Lexington, KY - In the six years that I've been a reporter here in Lexington I've wanted to cover the county's largest few days of commerce, but to admit it, I've been intimidated. The September Yearling Sale at Keeneland grosses millions, upon millions each year, and despite offers from the helpful and friendly staff at Keeneland, I never went. I understand the world of business, but the business model of the sport of kings is a concept that has eluded me.
Fortunately I found more like me in Lexington, long-time residents who really didn't know how it all works. So I decided to cover it for the first time this year, not from a perspective of reporting on the pedigree of horses up for auction and the quality bloodlines that were fetching high prices - which I would have to pretend to know about - but from an honest 'I've really got no clue' approach.
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While the Keeneland Sales Pavilion has taken strides to cater to captains of industry who may be in town looking to spend some serious money (the average price of horses sold over the first two nights of the sale at Keeneland was $353,488) you won't have to park at the airport to hide the shame of the type of car you drive and walk over to Keeneland. Outside the main entrance there were no Rolls Royces, no Maybachs not even a Ferrari. But there a cherry '80s El Camino. (It was pretty sweet.)
Upon entering the Sales Pavilion the bowl around the auction block is a site to be seen, and while all the seats are reserved for regular buyers and sellers, there are benches ringing windows in the corridor offering a perch to observe what's going on inside. But if you make that choice, you miss much of the action. Sure, Monday night's top seller was sold to a person in the sales arena, but the real action was happening in the areas behind the auction block and out in the walking ring.
While the top sale, a filly (female horse) from sire Unbridled's Song (that means dad) and dam Silvery Swan (the filly's mom - you should have caught on to that) sold for $1 million to Mandy Pope of Whisper Hill Farm inside the sales arena, bidding occurs by the two shoots that usher the 4,300 horses up to the sales floor as well. Bid spotters, a clicker in hand to register bids, train eagle eyes over the crowd.
Fear of scratching your nose and being on the hook for an offspring of a former triple crown contender that costs two or three times more than your house is unfounded.
Bidders usually are in large groups - especially in the early days of the sale when Keeneland sells the most proven pedigrees. Among them is the person who will end up actually owning the horse, often flanked by friends, their agent, and others communicating with veterinarians who have access to on-site computers with x-rays taken within the last three weeks of each horse heading to the block as well as others in the walking ring.
According to Keeneland's VP of Sales, Walt Robertson, there's about a half hour from the time a horse leaves its stall until it is auctioned. For those that may not have done their homework, or those feeling a little more impulsive, that still leaves time to kick the tires, so to speak.
"You look up the number in the catalogue and it tells you first of all if it is a colt or filly, who's consigned it (the person offering it for sale) and then it will tell you... (the family tree going back four generations) sire and dam," he said.
The catalogue is available a few weeks in advance of the auction and is split up into six 'books.' The first two nights sell the first book. The casual spectator can pick up a copy of the book during the sale. For the more advanced, there's an iPad app that contains all the information of the books, and saves you from having to carry too much.
Once the gavel falls, a horse is considered sold and liability is transfered to the winning bidder. With few exceptions those bidding have already established a line of credit with Keeneland to ensure they can pay for the living commodity they just agreed to purchase. In the rare case that a winning bid has been placed by someone who has not established credit with Keeneland, the person's ability to purchase is quickly determined.
From there it's to the back of the sales area and a row of windows -not unlike the betting windows at the track- where van line representatives make arrangements with you to get your new horse to wherever it needs to go. It's a bar closing time type situation: it doesn't matter where you want to take it - one of Monday night's top sellers is heading for Japan - whether you send it to its ultimate destination or not, the horse has to leave. Keeneland has 1,200 stalls and more than 4,000 horses that need to use them during the course of the sale.
Unlike many high-end auction houses for goods and collectables, the price that appears on the board is the price the buyer pays. There is no buyer's premium due to the auction house. The payment, though, does go to a few different receipients, not just the previous owner. Keeneland keeps 5 percent, (2.5 percent of the final offered price if the horse's reserve isn't met and the horse fails to sell). If the owner choses to go through a consigner, they'll keep a good size chunk in exchange for their services, which often includes boarding and training up to the point of sale. The consignor also provides their name and reputation which attracts into their assigned area at the track those looking to buy. This opportunity to browse horses prior to the sale can help drive up the price paid for a yearling.
While $1 million is a lot to pay for an unproven horse - OK, it's a lot to pay for anything - the high prices over the last few years are nothing compared to eight figure sales seen from time to time in the middle part of the previous decade. This raises the question: when paying those figures, is there ever a return on investment?
"We have in the past sold horses for more than one could logically expect them to earn on the racetrack and have got a lot of pedigree, and a lot of confirmation and a huge race record," Robertson said. "What they earn on the race track pales in comparison to what they earn as a stud and selling nominations to be bred to them."
While Sheikh Mohammed, the ruler of Dubai, may have spent more than $10 million from time to time on a horse, there are horses such as the recently retired sire (male breeding horse) Storm Cat. He wasn't a world beater on the track, but he had a knack for producing offspring that were. So in his heyday, people paid $500,000 per breeding session that produced a foal (baby horse) - and he had a busy calendar. That's some ROI.
For every high-seven-figure or eight-figure horse sold, there are more like Zenyatta that sold at this same sale in 2005 for $60,000 and is considered the greatest filly of all time. She's also in the debate for best horse ever, starting her career 19-0 and coming a close second in last fall's Breeders Cup Classic, her 20th and final run.
So looking to buy a horse at sale is a lot like betting on one at the track. Putting your money down on a sure thing may cost you or not pay big margins, betting the long shot can pay off huge, or you might just be throwing your money away.
If you're interested in being part of this action, resist any impulse to jump right in. Come to the sales and observe. You can meet everyone there who will help you prepare.
"Everybody that's even thought about putting together a partnership will be here. All the bloodstock agents, all the breeders, the largest collection of trainers that you could imagine. The world will be here and at each level," Robertson said.
Yearling
Breeding Stock
Horses of All Ages
Two-Year-Olds in Training
In addition to the September Sale, there is the November Sale which sells mainly sires and broodmares. There also is a January Sale and an April Sale. Keeneland used to hold a July Yearling Sale that evolved into the September sale.
Starting Tuesday, the September sales go from evening sessions to days
starting at 11 through the 15th with a dark day the 16th and picking up again at 10 each morning from the 17th through completion.