09/09/2013 8:00AM

Keeneland September: Bellwether auction will test strength of yearling market

The Keeneland September yearling sale begins Sept. 9 in Lexington, Ky.

The yearling market will get its most substantial test of the year this month, when Keeneland offers a 3,908-horse catalog at its September yearling sale Sept. 9-21. Solid performances at several key, but smaller, select and regional auctions have made auction officials and consignors generally confident that the reformatted 2013 September sale will perform well – and could even improve over last year’s large gains in average and median.

“Starting from the 2-year-old sales early this year all through, the sales have been very good,” said Keeneland’s director of sales, Geoffrey Russell. “We hope that will continue. There does seem to be a regained interest in horses and owning horses, which is a good thing.”

In 2012, the auction sold 2,516 yearlings for $219,723,000, down 2 percent from the previous year’s total for 2,921 horses. The average jumped 14 percent from $76,511 to $87,330, and the median skyrocketed to $45,000, up 50 percent from 2011’s $30,000. Buybacks also fell by 8 percent, ending at 19 percent.

The 2013 September catalog is 8 percent larger than the 2012 edition (it was 3,604 horses last year), bucking a trend toward smaller numbers in an era when the North American foal crop is declining, and this year, Keeneland has divided up the yearlings differently under a new format designed to appeal to distinct market segments.

[More Keeneland September coverage: Bellwether auction will test strength of yearling market]
[Keeneland September: Blame, Quality Road among first-crop sires]
[Keeneland September: Pinhookers ready to restock after strong juvenile season]
[Keeneland September: Q&A with Nick de Meric and Case Clay]

Keeneland has dropped the boutique-style two-day select sessions, which featured only about 100 horses each. Instead, Book 1 will encompass the auction’s first four days and will sell 218 or 219 yearlings a day, with sessions starting at noon. After a dark day Friday, Sept. 13, the auction’s second week continues with a total of eight sessions (two per catalog book), each selling between 302 and 425 yearlings. Sessions in Books 2 through 5 will start daily at 10 a.m.

“I think the new format will work very well for both buyers and sellers,” Russell said. “It’s a way for people to easily get to see a large amount of horses without being under a lot of pressure, especially starting at noon every day and selling just over 200 horses a day in Book 1.”

That’s something at least some buyers are likely to agree with.

“I do like the fact that they’re going to start at noon,” said buying agent Steve Young. “An hour doesn’t sound like much, but as many quality horses as it appears are going to be there, an extra hour is going to do nothing but help the buyer.”

The size of the September catalog also is a plus for many buyers.

“For value, having more options is always a benefit,” Young said, noting that more buyers are likely to scrutinize all the horses at a smaller boutique auction, whereas at Keeneland, “There are horses that, when they sell, you may feel that you’ve got a terrific shot for the money.”
The sense that he or she might find a good, affordable horse can encourage a bidder to get off the sidelines, Young said.

The yearling auction season got off to an enthusiastic start with Fasig-Tipton’s July select sale, where the average price increased 10 percent to $89,785, and the $72,000 median was up 20 percent. The same company’s Saratoga select sale posted a $295,093 average, 1 percent lower than 2012’s figure, but its median advanced 11 percent to $250,000.

Two subsequent important regional sales – Fasig-Tipton’s New York-bred auction and the Ocala Breeders’ Sales Co.’s August sale, which conducted both select and open sessions – enjoyed substantial, across-the-board gains, suggesting that the market recovery applied not just to the pricey boutique sales. At all of the aforementioned sales, buyback rates also declined from their 2012 levels. Given the strong early returns, consignors and auction officials are confident about the Keeneland September auction.

“It’s looking pretty good,” said consignor Craig Bandoroff of Denali Stud. “I’m never one to get exuberant. There are always so many hoops you have to jump through ... But there’s no reason not to be optimistic.”

“I think all levels of the market should be pretty good,” Keeneland’s Russell said. “There is great interest, and there’s less supply overall. If we can maintain our demand at the same level as last year or, hopefully, increase it, it should bode well. There are some outside factors that come into it. I think the stabilization in New York has been helpful. New York’s a very important racing jurisdiction for everybody in our industry, and if New York is strong, then the rest of the industry is strong.”

