09/16/2011 2:51PM

Keeneland September's strong first week suggests brighter days ahead for yearling sellers

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Photo by Z/Keeneland
Among six yearlings who topped $1 million was this son of Awesome Again, who sold on Thursday for $1.35 million.

LEXINGTON, Ky. – As the annual yearling auction calendar rolled around to Keeneland’s two-week September sale, there was one big question on everyone’s mind: Has the market turned the corner?

Bullish results out of the Keeneland September auction’s first week suggest that it might have. Through Thursday, the first five sessions had easily outpaced last year’s opening week results. Gross was up 22 percent when compared with the first five sessions in 2010, and it was up 2 percent when put against 2010’s first week, which had six sessions. The cumulative five-day average price this year, $192,851, is up 18 percent, and the five-day median of $150,000 is running 36 percent ahead of last year’s figure. Sellers understandably were happy to let their horses go in this climate, and the buyback rate consequently fell from 32 percent in 2010 to 27 percent.

The market was strongest at the top, selling six yearlings for $1 million or more as compared with three last year.

One reason for 2011’s sparkling first-week gains, according to Keeneland sale director Geoffrey Russell, was the company’s decision to trim the auction’s Book 2 portion from four days to three and tighten the criteria for horses selling on those days. Since last year, Book 2 yearlings also have been cataloged alphabetically by their dams’ names, randomly scattering quality horses throughout the catalog – a policy Keeneland officials said sparked the sale of two millionaires in Book 2 this year. A smaller supply of yearlings generally – a function of the declining yearling crops – also helped.

Still, even Russell was surprised by the week’s results.

“I expected it to be good, but this is beyond belief,” he said. “There is a little bit of confidence out there. Everybody’s very much looking forward to the New York casino money, and they understand they’ll need top horses to compete there.”

The five-day median is back in pre-recession Book 2 territory. In 2008, the last September select portion before the global economy went into free-fall, the first two sessions had medians of $300,000, followed by $160,000 and $125,000. The 2011 average also is edging back to pre-crash Book 2 levels. In 2008, the Book 1 and 2 average prices were $363,942 and $392,534 for the first two select sessions, respectively, but Book 2’s averages were $188,174 and $151,815.

After several years of steep declines, there were signs this summer that the market could bounce back in 2011. After the spring 2-year-old sales performed well, Fasig-Tipton’s July yearling sale kicked off the yearling season with an 8 percent drop in average, but that was offset by a 20 percent rebound in median. Things got better at Fasig-Tipton’s highly select Saratoga sale. There, the $319,340 average was up 16 percent, and the $250,000 median was up by 4 percent. Sheikh Mohammed al Maktoum – a close associate of Fasig-Tipton owner Synergy Investments – bought the two $1.2 million sale-toppers and 11 other yearlings, accounting for more than a quarter of the $32.9 million gross. That prompted widespread speculation that he effectively might be propping up the higher end of the yearling market, but it became clear at Keeneland that there were other serious players willing to spend at the seven-figure level.

Maktoum ended the week as Keeneland September’s leading buyer with 36 horses totaling $8,870,000, but other buyers also came to the fore at Keeneland September. All six of the auction’s million-dollar horses so far have gone to North American-based buyers, including the $1.4 million A. P. Indy-Malka colt that currently leads the sale by price. A three-man partnership – John Amerman, Shel Evans, and an anonymous party – bought him from the Hill ’n’ Dale Sales Agency. Benjamin Leon’s Besilu Stables, Mandy Pope’s Whisper Hill Farm, Adena Springs, and George Bolton all also picked up yearlings for $1 million or more. Leon bought last year’s $4.2 million sale-topper, but he has nearly doubled his total expenditures so far this year. The week’s second-leading buyer behind Sheikh Mohammed, Leon bought 13 yearlings costing $8,175,000.

“The fact that all the highest prices have gone to American buyers is pretty impressive,” said Russell. “Mr. Leon came in last year and made a big splash buying one horse. This year, he’s changed his buying pattern and is spreading it around. That’s good for the whole market.”

“I suppose it’s improving,” consignor Peter O’Callaghan said of the market.

O’Callaghan’s Woods Edge agency offered 20 yearlings during Week One, selling all but four. The rest grossed $4,160,000, highlighted by a $775,000 Indian Charlie-Lu Ravi filly that Besilu bought.

“I though the first two days of Book 2, there was definitely a lot of money there for a small group of horses,” he said. “It didn’t seem like there was a lot of depth to it. But definitely the third day of Book 2 buyers had a renewed appetite or bigger appetite for horses. It almost becomes the Last Chance Saloon for buyers. If they haven’t filled their orders in the first couple of days, they know they have to step up on the third day. It could be that simple.”

The Keeneland September sale continues through Saturday, Sept. 24. All sessions begin at 10 a.m. and run continuously each day in the Keeneland sale pavilion.