11/05/2013 10:00AM

Keeneland November: Sale to test long-term markets

Susie Raisher/NYRA
Two-time Breeders' Cup Filly and Mare Sprint winner Groupie Doll is among the top offerings at the Keeneland November breeding stock sale.

The road to recovery for the North American bloodstock market has featured many small steps over the course of the past few years.

Those steps have gotten larger in 2013, with record-setting sales throughout the 2-year-old and yearling sale seasons and a return to a form not seen since the market crash of the late 2000s in the industry’s bellwether auction, the Keeneland September yearling sale.

Next, the industry’s long-term futures market – broodmares and weanlings – will be tested in the Keeneland November breeding stock sale Nov. 5-14 in Lexington, Ky. Each session of the 10-day sale begins at 10 a.m. Eastern.

A total of 3,602 horses were cataloged for this year’s sale, down 9 percent from 3,958 last year. Included in this year’s catalog, before outs, are 1,739 broodmares and broodmare prospects, 1,364 weanlings, 481 horses of racing age, 10 yearlings, and eight stallions.

As the first major international mixed sale this season, the Keeneland November sale will be a key measuring stick for a segment of the market that often is the slowest to react to change, both from industry trends and from outside stimuli.

With that said, the breeding stock sector will have ground to make up once the headline-grabbing seven-figure horses leave the ring and the rank-and-file of the middle market begins to take shape, as buyers and sellers continue to recover from the economic crash of 2008 and the auction market’s bottoming out in 2010.

Geoffrey Russell, Keeneland’s director of sales, said time has helped heal those wounds, and that another year of distance should maintain the positive trajectory.

“The magic year of 2008 that we seem to go back to had such a huge effect on everybody, but it made people who are into long-term investments [scarce]; they didn’t want to own there for a while, so we had a lot of mares that were sold,” Russell said. “I think now that we’re getting further away from 2008, we’re starting to see people wanting to reinvest into broodmares and look to the long term. Having successful yearling sales for the past few years, it gets the confidence to come back into the market for people who are into long-term investments.”

A common thread at this year’s major auctions has been a renewed willingness among buyers to go after what they want, especially for horses at the top end of the market. This, in turn, has trickled down to the middle and lower levels, as illustrated by the strong median figures at this autumn’s yearling sales.

Russell said he expected buyer interest to make the leap into the next segment of the market at the Keeneland November sale. He also noted that the success of weanling-to-yearling pinhooks in 2013 could motivate buyers of young horses to return in force.

“It’s slightly different, but I think the buying enthusiasm is strong at the moment, so I think that will carry on,” Russell said. “Yes, we’re going away from the yearlings and into the production area, and there’s a lot of people who don’t buy mares and foals – they just want to buy the offspring – but the enthusiasm of the market is very good.”

An increased demand for breeding stock would indeed be a positive indicator of the market’s recovery. However, the relatively slow reflexes of the mixed sector, compared with yearling and juvenile markets, where horses are closer to reaching the racetrack, means that the supply probably will need time to catch up to that demand.

As the industry changed through the lean years, numerous farms culled their broodmare bands and elected to keep a tight grip on the very best stock they had. Reiley McDonald of Eaton Sales predicted that this would put a premium on high-quality broodmares during the November sales.

“I’d have to expect that the broodmare market’s going to be strong just because it seems as if fewer and fewer really good mares are coming to market anymore,” McDonald said. “It seems as if this business has grown in the number of people with large amounts of capital behind them, and those people want to be in the breeding business and don’t want to sell their horses that have been good broodmares for them, or sell good racemares that are potentially top broodmares.”

Even venturing into the middle and lower markets, the clearance rates of this year’s sales and the number of horses attracting several bidders gave consignors hope that the momentum will carry into the breeding stock portion of the sales calendar.

“All the yearling sales were positive, and I think it’ll have to transfer into November on every level of the market,” said Pat Costello of Paramount Sales. “The middle market was strong in September, so I think people will want to replenish mares.”

The ever-looming factor leading up to both Keeneland November and the Fasig-Tipton Kentucky select fall mixed sale that precedes it, is the impact that the Breeders’ Cup will have on the catalog updates.