One question on consignors’ minds this year: Will European-based buyers show up in force?

“The game-changer in our market is going to be whether the European guys come over,” Bandoroff said. “If some of the Qatari money and new money that’s been a major force over there comes over in September, I think that’s going to create one thing. If it doesn’t, then I look for us to be up, but not exorbitantly so.”

So far, the 2013 yearling auction season has been dominated by domestic buyers, but last September’s Keeneland sale attracted buyers from 50 countries, according to Keeneland, and Russell believes the auction’s historic appeal to international bidders will continue.

The auction got a big boost for the European audience this summer when 2012 grad No Nay Never, a $95,000 purchase, won Royal Ascot’s Group 2 Norfolk Stakes and Deauville’s Group 1 Prix Morny. Also flying the Keeneland September flag is Elusive Kate, a European champion and the winner of four Group 1 races. She brought $70,000 at the 2010 Keeneland September sale.

“We’ve had multiple stakes winners from last year’s catalog already, owned by Qataris and European-based owners, so my feeling is that these groups probably will be in attendance,” Russell said. “We don’t know until they’re on the grounds, of course, but we hope they will attend.”
Russell noted that Europeans’ desire for outcrosses also could bring them back for the September sale’s large selection. “And this catalog is pretty international,” he added. “We have seven Galileos and yearlings by Makfi and Invincible Spirit, so there are different flavors in there for everybody.”

Makfi is one of this year’s first-crop sires, and while proven stallions have been at the market fore since the 2008 financial crisis, the debuting sires still feature some exciting names, starting with 2010 Breeders’ Cup Classic winner and champion older male Blame.

Also among the classy freshman sires are champion older male Blame; two-time champion Lookin At Lucky; 2010 Kentucky Derby winner Super Saver; multiple Grade 1 winner Quality Road; Desert Party, who sired Fasig-Tipton July’s $460,000 sale-topper; Grade 1 winners Discreetly Mine, Eskendereya, Majesticperfection, Tale of Ekati, and Warrior’s Reward; and crack sprinter Munnings.

Strong juvenile sales also should help pinhookers continue to buy yearlings aggressively, but Russell cautioned that realism, rather than irrational exuberance, is today’s trend.

“I think people will be realistic,” he said. “Consignors are realistic, and buyers are realistic. The 2-year-old consignors, while they had a very good year, they’ve been through this cycle before. They know what works, and I think they’ll be realistic in their purchases. Consignors have done a wonderful job. They’ve adapted to this marketplace very, very well.”

Live streaming of the sale is available at www.keeneland.com.

Keeneland September yearling sale
Sept. 9-12, noon Eastern (Book 1); Sept 14-21, 10 a.m. (Books 2-5)
Where: Keeneland sales pavilion, 4201 Versailles Rd., Lexington, Ky. 40510
Phone: (859) 254-3412
Catalog: The sale has 3,908 horses, up 8 percent from 3,604 last year
Recent history: The 2012 sale posted final results of 2,516 horses sold for $219,723,000, with an average price of $87,330 and a median of $45,000. The gross decreased 2 percent, The average rose 14 percent, and the median was up 50 percent. Shadwell Estate Co. bought a Distorted Humor colt out of Grade 1 winner Mushka consigned by Eaton Sales, agent, for $1.65 million to top the sale. The colt was later named Heyaarat.
Internet: Live streaming at www.keeneland.com

Keeneland September yearling sale results,2003-2012
2012 2,516 $87,330 $45,000 $219,723,000
2011 2,921 76,511 30,000 223,487,800
2010 3,059 64,810 25,000 198,254,900
2009 3,159 60,734 22,000 191,859,200
2008 3,607 90,988 37,000 328,194,100
2007 3,801 101,318 42,000 385,110,600
2006 3,556 112,427 45,000 399,791,800
2005 3,545 108,420 40,000 384,349,900
2004 3,370 96,411 37,000 324,904,300
2003 2,969 92,329 34,000 274,125,300