Posts Tagged ‘keeneland november breeding stock sale’

By Ray Paulick
I was scratching my head over the apparent huge drop in weanlings catalogued to this year’s Keeneland November yearling sale; according to Keeneland press releases from the last two years, there were over 1,000 fewer weanlings in the 2009 sale than in 2008. That led to an article published here Monday entitled: ONE-THIRD FEWER KEENELAND NOVEMBER WEANLINGS.

Mystery solved, thanks to a couple of Paulick Report readers who alerted us to some wrong numbers.  The number of weanlings and broodmares catalogued, as reported on Keeneland’s 2008 press release, was incorrect (the number of weanlings and broodmares offered was transposed in the press release). Those incorrect numbers were used in our Monday report entitled ONE-THIRD FEWER KEENELAND NOVEMBER WEANLINGS.

We should have done some additional digging to confirm those numbers, and apologize to our readers for the error.

The correct numbers (with comparison to 2008) for the 2009 sale are 2,337 broodmares catalogued, down 19.2% from the 2,893 catalogued in 2008. The 1,885 weanlings catalogued to this year’s sale represent a decline of 16.8% from last year. The declines in both weanlings and broodmares offered are roughly the same percentage, and the number catalogued will be the smallest in both categories in several  years.

The corrected table is below: 

At the current rate, the final numbers for this year’s Keeneland auction will show gross sales of approximately $190,000,000, the lowest figure since 1998, when total sales reached $169,811,800. The difference between 2009 and 1998, however, is that the numbers were ascending then; the $169.8 million total represented what was then an all-time Keeneland September record and the seventh consecutive year of gains. (Click here for a summary of Keeneland sale history.)

This year’s projected sale-ending average is $65,000, also the lowest since 1998, when the average was $59,475, also a new September sale record. This year’s projected median, $25,000, is identical to the median of 2001. The decline in average price from 2008’s September sale is projected to be 28.6%, slightly higher than the 25% I predicted during a presentation in February to the Kentucky Thoroughbred Farm Managers’ Club. A number of concerned breeders said that night they thought 25% was optimistic—and they were right. The 28.6% decline is exacerbated by unprecedented buyback rates during each of the first six sessions ranging from 30.1% to 41.2%.

If these projections hold up, breeders will have suffered roughly $200 million in losses since the sale’s highwater mark in 2006, when gross receipts reached $399,791,800. That year’s average price, $112,427, was another record for September, as was the $45,000 median.

This year’s prices are all the more devastating when you take into account that breeders almost certainly invested more money in aggregate stud fees to produce these yearlings because of the record, inflated yearling market of 2006. The prospects for 2010 yearling sales are not bright, either, since those horses were produced from 2008 fees; it was not until earlier this year that many stallions operations significantly reduced stud fees.

How will this year’s September sale affect the broodmare market when Keeneland hosts its November breeding stock sale in less than two months? Because the global financial markets collapsed midway through the 2008 September sale, it didn’t have that severe an impact on yearling prices, but it was felt at the 2008 November sale, where the average price of broodmares was down 48.5% from the previous year(from $125,581 to $64,695). That was the most significant single-year drop in average price of mares in the history of the Keeneland November sale; the next closest came in 1990, when the average fell by 40%, from $78,883 to $47,109. However, over a seven-year period, from the market peak of 1985 to the bottoming out in 1992, the average price of Keeneland November broodmares plunged by 61%.

Keeneland’s broodmare market has fallen nearly that far already, but I’m not sure the bottom is yet in sight. As the size of the foal crop comes down even further (and it’s dropped 18% in two years), expect the market to be flooded with mares breeders no longer want nor can afford to keep. That means prices will decline even further, perhaps to a level similar to the early 1990s.

Copyright © 2009, The Paulick Report

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By Ray Paulick

Lane’s End Farm is expected to announce that reigning Horse of the Year Curlin will enter stud at the Versailles, Ky., farm in 2009 for a live foal stud fee of $75,000, the Paulick Report has learned. Lane’s End is owned by William S. Farish, vice chairman of the Jockey Club and former ambassador to Great Britain for President George W. Bush.

“Curlin has proven himself across two continents with 16 starts, the honor of 2007 Horse of the Year and the greatest North American money-earner in racing history,” Jackson said in the Nov. 15 announcement that Curlin would enter stud in 2009. “He always gave it his all and has done everything we have asked of him. I am proud to announce that he will start a new career in 2009 and contribute his soundness, stamina, durability and athleticism to the breed. I am looking forward to seeing his foals compete and possibly exceed his unequaled racing record.”

Curlin, who began his career under the care of Helen Pitts and was transferred to trainer Steve Asmussen after breaking his maiden at Gulfstream Park early in 2007, retires with record earnings of $10,501,800. He won 11 of 16 starts, with two seconds and two thirds. He won seven Grade 1 races: the Breeders’ Cup Classic, Dubai World Cup, consecutive runnings of the Jockey Club Gold Cup, Woodward, Preakness and Stephen Foster Handicap. Bred in Kentucky by Fares Farm, he sold for $57,000 at the Keeneland September yearling sale. Jackson, Satish Sanan and George Bolton bought at 80% interest in Curlin through bloodstock agent John Moynihan for about $3 million after the colt’s maiden win. Jackson eventually bought Sanan and Bolton’s interests.

