08/01/2002 11:00PM

Mixed results give market index

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LEXINGTON, Ky. - The Keeneland July select sales results received wide attention, although not everyone interpreted them the same way. In fact, most observers seem to have a slightly different opinion about the results of the first two yearling sales of 2002 and about the prospects for the market, notably the select sale at Saratoga that starts Tuesday.

Since Keeneland July is the first of the season's yearling auctions and also the richest, there was a lot of anticipation that the sale would make a statement about the health of the industry. Not surprisingly with that level of baggage, headlines squealed about the declines at Keeneland. But how did anyone expect the sale to be up? Coming off a record sale last summer, they also followed one of the worst years of political and economic news in history.

Had Keeneland July declined 20 percent or less, it would have been a moral victory.

Even so, the average price at the July sale was nearly a half-million dollars, and that is pretty healthy territory. Obviously, the best of the Keeneland select sale brought a good return for most of the vendors.

But the real kick in the shins came from those horses who didn't sell. Too many went back home, and the only logical conclusion is that there wasn't enough demand for the stock that consignors brought to the sale.

At this point, there are numerous opinions about why demand fell off, why sellers were so determined to keep certain lots, and why the stock failed to appeal to a wider spectrum of buyers. And doubtless Keeneland's director of sales and his staff are tired of hearing other people's opinions on the matter.

Across town, the Fasig-Tipton sale of selected yearlings had a much larger auction, more than 600 yearlings, and the results there were contrary to Keeneland's. The auction at Fasig-Tipton's Newtown Paddocks had a larger gross receipt from sales, as well as a higher average price and a median equal to last year's.

But why did Fasig-Tipton prosper when Keeneland was much less consistent? One comment that came up again and again was "the athletic individual." Buyers want big, powerful, easy-moving yearlings who look like racehorses, and at both sales, they paid for them. Those with bigger pedigrees and several competing bidders brought large, even astronomical, sums.

The result for consignors who showed up with something less than buyers wanted was very uncertain. Tom Evans, owner of Trackside Farm and a consignor at both Fasig-Tipton and Keeneland, said: "There are really three levels of horses out here. The first is the group that meets all the buyers' criteria, and they sell extremely well. The second group meets most of the buyers' criteria, but we don't have enough buyers to absorb the supply. And the third group doesn't meet the buyers' criteria, and they are difficult to sell."

The yearlings who meet the buyers' criteria are big, strong, outstanding individuals who vet clean. Consignors who brought in small yearlings, no matter how strong or how impressive otherwise, had to take them home. Likewise, those yearlings who were growing the wrong way at sales time found nobody who wanted to take a chance on them, even though there was nothing "wrong" with them.

Evans commented that "we don't have enough consumers to purchase yearlings. So not only are non-commercial yearlings being left out, but some sound commercial horses are getting left out too."

Buyers have a firm, almost obsessive fascination for the right physical type of yearling, and that's not a bad thing. In fact, Rob Whiteley, director of operations for Carl Icahn's Foxfield, said, "The increasing emphasis among buyers on the physical horse is great, because I have always tried to produce the well-made, well-balanced, racy and athletic-looking individual."

The focus on physique has led buyers to extremes in selectivity, and Whiteley noted that "unfortunately, many people also want pristine X-rays, which often have little to do with later racing performance." This preoccupation with skeletal perfection, Whitely said, together with rising stud fees and the negative effects of mare reproductive loss syndrome, "creates a difficult environment for the commercial breeder. A buy-back rate in the high 30's and low 40's speaks for itself."

Indeed it does. The marketplace, with all its harshness and imperfections, is clearly at work, and one of the results of this year's sales season is going to be more careful shopping for stud fees among the savvier commercial breeders.

And factors external to the horse business itself, such as the general economy and buyers' psychological reactions to the stock market and other business concerns, will have a great deal of influence on the direction that the yearling sales follow in the coming months. But if Fasig-Tipton's middle-market energy is the reliable indicator that many believe, the overall outlook is positive for the upper tier of yearlings that will be offered this week and in September.