The Breeders’ Cup Forum: Naohiro Goda on Japanese Buyers
Naohiro Goda operates Regent Co. Ltd, a racing data and information company in Japan. He is well-known throughout the world for his knowledge of international racing and breeding and is a popular television racing commentator and writer in Japan. He acts as a liaison for numerous auction companies in the United States and abroad, promoting sales to Japanese buyers, who have been much more active in the United States this year than in the recent past.
Why has there been an increase in Japanese participation at American sales of 2-year-olds in training this year?
There are two factors. First of all, thanks is due to two American-bred horses, Suni and Testa Matta. Suni is the winner of the G1/JBC Sprint last autumn and Testa Matta is the winner of the G1/February Stakes last month. Both of them were bought at the Barretts March Sale. Suni cost only $120,000 and Testa Matta was only $60,000. Japanese owners are now convinced again that 2-year-old sales in the U.S.A. are the place to find ready-to-run horses for a reasonable price.
The second factor is the exchange rate. Although I cannot explain the reason logically, the Japanese yen has been strong against the U.S. dollar. While it cost more than 120 yen some years ago, the dollar was less than 80 yen earlier this year. It looks very attractive now to buy in the U.S.A.
Are there any sales of this type in Japan?
Yes, there are several 2-year-old in training sales in Japan.
The 2-year-old sale with the strongest market is the Chiba Thoroughbred Sale at Funabashi Racecourse in mid-May. Teruya Yoshida of Shadai Farm is supporting this sale and sells 20 or more lots there every year. Funabashi Racecourse is within a one-hour drive from the city center of Tokyo. The easy access from Tokyo is a big advantage to attract owners based at Tokyo. There are some 2-year-old sales in Hokkaido conducted in spring time as well.
The Japan Racing Horse Association auction for foals and yearlings has become a major sale each summer. Are there plans to expand to the 2-year-olds in training market?
No, JRHA does not have any intention to organize 2-year-old sale, though JRHA intends to expand the yearling session.
What are the economics of purchasing a 2-year-old in training here?
Japanese need to pay an import tax of 3.4 million yen per horse (about $41,000), regardless the value of the horse, when they import horses from all over the world for racing purposes. While the shipping depends on how many horses are shipped together, it costs roughly 2.5 million yen per horse ($30,000). Hence, Japanese who buy a 2-year-old in the U.S.A. must be prepared to pay at least 6 million yen (over $71,000) to race them in Japan, in addition to the purchase price. To be frank, it is a big amount.
Japan and U.S.A. have already discussed the Trans Pacific Partnership (TTP). If both Japan and U.S.A. agree to join the TPP, the import tax will disappear. Then, I do believe, many more American-bred horses will be imported to Japan for racing purposes.
Who are some of the most successful Japanese runners to have come out of American 2-year-old sales?
In addition to Suni and Testa Matta, whom I mentioned earlier, I must not forget to note Kurofune, who was bought at the Fasig-Tipton Florida sale in 2000. Kurofune won G1/NHK Mile Cup and G1/Japan Cup Dirt, and earned more than 370 million Japanese yen ($4.5 million). Kurofune is now successful as a stallion standing at Shadai Stallion Station.
The average distance of a Japanese race is longer than American races. Are Japanese buyers concerned the horses at 2-year-old in training sales may not have the desired stamina?
Yes, that is the reason Japanese buyers, who were very, very active at 2-year-old sales in U.S.A. in the mid 1990s, became not so active since the late ‘90s and 2000s. While American-bred runners tend to have good speed and are precocious, they do not have stamina and do not improve after the spring of their 3-year-old season. Many of them preferred a dirt track. However, Suni and Testa Matta changed some of that belief as both of them have run very well as they get older.
As a principle, the buyers who attend 2-year-old sales in the U.S.A. do not dream of winning 3-year-old classic races, as they understand American-bred horses from 2-year-old sales do not stay and do not act on grass. On the other hand, Japanese expect to find horses who have good speed and are ready-to-run.
How soon will they run in Japan?
The horses imported to Japan from foreign countries must have quarantine period at an isolated facility in Japan for 10 days for their first quarantine. Then they spend a second quarantine for three months. The horses cannot begin to race prior to completing this three-months second quarantine.
It means, for example, we must wait until the middle of August to see a horse bought in the U.S.A. in March to make its debut.