N.Y., with sessions beginning at 7 p.m. Eastern.

A total of 209 horses were cataloged for this year’s renewal, the first boutique sale of the yearling calendar, marking a 27 percent increase from the 165 yearlings included in 2014. It is the most voluminous Saratoga catalog since 2009, when 235 horses were entered for the sale.

“We were offered more quality horses that we thought worked at Saratoga, plain and simple,” Browning said, explaining the larger catalog. “We were able to attract a larger number of horses that had the physical conformation and pedigree that we thought would be appropriate entries for Saratoga, and we’re very pleased with the increased numbers.”

Last year’s Saratoga sale closed on a fairly steady note, with 114 horses bringing total revenues of $33,284,000, up 4 percent from the 2013 sale. However, the average sale price fell 1 percent to $291,965, and the median dropped five percent to $237,500. The buyback rate decreased slightly to 19 percent.

Willis Horton bought last year’s sale-topper, a War Front filly out of the winning Seeking the Gold mare Charming, for $1.25 million.

The filly, named Take Charge Tressa, is a half-sister to eventual champion 2-year-old filly Take Charge Brandi, also owned by Horton, and is from the family of Broodmare of the Year Take Charge Lady and her sons, champion Will Take Charge and Grade 1 winner Take Charge Indy. The sale-topper is working toward her debut start at Saratoga under trainer D. Wayne Lukas.

FASIG-TIPTON SARATOGA SELECT YEARLING SALE
WHEN:
Aug. 10-11, 7 p.m. Eastern
WHERE: Humphrey S. Finney Pavilion, Saratoga Springs, N.Y.
PHONE: (518) 584-4700
CATALOG: 209 horses, up 27 percent from 165 last year
RECENT HISTORY: The 2014 sale posted overall mixed results while selling 114 horses for $33,284,000 (up 4 percent), an average price of $291,965 (down 1 percent), and a median of $237,500 (down 5 percent). Willis Horton bought a War Front filly out of Charming, consigned by Eaton Sales, agent, for $1.25 million to top the sale. The filly was later named Take Charge Tressa.
INTERNET: Live streaming at www.fasigtipton.com