By Ray Paulick

The final numbers from Monday’s opening session of the 2008 Keeneland November breeding stock sale were not pretty, and the bad news is that it might get worse before it gets any better in an environment stung by turbulent stock exchanges around the world, high-profile bankruptcies in the financial markets and a stalled American economy.

First, the numbers: Keeneland reported selling 149 horses (broodmares, broodmare or racing prospects, and weanlings) from the 311 catalogued. The gross amount was $48,021,000, an average price of $322,289 and a median of $185,000. Those numbers are down substantially from last year’s opening session when 194 horses sold for $109,064,000, an average of $562,186 and median of $272,500. The declines are 56% in gross, 42.7% in average, and 32.1% in median price. Last year’s opening session was the strongest in the history of the Keeneland November sale, jumping 30% in gross revenue from the 2006 opening day.

The average and median prices don’t tell the whole picture. Of the 311 horses catalogued, there were more that didn’t sell than changed hands. Seventy lots were withdrawn and 92 horses, or 38.2% of the 241 through the ring, failed to meet their reserve price. The RNA or buy-back rate was twice as high as last year’s opening session, when 19.2% of those through the ring failed to sell.

Those are tough numbers for  breeders to swallow. In cases where breeders were not forced to sell to pay their bills, they had the luxury to withdraw their horses rather than selling them in a soft market. In instances where bank notes were due or credit lines have been tightened, mare owners had to suck it up and see what the market was willing to pay.

"It’s a bloodbath," one agent said midway through the session. One breeder said he took a beating on one mare sold early Monday and withdrew the rest.

In contrast to 2007, when a record 28 million-dollar horses were sold on the opening day, there were just 11 this year, led by the $3 million paid by John Ferguson, chief bloodstock adviser to Sheikh Mohammed’s Darley operation, for Hip 53, the grade I-winning mare Hystericalady, who most recently finished fifth behind Horse of the Year candidate Zenyatta in the Breeders’ Cup Ladies’ Classic at Santa Anita Oct. 24. It’s doubtful Hystericalady will race again.

Ferguson was the day’s leading buyer, with six purchases totaling $8,710,000. Last year, Ferguson bought just four horses on the first day, but one of them was Playful Act, a mare who set a then-world record price of $10.5 million, who made up the bulk of his $18.5 million expenditures.

The atmosphere at Keeneland on Monday in no way matched the buzz that was created across town at Fasig-Tipton on Sunday night, which was highlighted by the $14-million sale of Broodmare of the Year Better Than Honour and the $5.7 million sale of presumptive 2-year-old filly champion Stardom Bound. But even those headline prices camouflaged a soft market.

Fasig-Tipton was packed Sunday night, in part by Thoroughbred enthusiasts who wanted to get a close look at Better Than Honour and Stardom Bound. It was a little reminiscent of the old Keeneland July yearling sale, when the Keeneland pavilion was filled with a combination of buyers, consignors, industry workers and "tourists." Monday’s atmosphere at Keeneland is strictly business, it seems. 

The tarmac at Bluegrass Field across Versailles Road is filled with private jets, suggesting that many of the industry’s wealthiest particpants are here. Comments from several consignors suggest the presence of those jets indicates the very high end of the broodmare market will be stable. Below that, however, there are fears of a major dropoff in prices. "Some breeders are in a tough spot," one consignor said. "They need to sell some mares to pay the bills, but they are selling into a very tough market right now."

Geoffrey Russell, Keeneland’s director of sales, made the following statement in a press release: "Last November opened with an historical and record-breaking session during which we sold 28 million-dollar horses versus 11 this year, including a $10.5 million broodmare; that’s a huge difference. Whether the difference is owed to the economy or to the catalog; it’s probably a factor of both. But this is marketplace where people come to trade horses; and we will successfully trade horses over the next two weeks; though probably not at the level we did last year.” 

Click here for Monday’s results, includilng a summary of leading buyers and consignors.

The sale continues through Monday, Nov. 17, with daily sessions beginning at 10 a.m.

A CLOSER LOOK AT SUNDAY’S FASIG-TIPTON SALE

While Fasig-Tipton’s Sunday night sale looked very strong at first glance, it had the same clearance problems that plagued Keeneland’s opening session on Monday. The published buy-back rate was 39.3% (59 RNAs from 150 offered), but there were also 39 lots withdrawn, meaning that 98 horses, more than half of those catalogued, failed to sell.

Fasig-Tipton reported 91 horses sold for $70,279,000, an average of $772,297 and median price of $250,000. Included in those sales were eight horses bought for $23,460,000 by Southern Equine Stables from the consignment of Hill ‘n’ Dale Sales Agency that were previously owned in partnership by Southern Equine and Hill ‘n’ Dale (including the world record-priced Better Than Honour, which sold for $14 million). Hill ‘n’ Dale owner John Sikura bought one from his consignment for $3.1 million. Stripping those nine transactions out, Fasig-Tipton still sold 82 horses for $43,719,000, an average price of $533,158 and median of $220,000, well ahead of last year’s average of $486,318 and median of $180,000. 

Either with or without the Hill ‘n’ Dale horses, it was an extremely strong market for top-class mares.

The increasing depth and quality of Fasig-Tipton’s November sale didn’t happen overnight, or with the purchase of the company by an associate of Dubai’s Sheikh Mohammed. Fasig-Tipton is in the very early stages of that new ownership, but already there have been significant enhancements in the physical plant on Newtown Pike (more are certain to come), along with news about coming improvements at the Humphrey S. Finney Pavilion in Saratoga Springs, N.Y.

The accompanying table shows Fasig-Tipton’s stready growth in the November sale over the last eight years.

Perhaps more than anything else, the strength of Fasig-Tipton’s outstanding catalogue was the reason for Keeneland’s sluggish start on Monday. As one commercial breeder said, "Fasig-Tipton took a huge bite out of book one at Keeneland."

Earlier this year we wrote about the "new era of Fasig-Tipton" under the ownership of Synergy Investments, and included a number of comments from breeders, agents and buyers who hoped that Fasig-Tipton’s advancements would make Keeneland more customer friendly. Keeneland was called "arrogant" by a some of its customers in a subsequent Paulick Report article.

Based on comments by some mare owners, Keeneland is responding with a stronger recruiting effort, something Fasig-Tipton has been doing for years. Keeneland has held a powerful edge in market share in yearling and breeding stock sales, but the results from this fall indicate Fasig-Tipton is gaining ground.

Copyright © 2008, The Paulick Report

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Tags: breeding stock sale, darley stud, dubai, hill 'n' dale, hystericalady, john ferguson, katsumi yoshida, Keeneland, keeneland november breeding stock sale, northern farm, sheikh mohammed, taylor made sales agency, Thoroughbred Auctions, tyreel stud

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