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Keeneland September: Largest yearling sale will test market stability
When the world’s largest Thoroughbred yearling sale kicks off Sept. 10, consignors and auction executives will have some reason for happy expectations. Since the major yearling sale season started in July, the general trend has been upward, though in some cases those good results have been tempered by higher buyback rates than auctioneers and their vendors would like to see. But a stable-to-rising market is exactly what sale participants want to see heading into the 11-day September auction, the season’s most thorough test of commercial yearlings.
Last year’s September sale outperformed most expectations. Average price ($76,511) and median ($30,000) went up by 18 percent and 20 percent. Despite a smaller catalog that resulted in 5 percent fewer sales, even the 2011 gross enjoyed a strong move up, gaining 13 percent after 2,921 yearlings brought $223,487,800. Since the market collapse in 2008, stability is the new benchmark for success among many horse sale executives, but can this year’s Keeneland September build on last season’s strong increases? If the season’s earlier, smaller yearling sales are any guide, it’s possible.
“The sales so far have kind of followed the same line as 2011,” said Keeneland sales director Geoffrey Russell. “If that continues, it will be good.”
Keeneland has changed the auction format slightly, scaling down last year’s two select night sessions into a single afternoon select session, Book 1, at 4 p.m. Sept. 10. That will feature 132 horses. Book 2 will take place Sept. 11-13 and offer 305 horses a day, with each session starting at 11 a.m. After a dark day Sept. 14, selling resumes with Book 3 on Sept. 15, with that and the remaining sessions starting daily at 10 a.m.
This year, Keeneland won’t be able to duplicate two of the major factors in 2011’s September success: lucrative dispersals by the Edward P. “Ned” Evans and Saud bin Khaled estates. Evans’s 50 Spring Hill Farm yearlings grossed more than $6.5 million, and Khaled’s 10-horse Palides Investment consignment accounted for just over $987,000. But supply is down again this year as the catalog numbers drop another 17 percent to 3,604 horses, a good sign at a time when demand appears broadly similar to last year.
“I continue to give credit to the breeders who have evaluated this market very well and either have decided not to offer less-commercial yearlings to the sales or have not bred those mares to start with,” Russell said. “And talking to several breeders, they’ve looked at their mares and decided which mares are commercial ones, and others they’ll either breed to race out of or else they can just be lawn furniture for a while until either the market changes or else something in their produce record pops up and makes them more commercial.”
A meeting of supply with demand is fundamental to market success, but it also helps if buyers feel confident enough to spend.
“To grow you have to have a good base, so we have two years of solidness and we can grow off of it, that will be very good for our industry,” Russell said. “We are in the era of discretionary income, as it’s now called. With the lack of credit available to purchase horses we’re now down to discretionary income. We’ve always used the stock market as a weather gauge on that, and the Dow over 13,000 can’t be bad.”
Fasig-Tipton’s season-opening July select sale posted a $60,000 median that was identical to last year’s figure, and average price ($81,291) increased 16 percent despite a 12 percent larger catalog. The average got a boost from two key upper-market increases: 15 yearlings sold for $200,000 or more, up from nine in 2011, and the sale-topping price climbed from $310,000 in 2011 to $375,000 for this year’s Malibu Moon-Uncontrollable colt. In Deauville, France, Arqana’s four-day auction had a 2 percent increase in average price ($120,621) as median ended level with last season at $79,950. Buoyed by optimism over New York’s slots-enriched purses, Fasig-Tipton’s New York-bred auction ended with big gains as average ($62,551) jumped 15 percent and median ($50,000) soared up 43 percent.
More recently, the Ocala Breeders’ Sales Company produced gains at both its select and open sessions; select average ($43,895) and median ($35,000) were up 17 percent and 8 percent, and open average ($12,700) and median ($9,000) each climbed 13 percent. Most recently, at Fasig-Tipton’s Texas sale at the end of August, the $6,000 median was 20 percent higher, and the $10,177 average price fell 4 percent, ending $450 short of last year’s figure.
The exception was Fasig-Tipton’s small but prestigious Saratoga select sale. The two-night auction endured a roller coaster ride as sellers and buyers alike tried to discern leading bidder Sheikh Mohammed al-Maktoum’s buying strategy. After opening-session figures plummeted, the second night roared back into positive territory. But the gains were not high enough to offset all losses, and the 107-horse auction ended with its $299,065 average 6 percent lower than last year and its $225,000 median off by 10 percent.
Even amid the Saratoga select losses, and widespread but unconfirmed suggestions that the $1.575 million sale-topper was either a buyback or a partnership buyout that might have inflated gross and average, there were some positive messages in Saratoga’s tea leaves. The second-night rebound suggested that demand still exists on the market’s upper slopes, and the variety of buyers bidding at those heights also cheered market watchers.
“I don’t know if I’d say the top is strong, but I would say diverse,” Russell said. “There’s great interest in our sport. The purses at Saratoga this year have been phenomenal, and to partake in top-quality racing, you’ve got to have top-quality horses. People realize that, and they know they have to step up. Where I think you might see a change is in the number of horses people buy. They’ll still buy top quality, but they might buy less of them.
“If the Saratoga sale represents the top end, you’d look at the OBS sale to look at the middle market, and that was very good sale. So those two indicators bode very well for September.”
Keeneland’s vast September catalog has long attracted a broad range of international buyers, too, and Russell expects their participation to be strong again – and reflective of the ebb and flow of their currencies’ exchange rate versus the dollar.
“The yen is very strong at the moment, and the euro is not very strong,” Russell pointed out, adding that he expects continued activity from South America, Korea, and such Persian Gulf states as Qatar. “I think we’ll see those areas will still remain high, and I think we’ll see some continuing participation from the Russian republics, as well.”
On the other hand, these days buyers are sticking determinedly to their budgets, and high buyback rates have occurred at a number of auction sessions recently.
“Last year’s September sale, from start to finish, was very, very good,” Russell said. “Especially during the second week, the clearance rate (the percentage of horses sold) was phenomenal. I’d like to see that continue. What sales officials like most is customers bringing horses to sell and buyers buying them. That’s what we want. We don’t want consignors going home with their horses.”
The September sale will stream live at www.keeneland.com.
When: Sept. 10-21
Where: Keeneland Association sale pavilion, 4201 Versailles Rd., Lexington, Ky., 40510
Catalog: 3,604, down 17 percent from last year’s 4,319
What’s new: Keeneland has combined last year’s two nighttime select sessions into a single afternoon select session, Book 1, offering 132 yearlings at 4 p.m. on Sept. 10. Book 2 will sell 305 horses a day Sept. 11-13, starting daily at 11 a.m. After a Sept. 14 dark day, selling resumes Sept. 15 with Book 3 at 10 a.m. All remaining sessions also start at 10 a.m.
Recent history: Following across-the-board gains in 2010, the 2011 edition performed better than expected. The auction’s 2,921 sales grossed 13 percent more than a larger catalog did the previous year, while average improved 18 percent to $76,511 and median increased 20 percent at $30,000. The sale-topper was Powerful, a $1.4 million A.P. Indy-Malka colt that Amerman, Evans, and Co. bought from the Hill ’n’ Dale Sales Agency.