09/16/2016 12:10PM

High average offers no guarantee

Keeneland Photo
This colt by the late Scat Daddy sold for $3 million on Wednesday.

When horses sell for as much money as they did during the first three days of the Keeneland September sale, it looks like it’s an easy game for consignors. It’s not.

All commercial breeders who sell a number of yearlings annually need the hefty returns from sales such as Keeneland to help their operations attain the desired profits. For every horse who sells for a lot of money, there’s usually another one who barely brings the stud fee, and that’s a loss after investing two years into the horse, from the time of mating to the sales hammer.

The strong averages posted by sires at the three select sessions of the Keeneland September sale do not equate to profitable numbers for all consignors. Sales are not socialist events where everyone who offers a yearling by a certain sire participates in the total proceeds of progeny sold by that sire. While the $3 million price paid for the Scat Daddy sale-topper was a clear home run for his consignor, selling for 100 times the $30,000 stud fee of Scat Daddy in 2014, that price did nothing for the consignors of nine yearlings by Scat Daddy who failed to meet their reserve during the first three days of the Keeneland sale.

So, with that in mind, let’s take a look at some of the numbers behind the numbers at the three select Keeneland sessions to see how consignors fared with some of the higher-profile stallions.

The starting point for any discussion of sires at Keeneland must begin with Tapit, the leading commercial stallion in North America and the owner of the highest stud fee in North America. His progeny produced tremendous activity at the three select sessions, with his yearlings accounting for 15.4 percent of the total receipts at the first three days. His average price of $662,857 was just ahead of War Front’s $659,167 average.

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But clearly, all consignors who offered a Tapit yearling did not realize a profit or get the price they had hoped for.

Though Tapit today stands for $300,000, his fee in 2014 was $150,000, and in the three select sessions, 35 yearlings by Tapit were offered, and 28 sold. Based on his 2014 stud fee, Tapit’s average is an excellent 4.4 times his stud fee, a number that more than covers the stud fee, the value of the mare, and the costs of raising the foal.

There were seven Tapits who failed to meet their reserve, plus another 10 who were withdrawn prior to the sale, meaning that of the 45 Tapits originally cataloged, 17 remained with their consignors.

Those consignors who sold progeny of War Front realized average results that matched Tapit’s. War Front, also with a 2014 stud fee of $150,000, had yearlings average 4.4 times the stud fee. The power of how one sale, or non-sale, affects averages is illustrated in War Front’s numbers. If the $1.9 million inadvertent buyback by Mandy Pope was included in War Front’s totals, his average would have been a sale-leading $724,474, but consignors do not live off the averages.

Eight yearlings by War Front failed to meet their reserve, and another five were withdrawn before the sale, so 13 yearlings failed to bring that very profitable return of 4.4 times the stud fee for their breeders.

Several high-priced stallions who had mixed results at Keeneland were Bernardini and Kitten’s Joy, who both stand for $100,000.

Bernardini had 21 of his progeny pass through the sales ring during the first three days of the sale, and while the average of $292,727 was a respectable 2.9 times the stud fee, 10 failed to meet their reserve, and his average was 16 percent below the overall $347,471 sales average for the three select sessions. He did have three sell for $475,000 or more.

Kitten’s Joy had nine yearlings sell for an average of $221,111, just 2.2 times the stud fee. That return on investment would perhaps cover the stud fee and the value of the mare, but for the select sessions, which offer the best of the sale in terms of conformation and pedigree, that was not a good return for consignors.

The 48 total yearlings by Kitten’s Joy in Books 2, 3, 4, and 6 at Keeneland do not figure to attain that same average. Kitten’s Joy, the premier sire of grass runners in North America, is a great sire if you’re breeding to race, but the returns from Keeneland illustrate the hazards commercial breeders face every time they send a yearling into the sales ring.

Some sires who produced great returns for their breeders based on their 2014 stud fees were Curlin, Pioneerof the Nile, and Uncle Mo.

The progeny of Curlin, who stood for just $25,000 in 2014, sold more in line with his 2016 stud fee of $100,000. Seven of the eight yearlings by Curlin passing through the sales ring sold, for an average of $291,429, or 11.7 times the stud fee, with five selling for $200,000 or more.

Pioneerof the Nile saw his stud fee rise from $20,000 in 2014 to $60,000 in 2015 and to $125,000 this year. Fourteen of his progeny sold for an average of $358,571, an extremely lucrative return of 17.9 times his 2014 stud fee. It’s an easy game as long you could have predicted in the winter of 2014 that his then-unraced 2-year-old American Pharoah would go on to win champion juvenile male honors at year end and in 2015 become the first American Triple Crown winner in 37 years.

Uncle Mo, perhaps the second-hottest sire in North America, stands for $75,000 today – and likely a lot more in 2017 – but in 2014, his stud fee had dropped to $27,500 in his third year at stud. Nine of his progeny sold at the select sessions for an average of $285,000. While that is well off Tapit’s average, it is a return of 10.4 times his 2014 stud fee. Four sold for more than $300,000 each.

And getting back to Scat Daddy, who died last December, he had a terrific sale and rewarded those who paid his stud fee of $30,000 in 2014 (it was to be raised to $100,000 for 2016). He had 24 progeny go through the sales ring for an average of $410,833, or 13.7 times the stud fee. Even if you take out the sale-topper, his average is still a gaudy $298,260, with the median price for his progeny being $300,000.

He will be missed by Ashford Stud, where he had stood, as well as all commercial breeders who had used his services.