Curlin’s sire, Smart Strike, stands at Lane’s End for $150,000. Also joining the 2009 roster at Lane’s End is War Pass, the 2007 2-year-old male champion and winner of the Breeders’ Cup Juvenile who will stand for $30,000 live foal.

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By Ray Paulick

Bloodstock prices continued their downward spiral on Tuesday during the second session of the Keeneland November breeding stock sale, and after two days total receipts are down almost 50% from one year ago and are the lowest in years.

The Lexington, Ky., sale company reported there were 150 horses sold on Tuesday for $42,006,000, a decline in revenue of 39% from the $69,435,000 gross in 2007. The average of $280,040 was a decline of 25% from $373,306 recorded last year, and the median fell by 27.3%, from $220,000 to $160,000. Tuesday’s buy-back rate was 34.2%, down from Monday’s 38.2% but still extremely high and an indication of how soft this market is.

Cumulative figures are worse, in part because last year’s opening session set an all-time record for gross revenue. After two days, Keeneland has sold 299 horses for $90,027,000, down 49.6% from a year ago when 380 horses brought $178.489,000 the first two days. The two-day average of $301,094 is a 35.9% drop from $469,734 in 2007, and the median fell by 32%, from $250,000 to $170,000. A higher number of horses, 315, were withdrawn from the catalogue (145) during the first two sessions or bought back by consignors (170), than the 299 that were sold. The aggregate buy-back rate is 36.2%.

The top lot to sell in the early stages was Hip 374, J Z Warrior, which agent Olin Gentry purchased for $1,125,000 on behalf of an unnamed female client from Washington state. J Z Warrior was the first racehorse or broodmare prospect to sell from the Zayat Stables consignment being handled by Eaton Sales. J Z Warrior is a 3-year-old stakes-winning filly by Harlan’s Holiday.

Half Queen, a 12-year-old Deputy Minister mare in foal to Distorted Humor, brought a higher hammer price of $1,650,000, but she was bought back by her owner. Hagyard Farm, agent, consigned the mare, who produced 2003 champion 2-year-old filly Halfbridled. 

The mood of the sale is anything but upbeat. Asked about the health of the market, one agent standing near the outside ring behind the sale pavilion pointed in the direction of a near empty viewing area. “That should tell you a lot right there,” he said. “There’s not many people here.”

However, another prominent commercial breeder said the prices represent a much-needed correction in a market that has been inflated in recent years by newcomers to the breeding industry. “Prices have been so out of whack for mares in recent years because of the presence of outfits like ClassicStar and a number of billionaires from other industries who decided to get into the breeding industry," he said. "They drove up mare prices to the point that they couldn’t possibly make money selling yearlings out of those mares, and that made it much more difficult for us. I think it’s a healthy change for commercial breeders who are in this for the long haul.”

One agent commented that he heard a rumor that as many as 20% of the horses being sold are “owned by banks.” A representative of one major lending institution said his bank had liens or interests in about 325 of the horses being sold. “There are a lot of horses in here where the money will go straight to the bank,” he said, adding it wasn’t that unusual an occurrence.

“There is still money out there to be borrowed,” he said in reference to the recent crisis in the banking industry and financial markets that resulted from the sub-prime mortgage fiasco in the real estate world. “The banks might be tightening the amount they’re willing to loan on a horse, maybe only 40% of its appraised value versus the 50% that had previously been the standard.” 

The session was topped by the $2.4 million Mushta, a racing filly from the Zayat Stables consigned by Eaton Sales, agent. Fran Abbott signed a ticket to buy the 3-year-old graded stakes winner on behalf of Betty Moran’s Brushwood Stable, The Empire Maker filly will continue to race under the care of trainer Bill Mott. Mushka, whose dam, Sluice, is a half sister to multiple grade I winner Lakeway.  Mushta won the Grade 2 Demoiselle Stakes at Aqueduct last year. Zayat purchased Mushka for $1.6 million as a yearling at the 2006 Fasig-Tipton Saratoga sale.

Mushta was one of seven horses purchased for $1 million or more on Tuesday, compared with 11 during last year’s second session. The cumulative number of seven-figure purchases is 18, less than half of the 39 sold at this point in 2007.

"There’s no depth here," said one horseman. "The best mares are still selling, but below that top level it’s not good. And there’s virtually no market for older mares right now." 

“There was more uniformity to today’s session; it was more comparable to the Tuesday session last year," Geoffrey Russell, Keeneland’s director of sales, said in a press release. "We saw active bidding from a wide range of people and countries,” he added, noting that the market continued to place a premium on quality young race fillies.

Click here to see results and a summary of leading buyers and consignors.

Copyright © 2008, The Paulick Report 

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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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