The fallout from the marquee races will be felt twofold when the focus shifts to the auction ring. The first and most directly affected group will be the horses who will ship in after competing in a Breeders’ Cup race. A win or strong effort on that stage can greatly spike buyer enthusiasm on a horse.

Among the horses entered in the Breeders’ Cup who are cataloged in the Keeneland November sale are champion Groupie Doll (Filly and Mare Sprint), Lady of Shamrock (Filly and Mare Turf), Renee’s Titan (Filly and Mare Sprint), Street Girl (Distaff), Worldly (Marathon), and Laugh Track (Sprint).

“If you ever want to see what a Breeders’ Cup win can do, just look at Royal Delta,” Russell said, referencing the two-time champion mare who sold to Ben Leon at the 2011 November sale for $8.5 million just days after winning the Ladies’ Classic. “She was going to be very expensive, but I think the [price] was obviously based on the fact that she won at the Breeders’ Cup the Friday beforehand.”

The second group subject to the ripple effect of the Breeders’ Cup will be the broodmares and weanlings who are producers or siblings of Breeders’ Cup runners. While the potential price swing is perhaps not as dramatic as for the horses who run in the races themselves, a timely major update never hurts when trying to sell a horse.

Also of note, the November sale will feature a horses-of-racing-age portion Nov. 12, largely consisting of offerings who competed for WinStar Farm, Stonestreet Stables, and Adena Springs. These will be offered as racing or breeding prospects.

“WinStar started that a couple years ago, and this year we have the Adena Springs consignment in there, too, so the horses-of-racing-age segment has shaped up very well,” Russell said. “It’s really gained momentum.”

Last year’s Keeneland November sale finished behind the 2011 edition in average, median, and gross receipts, but it lacked the benefit of two record-setting dispersals that helped propel trade two years ago: those of the late Edward P. Evans’s Spring Hill Farm and the late Prince Saud bin Khaled’s Palides Investments NV, which sold Royal Delta.

A total of 2,414 horses sold last year for revenue of $143,025,600, down 30 percent from the 2011 sale. The average sale price of $59,248 represented a 27 percent decline, while the median fell 8 percent to $22,000. The sale was topped by Pure Clan, a multiple Grade 1-winning Pure Prize mare who sold to Borges Torrealba Holdings for $4.5 million. She went through the ring in foal to Bernardini.

Keeneland November breeding stock sale

When: Nov. 5-14, 10 a.m. Eastern

Where: Keeneland sales pavilion, 4201 Versailles Rd.,
Lexington, Ky. 40510

Phone: (859) 254-3412

Catalog: 3,602 horses, down 9 percent from 3,958 last year

Recent history: The 2012 sale posted overall declines while selling 2,414 horses for $143,025,600, an average price of $59,248, and a median of $22,000. Gross decreased 30 percent, average was down 27 percent, and median declined 8 percent. Borges Torrealba Holdings bought multiple Grade 1 winner Pure Clan, consigned by Hill ‘n’ Dale Sales Agency, agent, for $4,500,000 to top the sale.

Internet: Live streaming at www.keeneland.com

SALE RESULTS, 2003-2012

Year            Sold                Average              Median                     Gross

2012......... 2,414........... $59,248 ............ $22,000 .......... $143,025,600

2011......... 2,549.............. 80,632 .............. 24,000 ............ 205,531,700

2010......... 2,929.............. 50,322 .............. 17,000 ............ 147,392,900

2009......... 2,779.............. 57,477 .............. 20,000 ............ 159,727,800

2008......... 3,019.............. 61,462 .............. 20,000 ............ 185,552,300

2007......... 3,381........... 100,821 .............. 35,000 ............ 340,877,200

2006......... 3,146.............. 99,745 .............. 35,000 ............ 313,798,800

2005......... 2,816........... 102,842 .............. 35,000 ............ 289,602,900

2004......... 2,873.............. 97,348 .............. 32,000 ............ 279,680,200

2003......... 2,614.............. 90,310 .............. 32,000 ............ 236,070,900