02/11/2010 12:00AM

Sales hopeful things are looking up

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LEXINGTON, Ky. - The 2-year-old auction season opens Feb. 16 with the Ocala Breeders' Sales Company's February select sale, and there's one question on everybody's mind: Have we hit bottom yet?

Total North American juvenile sale revenues fell 33 percent as the global economic collapse carried over from the fall of 2008 into 2009. At the five boutique juvenile sales, average and median generally fell between 27 percent and 37 percent; Keeneland's April sale fared best with a 16 percent drop in average and 22 percent decline in median.

But auction executives are seeing some signs of a thaw in the economic winter as the 2010 juvenile season dawns.

"I think we've leveled off," said Tom Ventura at OBS.

The company's major juvenile auctions are the Feb. 16 select sale as well as the March select sale March 16-17 and the spring sale April 19-22.

"I don't think there will be dramatic increases, but I think everybody's kind of relieved that we've seen the worst of it," Ventura said.

"I would hope we've seen some bottoming out," said Boyd Browning of Fasig-Tipton, which hosts its select sale at Calder on March 2. "You see some stabilization at sales like our winter mixed sale, the Keeneland and OBS January sales, our Kentucky October yearling sale. There's a significant level of trade on racing prospects in the private marketplace. The world economy is certainly in better shape today than it was 12 months ago when the 2-year-old sale season was about to commence. It's not great, but it's a whole lot better than it was."

Another plus: the horses' age.

"The thing about the 2-year-old sales is we're dealing with the horses closest to the racetrack, and that's helpful," Ventura said.

Race-ready horses that can offer buyers a quicker return on investment have retained more value in the downturn.

But expect the juvenile auctions to be highly selective again.

"We won't know if buyers are there until they all show up, but there are certain buyers that like buying in this market, and they're still there," said Keeneland sales director Geoffrey Russell, whose sale takes place April 5. "How deep are they? I don't know. But I haven't seen anything at the moment that indicates people aren't willing to buy quality products."

There's at least one piece of good news for 2-year-old consignors this spring. The economy has stayed largely the same between 2009, when they bought their horses as yearlings, and 2010, when they are selling them as 2-year-olds. That's a plus that could mean a better profit margin than they saw last year. Last year, they lost profit simply because they had bought yearlings at pre-crash prices in 2008 but sold in the post-crash juvenile market of 2009.

Coming out of 2009 with less cash in hand, yearling-to-juvenile resellers adjusted. These resellers, called pinhookers, sell into a famously demanding and selective market, where potential buyers will pay big money only for a few top prospects they believe to be as close to perfect, physically, as possible.

Shopping for new inventory at the 2009 yearling sales, many pinhookers said they would spend roughly the same amount but on fewer horses in an effort to buy high quality.

That strategy shows itself now in smaller catalogs at most of the season's major boutique markets, and auction executives across the board agree that sellers' horses have not dropped off in quality.

"They didn't have enough capital to buy more horses," Russell said, "but they didn't just go buy in the lower end of the yearling market and buy the same number."

The exception, in terms of catalog size, is the Barretts March sale on March 22. It bucks the trend by increasing from 124 horses to 134 horses this year. That's partly due to an increase in shippers from the pinhooker capital of Ocala, Fla., said Kim Lloyd, Barretts vice president for sales.

"I think consignors have a lot of confidence bringing horses to our track," Lloyd said. "And there's a horse shortage in California, so there's a demand for horses. We have a lot to offer.

"There's money for good horses everywhere, and especially in California."

But will buyers still be there for select-quality 2-year-olds? There are some pressures against overseas spenders: the Japanese yen is soft these days, and the cost of shipping might dissuade international buyers who still aren't feeling flush. But domestic buyers, traditional market stalwarts, still have reason to show, Russell said.

"The dollar's getting stronger, which should help the domestic buyer, and 2-year-old sales tend to be more domestic buyers," he said. "Buyers are looking for horses they feel can go on and run and do well, and the 2-year-old market provides that. The success rate of graded stakes horses from the 2-year-old sales has been very, very good.

"There is money to be spent on discretionary items," he added. "There's plenty of money out there for the right horse.