06/20/2016 11:48AM

Growth only at top of juvenile sales

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Following a year of optimism and record returns in nearly every segment of the market, the 2-year-olds in training season of 2016 saw the buyers and sellers become more discriminating with their bids and reserves, while figures generally declined for all but the top offerings.

“When they say it’s been a roller-coaster ride, that’s been true for this year more than any other,” said David Scanlon of consignor Scanlon Training and Sales. “The highs are really high, and that middle-to-lower market has just been a very tough place this year.”

Of the seven juvenile sales hosted by major North American auction companies – Fasig-Tipton, Ocala Breeders’ Sales Co., and Barretts (Keeneland no longer hosts a 2-year-old sale) – the only one that displayed a fully upward trajectory, with across-the-board gains in gross, average, and median paired with a lower buyback rate, was the Fasig-Tipton Florida select sale of 2-year-olds in training.

In its second year at Gulfstream Park, revenues for the Florida sale increased by seven percent, while the average sale price increased 45 percent and the median grew by 92 percent.

The market’s leadoff sale is a boutique event specializing in upper-level offerings, the level at which sales were strongest across the board. The number of seven-figure juveniles sold over the season rose from four to eight, with half of them coming at the Florida sale.

There was, however, greater frugality as buyers worked their way down the ladder. Buyback rates increased in five of the seven major juvenile sales.

“I would say none of us saw it coming,” Scanlon said. “I’m guilty myself. You look at a [yearling to pinhook] and think, ‘I’m going to buy that horse, and if he turns out, he can really be good. If he doesn’t, I can lead him up there and get $30,000 or $40,000 from him, no problem.’

“That’s not the case,” he continued. “That horse you thought you were going to lead up there and get $30,000 or $40,000 last year, this year you’re going to lead him up there and get $20,000 or maybe even $10,000. That part of the market has taken such an adjustment.”

This became especially apparent in the season’s later auctions, traditionally seen as “open” sales – the Fasig-Tipton Midlantic sale, the Barretts May sale, and the OBS June sale. Two of the three auctions saw record or near-record-priced sale toppers, but all three posted declines of between 12 percent and 32 percent in average and median prices. While those auctions have made great strides in attracting high-end horses and buyers that might have previously passed on the later-season sales, the figures suggest those two groups are largely staying bunched together.

“Basically, we’re going to have to be closer to the top of the market if we want to continue to survive,” said Danzel Brendemuehl of consignor Classic Bloodstock. “The market’s adjusting and kicking out the little consignors that buy the $1,200 horse and take them to the sale.”

It was a stark contrast from the 2015 sale season, which appeared to spark a renaissance for later sales. A year ago the Fasig-Tipton Midlantic and OBS June sales posted record returns, while interest in the Barretts May sale was high as the auction company settled into its new home at Del Mar.

While those returns invigorated that segment of the market, it may have also set up the miscommunications between buyers and sellers that plagued the second half of this year’s calendar in the form of high-profile buybacks. All three of the late-season auctions had at least one horse finish under reserve that would have topped a session or finished among the top three overall prices of the sale.

Brendemuehl suggested that a series of shifts in the auction calendar could have also caused fatigue in the marketplace over the season. The number of days in the juvenile season where there was not an active sale, breeze show, or horses showing during the time in between decreased from 72 days to 62.

At one point in the season, auctions on separate coasts were held in succession, with the breeze show for the Barretts May sale taking place the day after final session of the Fasig-Tipton Midlantic sale.

While the very top and very bottom of market were on their separate trajectories, the upper-middle market sales – the OBS March and spring sales and the Barretts March sale – weathered the season fairly well.

The OBS spring sale, an auction quickly becoming the juvenile calendar’s bellwether event, saw a 2 percent decline in gross and a slightly higher buyback rate, but set record average and median prices for a fifth straight year. The other two sales saw general, but mild, declines or maintained their figures from 2015.