Lexington, KY - A stronger yearling market came just in time for some, too late for others and welcomed by all in the thoroughbred industry.
The results of the Keeneland September Yearling Sale were encouraging for an industry that has been struggling along with the rest of the economy in recent years.
"It's one of the best sales we've had in several years," said Beau Lane, of Beau Lane Farm in Bourbon County. "There's a lot more enthusiasm."
And a fair amount more money being spent.
Gross sales were $223,487,800 for 2,921 horses, an increase of 12.7 percent over 2010 when 3,059 horses sold for $198,254,900. The average price was $76,511, up 18 percent from $64,810 in 2010 and median price was $30,000, up 20 percent from $25,000 in 2010.
Breeders point to several reasons for the rebound from 2010:
Supply and demand: Foal crops have been getting smaller, with mares that had been producing poor sellers and runners the first to be weeded out.
"The main thing is supply and demand," Bill Harrigan of Miacomet Farm said.
"And there will be even less (supply) next year."
Estimates from The Jockey Club show that the North American foal crop declined 11.8 percent in 2010 and another 10 percent in 2011.
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The Jockey Club is projecting a 2012 North American registered Thoroughbred foal crop of 24,700, a decline of 8.5 percent from the estimated 27,000 registered foals for 2011. To view a related chart on the Jockey Club website,
Premiums for quality: "There are fewer horses and fewer really good horses," Lane said. Yearlings that came from strong bloodlines and good conformation, meaning the horse conforms well to the ideal look of a thoroughbred, are what buyers were looking for during the two-week Keeneland sale.
"Any deviation, then it gets difficult," said Bill Landes of Hermitage Farm in Oldham County.
Peter Blum, a breeder based in Atlanta who uses Dromoland Farm as a consignor, had one of the sales top sellers, a filly that sold for $1.3 million.
"You have to have the right horse," Blum said. "There isn't demand for the average horse that in previous times would sell OK."
International buyers: There were 29 countries represented at the Keeneland sale.
"All the familiar faces were here, as were many newcomers,"
Keeneland Vice President of Sales Walt Robertson said. "We had stronger Japanese participation than we've had in several years."
Russian buyers also were active this year.
Premiums for horses bred in states with racing incentives: States such as New York and Pennsylvania are using money from slot machines to increase purse sizes at their tracks. And there are extra incentives for horses bred in those states to run and win in those states - a trend that does not sit well with Kentucky breeders.
While Keeneland and Churchill Downs will continue to attract good racehorses, "nobody can afford to stay and race at Turfway and Ellis Park," Harrigan said.
While a smaller foal crop has helped bring supply and demand in line, Lane says losing market share to other states is bad for Kentucky.
"I have good friends that have gone under and good friends in danger of going under," said Lane, adding that he was forced to sell off 150 acres of his farm. He blamed part of that on the loss of horse boarding business because fewer horse owners want to breed, train and race in Kentucky.
Harrigan points to a domino effect throughout the Kentucky horse industry, with fewer jobs on farms, less demand for veterinary services, feed and so on.
Without racing and breeding incentives like those of competing states, "This thing will slip away and is slipping away," Harrigan said.
Noted Lane: "If we can compete on an even scale, Kentucky will win every time."
Breeders have been competing just to stay in business. It was not so long ago, 2006, when gross sales at the September Yearling Sale nearly hit $400 million. The total for the sale in 2010 was half that, just over $198 million.
As the market declined, breeders have been helped by reductions in stud fees, though they would like to see them come down further.
"We want to price these horses so that breeders have a chance to make money," said Charlie Boden,
Darley USA stallion nominations manager. Darley, owned by Sheikh Mohammed bin Rashid Al Maktoum, has two of the top sires in thoroughbred racing, Medaglia d'Oro and Bernardini.
The nature of the horse breeding business requires breeders to be an optimistic bunch, Boden says. And he does see more reason for optimism after this year's Keeneland yearling sale.
While the market isn't what it was a few years ago, there is the feeling that the yearling market has hit bottom and is on its way back up.
"It was nice to walk around and see people smiling rather wringing their hands," Boden said. "That is a welcome change."
But in addition to being optimistic, Blum says sellers have to be more "realistic" these days. That appears to be happening, with more horses attaining their reserve price than in the past couple of years.
This year, 20.8 percent of horses failed to meet their minimum reserve price, a 22 percent decrease in the buyback rate from 2010.
Landes said he sold several horses just over the reserve price. "It's a good thing that they're gone because that's our business," Landes said. And he says while he may not feel quite "fulfilled" with the 2011 sale, "we get to come back another year."
Top consigner: Lane's End Farm, owned by Bill Farish, who sold 335 yearlings for $27.437 million.
"We are very pleasantly surprised by the market being up pretty consistently throughout the sale," Farish said. "The decrease in (the size of) the foal crop, lower production costs, and lower stud fees, have given buyers a new sense of confidence. They are more apt to want to race because they can get in at lower rates."
Top buyers: John Ferguson, acting on behalf of Sheikh Mohammed bin Rashid Al Maktoum, topped the buyer's list, paying $8.87 million for 36 yearlings. All the horses Ferguson bought were sired stallions from Sheikh Mohammed's Darley Stud, including a foal share with Catherine Parke of Valkyre Stud that sold for $1.2 million.
Benjamin Leon's Besilu Stables purchased 13 yearlings totaling $8,175,000. Leon purchased two of the six million-dollar yearlings.
Top sires: By average, it was A.P. Indy, who stood at Lane's End, at $411,875; by gross sales, Medaglia d'Oro was the winner with $10.737 million, with Tapit to place and Unbridled's Song to show.
Sale topper: $1.4 million, for a colt by A.P. Indy out of Malka bought by John Amerman, Robert "Shel" Evans, and an anonymous third partner, consigned by the Hill 'n' Dale Sales agency.