02/28/2013 2:39PM

New York-breds: Demand, prices up at sales

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The outlook for New York’s yearling sales is bright, but commercial breeders also should remember that buyers are more selective than ever, says Fasig-Tipton chief executive Boyd Browning Jr.

“New York’s breeding program is a bright star in the North American breeding world,” Browning said. “There have been significant additions in terms of the mares and stallions there in the last 24 months, and the quality continues to improve, so we’re extremely bullish on the sales in New York.”

Fasig-Tipton has long conducted the state’s select and New York-bred preferred auctions in Saratoga, and last year the company added a new sale to the calendar − the Saratoga fall mixed and horses of racing age sale, which is on Fasig-Tipton’s calendar again for 2013, a testament to New York’s growing Thoroughbred population. The reason for growth is clear: After a decadelong wait, Resorts World Casino finally opened its slots operation at the New York Racing Association’s Aqueduct racetrack in 2011, ushering in a new era of fattened purses and breeder and owner incentives fueled by revenues from video lottery terminals.

“Market conditions and demand led us to add the October sale,” said Browning, who pointed to increases in the state’s breeding population and foal crop since 2010, noting that New York’s active breeding population was on the rise between 2011 and 2012. Jockey Club statistics released last October showed an 18 percent increase in stallions and a 43 percent jump in active mares in New York.

“New York-breds basically sold at a premium, and the addition of the October sale − which is replacing a sale conducted by the New York Breeders’ Sales Company − is a great sign because it shows that there’s a market again for those horses and that there’s demand for them,” said Jeffrey Cannizzo, executive director of New York Thoroughbred Breeders, Inc. “All that can be attributed to the racing opportunities and the end-users’ support of the New York-bred program through ownership. I think end-users’ demand is dictating how well breeders are faring in New York state.

“New York is one of the only states that had growth in statebred horses,” Cannizzo said. “New York sires covered more mares last year than they’ve covered in the last several years, and we’re one of the few states that can say we’ve had an upward swing.”

So far, Browning said, Fasig-Tipton isn’t worried that a shift in Thoroughbred breeding population from other states will oversaturate the New York market.

“I think the New York program is so strong that we’ll continue to see, as we have in virtually every other market, that quality will be necessary,” Browning said. “And we’ve seen that in New York. There hasn’t been an across-the-board dramatic shift in value for every horse. The competition for every New York-bred continues to get better. You have to be a better New York-bred today to win a race than probably five years ago. The market will put some pressure on maintaining quality, both in the breeding operations and the racing operations. But I’m not terribly worried about oversaturation. There are a lot of racing opportunities and some very meaningful purses for those horses to run for.”

For New York breeders, the statebred preferred sale is the heart of the state’s market, and that auction’s average and median have climbed since 2010, the year before Aqueduct’s slots debuted. Last year’s sale saw those key figures rise even as the number of horses offered also climbed from 183 to 223. The 2012 New York-bred preferred auction got a 28 percent bump in gross from its thicker catalog; average rose 15 percent to $62,551, and median rose 43 percent to hit a bullish $50,000.

New York-bred yearlings sold outside the state also contributed to an overall gain in value, Cannizzo said. The average price for a New York-bred yearling nationwide was $37,635 in 2011, and that figure climbed 12 percent to $42,071 last year, according to a NYTB report. The nationwide New York-bred median yearling price gained 25 percent, rising from $20,000 to $25,000.

Cannizzo predicted that New York-bred sale returns, both in and out of the state, could rise again in 2013, a logical outcome of increasing quality in New York’s active sire and mare populations. He said he thinks an overall yearling average of $50,000 in 2013 is possible and looks for particularly strong growth in weanling prices at the fall mixed auction in Saratoga.

“The weanling market there last year was fairly consistent, and I think that’s a market that will continue to improve and show growth,” Cannizzo said. “My theory is that people were buying weanlings out of that October sale with the intention of flipping them back in New York at Fasig-Tipton’s yearling sale. People will see that those weanling buyers were making significant gains coming back as yearlings, because they bought for reasonable prices at an introductory sale. I think the interest and participation in this year’s October sale will skyrocket.”

Higher prices are good news, but it’s worth noting that the New York-bred preferred sale also saw a jump in its buyback rate last year. Buybacks went from 32 percent to 38 percent in a sign that sellers have seen consistently in the wider Thoroughbred market: Buyers are present and willing to spend for yearlings they believe are high-quality, but even in an era of smaller foal crops they’re not afraid to walk away if a yearling doesn’t suit them.

“The New York market is like every other market we see throughout the world,” Browning said. “Quality is important, and quality is more important than quantity. Try to buy and raise well-conformed foals with commercial appeal. Try to produce runners. That’s the beauty of New York: You have the opportunity for two paydays. One is when you sell the foal, and the second is in the form of breeders’ awards. So breed to horses that have a history and probability of producing good, durable, consistent racehorses, treat those foals as valuable assets, and raise them accordingly.”


Fasig-Tipton New York-Bred Preferred Yearling Sale

YEAR NO. SOLD GROSS AVERAGE MEDIAN NOT SOLD
2012 138 $8,632,000 $62,551 $50,000 85 (38%)
2011 124 6,725,500 54,238 35,000 59 (32%)
2010 94 3,676,000 39,106 30,000 48 (34%)
2009 107 4,353,500 40,687 27,000 91 (46%)
2008 100 5,439,000 54,390 45,000 90 (47%)


Fasig-Tipton Saratoga Fall Mixed and Horses of Racing Age Sale

YEAR NO. SOLD GROSS AVERAGE MEDIAN NOT SOLD
2012 119 $1,933,600 $16,249 $12,000 82 (41%)