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Fasig-Tipton sale may ride market momentum
Fasig-Tipton’s Saratoga select yearling sale, scheduled for Monday and Tuesday, looks likely to improve on its 2012 auction figures, thanks largely to a smaller catalog and a healthy demand for ultra-select young stock.
The 2013 catalog weighed in at a svelte 152 yearlings, down 20 percent from last year. And if early signs from Fasig-Tipton’s Kentucky July select yearling sale are any indication, there still is good bidding competition for upmarket yearlings who can put together the prized combination of athleticism and pedigree.
The one-day July sale sold 163 yearlings and saw its average price rise 10 percent to $89,785; the median did even better, gaining 20 percent to reach $72,000. And the buyback rate fell sharply from 33 percent a year ago to 27 percent.
Like the July auction, the Saratoga select sale should benefit from several key positives, starting with a better alignment of supply and demand as recent foal crops have fallen. Another plus: the extension of federal tax benefits for Thoroughbred buyers, including a 50 percent bonus depreciation on yearling purchases and an accelerated depreciation rate.
Signs of the general economy’s stabilization also have boosted some bidders’ confidence. And the 2-year-old auctions’ strong performance earlier this year might prompt yearling-to-juvenile resellers, called “pinhookers,” to bid on some select yearlings at the Spa.
“We’re very excited and enthusiastic about the sales at Saratoga,” said Fasig-Tipton President Boyd Browning. “We started the yearling sales off with strength and widespread interest, and those indicators are all very positive going to Saratoga. We’ve received a lot of preliminary interest.”
Last year’s Saratoga select yearling auction endured a wild ride, thanks partly to a change in major buyer Sheikh Mohammed al-Maktoum’s pattern that took consignors by surprise. Sellers, who often look to the number of requested veterinary exams as a gauge of buyer interest, said they were flummoxed when Maktoum requested no presale vetting last year. That caused some confusion when it came to setting reserves on horses Maktoum had inspected, particularly if those yearlings were by Maktoum’s own sires – and therefore reasonably expected to attract his interest.
But Maktoum trimmed his buying last year. That, combined with the confusion over setting reserves, some consignors said, contributed to a jump in the 2012 opening session’s buyback rate, which climbed from 25 percent in 2011 to 33 percent.
Another factor in the session’s soft results was what Browning then called “restraint in the marketplace,” adding: “Buyers are still bidding with discipline, both on the number of horses they bid on and the level at which they’re willing to bid.”
Last year’s opening session ended with a 21 percent decline in average and a startling 30 percent dive in median on a night that most players considered aberrant.
Indeed, the auction’s second night roared back to life, beating the previous season’s second-session average and median by 8 percent and 11 percent, though buybacks were still high at 35 percent, as compared with 19 percent on the second night the year before.
The climb wasn’t quite enough to erase the early losses. For the two nights, the overall average of $299,065 and the $225,000 median were down 6 percent and 10 percent. Even so, the 2012 auction’s second session had shown that a range of bidders, particularly domestic racehorse owners, were still plenty interested in select stock. That’s a theme Browning expects to continue this season.
“That trend certainly was evident throughout the 2-year-old season, and [five of the top six] yearlings in July were purchased by different entities or individuals, so you’ve certainly got a broadening at the top of the market. The height of the top might be lower than it once was, but it’s not a narrow one- or two-person market.”
In 2013, the results of the 2-year-old auction season and the July yearling sale suggest that those bidders can still be highly selective, but the middle market also appears to be heating up, some auction participants said.
“There’s plenty of demand for top-quality race prospects, and I think there probably will continue to be more of the same, so the horses that are perceived to be the cream of the crop will sell very strong,” said bloodstock agent Barry Berkelhammer, a regular bidder at the Saratoga select sale. “I’m starting to see a little bit of demand for other areas of the market, too. Maybe I’m just being optimistic, but I’m hoping there will be a bit of trickle-down effect, and those who play the middle will start getting stronger. The strongest demand is definitely at the top, but it seems like the others are starting to find homes.”
Supply and demand is likely playing a role in that, but increasing economic confidence probably is helping, too, agents said, as investors who retreated to the sidelines during the recession begin spending again and market stalwarts expand their budgets. In both cases, the aforementioned tax benefits also are encouragement.
Browning, too, sees what he called “a slight widening of parameters” among boutique-level buyers, though he cautions against irrational exuberance on that point.
“I think there’s recognition amongst the buyers that we’re dealing with a diminished supply,” Browning said. “If their goal is to have as many or more horses than they’ve had in the past, they have to widen their level of acceptability. [The market is] still very selective, but hopefully slightly less selective than in the past.”
As for why demand for Thoroughbred yearlings remains vibrant, Browning acknowledged that economic calculations like supply and bonus depreciation are factors. But there are other important – and more romantic – considerations, too, when a person makes a bid at a yearling sale.
Asked to what he attributes the current demand, Browning said: “The desire to be in the winner’s circle. There’s no thrill like the thrill that racing provides people. It is an unbelievable experience to have a good horse. You see a gentleman like Ken Ramsey, who has won at every level, and he’s got a smile on his face whether he’s leading one in that’s won a maiden race or a claiming race. It’s the same smile he has when he’s leading one in that just won a Grade 1. That’s the beauty of our sport and of our business: People thrive on competition, the thrill of victory, and the thrill of having a good horse.”
Fasig-Tipton’s sale takes place at the Humphrey S. Finney sale pavilion in Saratoga Springs, N.Y. Sessions will begin each night at 7 Eastern, and Fasig-Tipton will offer live streaming at www.fasigtipton.com.
Fasig-Tipton Saratoga select yearling sale
When: Aug. 5-6, 7 p.m. Eastern
Where: Humphrey S. Finney Pavilion, Saratoga Springs, N.Y.
Phone: (518) 584-4700
Catalog: 152 horses, down 20 percent from 189 last year
Recent history: The 2012 sale posted overall declines while selling 107 horses for $32,000,000, an average price of $299,065, and a median of $225,000. Gross decreased 3 percent, average was down 6 percent, and median decreased 10 percent. Todd Pletcher, agent, bought a Medaglia d’Oro filly out of champion Wait a While, consigned by Three Chimneys Sales, agent for Arindel Farm, for $1,575,000 to top the sale. The filly was later named Wait No More.
Internet: Live streaming at www.fasigtipton.com
|Fasig-Tipton Saratoga selected yearling sale results, 2003-2012|
|Year||Offered||Sold||Not sold||Average||Median||Gross||Highest price|
First-year sires of yearlings at 2013 Fasig-Tipton Saratoga select yearling sale
|Stallion||2013 stud fee||No. cataloged|
|Lookin At Lucky||$ 25,000||1|
|Quality Road||$ 25,000||4|
|Tale of Ekati||$ 15,000||1|
|Warrior's Reward||$ 8,000||1|