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Sales officials expect bullish market for juveniles in training
One year after most major American 2-year-old sales put up large increases in average and median price, many sales officials are feeling optimistic about 2013. Five years after the global economic crisis, buyers appear more confident and willing to bid on attractive racing prospects. And at least one aspect of the crisis’ fallout is now helping the market: Smaller foal crops have concentrated bidding and contributed to rising 2-year-old prices, sellers and sales officials say.
That trend should continue in 2013. And, while few expect any return to the multi-million-dollar prices that became common at select sales in the mid-2000s, the people who put on the season’s most important American 2-year-old auctions believe sale returns could rise again this year.
“People are still very willing to pay for quality offerings, and there seems to be a slight uptick in interest and enthusiasm,” said Boyd Browning Jr., chief executive officer of Kentucky-based Fasig-Tipton Co., which will hold three major juvenile auctions this year, including the select Florida Sale on March 25 at Palm Meadows in Boynton Beach, Fla. “Frankly, that might be simply a reflection of the diminished numbers we’re seeing in the marketplace, both in the yearling and 2-year-old sales as competition is increasing for those horses that are available. I think it’s a combination of that and some acceptance of the world economy and where it is. People may be more conservative, but they’re certainly more confident in the overall world economy today, and, as a result, people are more willing to spend money on Thoroughbred horses.”
With one select sale already in the books, predictions of higher prices and a selective market so far are correct. The season-opener Barretts March select sale in Pomona, Calif., on March 4 saw its gross rise by 4 percent to $8,751,000 even though it sold fewer horses this year, 61 compared with 77 last season. Its average price also gained 31 percent at $143,459, and median bounced up by 18 percent, to $100,000. Buybacks were 34 percent, down from last year’s 36 percent. But the high withdrawal rate cast a shadow: from an initial catalog of 138, there were 46 scratches.
The upturn in finances vindicated Barretts general manager Kim Lloyd’s early predictions that the 2013 select season would be buoyant.
“I’m very bullish for the year,” Lloyd said before the sale. “We spend a lot of time watching horses train over the winter in Ocala, and I’ve seen a lot of the babies in the select market, and there are some really good babies. Consignors are working hard and doing a great job buying these horses for this marketplace. I think for the select sales, you’ll see the averages go up.”
Last year’s juvenile sale season is a tough act to follow. The Barretts March select sale kicked off the 2012 boutique market season with a 9 percent gain in average price ($109,429) and a 21 percent increase in median price ($85,000). The Ocala Breeders’ Sales Co.’s March select auction was even stronger as average ($137,442) and median ($100,000) grew by 32 percent and 43 percent, respectively. Fasig-Tipton’s select Florida sale saw average ($320,250) soar 35 percent and median ($227,500) grow by 14 percent; that auction also featured North America’s highest-priced 2-year-old last year when Darwin brought $1.3 million. Keeneland’s April auction was the only major select sale to post a decline in median when its figure fell 8 percent to $120,000 as average was up less than 1 percent at $165,322.
Many regional sales also improved. Fasig-Tipton Midlantic, Barretts May, the OBS April and June sales, and Louisiana’s John Franks Memorial auction all posted double-digit gains. The exception was Fasig-Tipton’s Texas sale, where the average ($19,689) and median ($14,000) each were 7 percent lower as horsemen and bidders defected for surrounding states that offer slots-enriched purses.
At OBS in Florida, director of sales Tod Wojciechowski notes that slots-fueled purses in Louisiana and New York have increased what he called “an appetite for racing” among bidders at OBS auctions in Ocala, Fla. Some buyers who fled the market after 2008 are back, he said, and there are some new credit requests, too.
“We saw some people come back into the 2-year-old market as well as some fresh faces,” Wojciechowski said. “I have some college buddies who have been some racegoers, and now they find themselves in a little better economic situation, and they’re going to be looking for racehorses through the spring to take to the races so they can enjoy racing as owners.”
If there are things to be hopeful about, there’s also a traditional juvenile sale worry: high buyback rates. The juvenile market has become strongly polarized over the past decade, and there’s little indication that will change in 2013.
But Barretts executive Lloyd says the less-publicized Barretts aftermarket has been energetic recently.
“We don’t list private sales after a sale, but if horses aren’t sold at the sale, we’re inundated with calls, and horses get purchased after the sale,” he said.
Relatively high buyback rates at juvenile sales have long frustrated consignors and sales executives, who hope buyers will widen their view to include more middle-market horses.
“Several of our graduates fell into the middle-market bracket and are now doing quite well at the racetrack,” noted Geoffrey Russell, Keeneland’s director of sales.
Two cases in point: 2012 Keeneland April graduate Balance the Books, a $160,000 purchase who won two graded stakes last year, and 2011 alum Golden Ticket, a $100,000 buy and now a Grade 1 winner.
“With the success of those horses, I hope that will expand the middle market,” Russell said. “The top is very thin, and the horses there have to hit all the boxes, and when they do, they bring exorbitant prices. The ones that just miss by a little, it does seem to penalize them. But when they get to the racetrack, they level out.”
Buyers’ stringent demands mean yearling-to-juvenile resellers, called pinhookers, also must be highly selective when choosing yearlings to point to boutique juvenile sales. That job got tougher in 2012 as many yearling sales saw prices rise for the kinds of conformation and pedigrees that pinhookers need for their inventory. Resellers at yearling auctions often reported that they were still paying as much for yearlings overall but were buying fewer yearlings in 2012 for that money. That’s also helped keep juvenile catalogs down in 2013.
“They probably don’t have the capital to spend as much as they used to, and if you pay a dramatic amount for a yearling, the number of people at the top end that you can sell it to is less than it was five years ago,” Browning said. “I don’t think they’ve compromised on quality. The downturn in purchase price in many ways reflects the downturn in the overall marketplace since 2008.”
The major sales calendar has changed little from last year’s, with Barretts leading off, followed by OBS March select on March 12-13, Fasig-Tipton Florida on March 25, and Keeneland’s April sale on April 8. Sale dates have drifted steadily later over the past two decades, partly a reflection of buyers’ desire for later-maturing, two-turn horses who might point to the classics.
“I think we’re all trying to attract the horse that’s going to win the next year’s Derby,” Keeneland’s Russell said. “These sales take place during the prep season for the Derby, so everyone’s talking Derby.”
Big-race dreams, improved economic confidence, and a thirst for racing action all could contribute to make 2013’s juvenile sales strong for the right horse, executives agree, but don’t look for another $16 million sale like The Green Monkey in 2006.
“I don’t think we’ll see those crazy $2 million horses, but when you’re selling horses for $250,000 or $300,000 or $350,000, that’s good money for horses,” Lloyd said.
Save your money and wait for 2 year olds in training, so you get to see first hand, what the horse really looks like. The rider of the horse, usually has pretty good insight, on the talent level of the horse. Been there, and done that.