11/14/2002 1:00AM

Pre-sale worries largely unfounded


LEXINGTON, Ky. - The Keeneland November sale ended Wednesday, and the 10-day auction provided some insights on the health of the horse business and its prospects for next year. Coming into November, most observers expected the market to be down. The only question was how much. The result, however, was an unexpected upturn in average and median prices, as well as an increase in gross revenues. The unexpected boost is reassuring to those in the horse-selling business, a segment of the economy whose product is not a daily requirement.

One optimistic participant in breeding, selling, and buying is Pam Robinson. She is general manager of Rick Trontz's Hopewell Farm in Woodford County and owns Brandywine Farm in Bourbon County with her husband, Jim. She takes a rather aggressive position about the economic vitality of the horse business. She said, "I think that money in the bank is a waste. You can't get any return there. Instead, people who need to invest should look closely at the horse business. It's a great place to invest so long as you pay attention to fundamentals and choose good advisers."

Robinson believes that the reason to choose horses rather than more conventional investments is purely economic. "In the horse business, you can easily make 25 percent to 50 percent return on an investment in a year. Of course, it is still a risky business, as the foal losses and other problems have shown, but so long as an individual doesn't get greedy, a lot of people can make money."

As the sale results suggest, a significant number of people share Robinson's opinion. Dan Kenny, a longtime bloodstock agent and a participant in the Four Star Sales marketing venture, said that "Keeneland November was a sale with a great deal of balance. From the first day to the last, there seemed to be a buyer for every horse. If you had an above-average horse, you got an above-average price."

Walter Hillenmeyer, managing partner in Woodlynn Farm, shared this sentiment. He said, "This market is really encouraging because, even here on the last day, good horses are still bringing good money. And as long as that happens, the market is going to be okay."

Of course, the sale wasn't all roses. There were weak spots for some consignors. But overall, "the market was pretty deep," Kenny said. "The big question going in was the depth of the market."

The decrease in supply because of foal losses, he said, "was a significant factor in keeping prices strong, especially in the weanling market. Coming up to the sale, broodmares had been a little dicey, but I think people found a lot of strength in broodmares."

More than that, some buyers found it impossible to purchase the quality of mares they were looking for at prices they could square with everyday economics in their home markets. Regional buyers in particular found the November market too strong for them in some cases.

For instance, Jay Adcock owns Red River Farms in Louisiana, and he found little in his price range that he wanted to take back home. "Cheap is cheap," he said, indicating that most of the mares falling into his price range were not of the quality he was seeking. Instead, "anything that had quality brought good money," Adcock said.

Adcock and other buyers from the regional markets did succeed in purchasing some stock, but the general opinion was that there were few bargains. Among the successful bidders, regional buyers from New York and Florida found the most horses. That is not surprising, as those states have rich programs that reward owners for purchasing quality and breeding good horses. Even so, regional buyers are very cost-conscious.

One of the reasons that regional buyers are careful about limiting their spending is that mare purchases entail considerable auxiliary expenses, from boarding costs to stud fees to veterinary bills.

"A mare is a long-term commitment," Kenny said. "When you see people buying mares, you know there's enough demand and confidence to stabilize the market."

Kenny believes that "the stabilizing influence is the purse structure. People have racing as another rational point in a business plan because they can race the horses they breed and make money."

These observations are good news for the breeding and sales business, which has been hurt by the past year of uncertainty and volatility in the greater national economy and international markets.

Hillenmeyer, who brought seven horses to the sale and sold them all, said that "I see this carrying on," and that September yearling sales next year will be "more of the same. If you've got something the buyers want, it's going to bring good money."

Stability and consistency in the market will have a reassuring effect on all segments of the horse business and will help to keep more good mares and stallions in the United States as breeders believe they can make money by keeping their bloodstock, instead of selling them abroad. As Robinson said, "I'm optimistic. I think the horse business is great."