02/23/2017 10:36AM

Juvenile sale season preview: Consignors optimistic for middle market

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Barbara D. Livingston
The Fasig-Tipton Gulfstream sale kicks off the 2-year-old sale season Wednesday.

One could argue that the 2-year-olds in training portion of the North American auction calendar is the most dependent on outside market forces in determining its own outcome. Sellers often must base their reserves on the prices they paid for their stock in the yearling market the previous year, while buyers shop based on their foreseeable futures on the racetrack.

In 2016, that produced a rather fragile ecosystem in the juvenile market, with lower returns and higher buyback rates at nearly all of the major sales. That momentum was compounded during the subsequent yearling and mixed-sale seasons, where relatively healthy upper and middle markets were dragged down by a hurting lower market.

On paper, those metrics should not add up to a rosy forecast for the upcoming juvenile auctions, and perhaps that will be the case, but the juvenile market is built on the ability to rebuild, restock, and adapt to changing landscapes. That preparation for the coming season has come in different forms.

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Consignor Cary Frommer watched the low-end market struggles during last year’s juvenile auctions with a keen eye. She focused her yearling-buying strategy on horses that would stay out of the bottom tiers, and be able to sell at the Fasig-Tipton Gulfstream and Ocala Breeders’ Sales Co. March juvenile sales.

“We stepped up and spent a lot more money than we normally do and picked out some really lovely individuals, and they’re all looking promising,” Frommer said. “We’ve concentrated on trying to buy for these first two sales – just the right ones.”

Frommer said she came out of the Fasig-Tipton Kentucky July yearling sale with $1 million worth of horses.

“Usually, I come out of there with three horses and I’ve spent $200,000,” she said. “We spent a couple hundred thousand on a few horses, and the same up in Saratoga. We spent a lot of money on our horses. We need to have a good year, because we put our necks on the line a little bit here.”

The desire to stay out of the lower markets, both in buying yearlings and offering them as juveniles, was one shared by many pinhook buyers last year, which increased the competition and prices on some desired horses. While this likely helped secure higher-quality offerings for the coming 2-year-old market, a hard-fought yearling purchase also means the price clearance must be higher as a 2-year-old to make a profit.

“It was probably one of the toughest years ever that we’ve experienced buying,” said Ciaran Dunne of Wavertree Stables. “It’s the same deal, everyone wants the same thing. You find one you think you’re going to sneak up on, and you walk up there and everyone in the world is there.

“Probably one of the hardest things last year was the racing guys. The end-users were landing on the horses they normally let us have. We found it very difficult.”

Dunne said he expects a similar juvenile market landscape to what was seen in 2016, but having a year to prepare and adjust to a tide that shifted in the middle of last year’s season should help create steadier trade.

“The buyers have gotten very sophisticated, and as we’ve seen in the yearling and mixed sales, there’s great demand at the top end, and the middle is a little sticky, and the bottom is nonexistent,” he said. “I don’t think you’ll see any dropoff from that, and it might even improve a little.”

That source of improvement might come from the middle market. J. Michael O’Farrell Jr. of Ocala Stud said the market’s easing off from what was a record average and median pace for many 2-year-old auctions could make horses more accessible to a wider range of end-users.

“Buyers don’t like paying more for something than what they’re comfortable with, and I think the way the averages have come down at a lot of the sales for the middle market makes it more affordable for a wider group of people to play the game,” he said. “I think we have a chance of it bouncing back a bit, not that it’s going to take off, but I do think the market will broaden out a little bit this year.

“It’s no different from people going to the stores – when somebody puts something on sale, you’ll have more buyers. I think the middle market’s been on sale the last couple of years, and I think we might start attracting additional buyers, and those that had been playing, maybe they’ll be playing a little harder.”

However, O’Farrell did acknowledge that having a horse that fell below the median was still rough waters to navigate, and that might not change anytime soon.

“The bottom end is tough,” he said. “It’s always been tough, but over the last few years, we’ve had some racetracks that have closed and other racetracks that have cut racing days or purses. We’ve seen some running fewer races per day, so there’s less opportunity for the bottom end.”

The Fasig-Tipton Gulfstream sale of select 2-year-olds in training is not in line to have that concern. Of the seven juvenile sales hosted by a major North American auction house in 2016, only the boutique Gulfstream sale posted across-the-board gains in gross, average, and median.

The auction will take place Wednesday in the paddock of the Hallandale Beach, Fla., racetrack, beginning at 4 p.m. Eastern. The pre-sale under-tack show will be held at 10 a.m. Monday.

This year’s catalog features 160 offerings, marking a 5 percent increase from last year’s 152-horse catalog.

“We’re very enthusiastic about the sale,” Faisg-Tipton president Boyd Browning said. “I think we’ve got a really nice group of horses coming to the sale, a lot of diversity, sire power, and pedigree. The consignors have given us, from top to bottom, really quality horses that we saw at the farms.”

It will be the third year that Fasig-Tipton’s select juvenile auction will be held at Gulfstream Park, having previously been hosted at other Florida destinations including the Palm Meadows Training Center, Calder Race Course, and Ocala-area Adena Springs South.

With two years of partnerships, breeze shows, and well-received auctions at Gulfstream, conducting business there has become routine for the sale’s participants heading into the 2017 renewal, which makes for a smoother event.

“By the third year, you know what you need to know – what you need in advance for coming to the track, how the track plays,” Frommer said. “I feel comfortable with it being at Gulfstream. I think it’s a good place to sell a horse.”

The working relationship between Gulfstream and Fasig-Tipton also has allowed the auction company to expand its presence within the property. The two entities cooperated to build additional stabling for the sale horses last year, and a permanent cover was added to the new structure for this year’s renewal.

“Fasig-Tipton has always been very user-friendly for 2-year-old consignors, and they’ve been doing it so long,” Dunne said. “The guys that are in there know how put on a 2-year-old sale. Maybe with a new company, the transition would have been a little harder, but with those guys at the helm, it’s been great.”

The Gulfstream sale will once again be the only major juvenile auction on the calendar to be held at a racetrack during an active meet. Browning said the ability to directly compare a juvenile’s breeze-show performance to that of an afternoon runner was an appealing draw for buyers, many of which might be based near Gulfstream for the races anyway.

“They’ve gotten used to, and really enjoy, buying horses that are working and training on a daily basis over a racetrack where some of the best racing in the United States occurs, so I think the buyers have gotten a really high level of confidence,” he said. “They understand [breeze] times there, they understand how the good horses generally move on dirt. I think the buyers have gotten really comfortable with the setup, and the sale has found a home.”

The 2016 renewal of the Gulfstream sale sold 66 horses for revenues of $21,590,000, up 7 percent in gross from the 2015 renewal when 89 horses brought $20,095,500. The average sale price rose 45 percent to $327,121, the median increased 92 percent to $250,000, and the buyback rate remained fairly steady at 31 percent.

Four horses sold for seven figures during last year’s sale, led by a $1.8 million Tapit colt later named South Beach. The colt, out of the Giant’s Causeway mare Bethan, was purchased by Woodford Racing and Robert LaPenta and is unraced. Old South Farm consigned the colt, as agent.

Last year’s auction also has produced stakes winner Tap It All, Grade 1-placed Mopotism, Grade 2-placed Jamyson ’n Ginger, and Grade 3-placed Recruiting Ready and Harlands Thunder.