Keeneland: Consignors concerned over new conditions of sale

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Despite the positive results from the recently concluded Keeneland September Yearling Sale – where the $45,000 median price represented a 50% jump and equaled an all-time high, average increased by 14.2%, and buybacks were under 20% – a number of consignors are concerned with a 2012 change to the conditions of sale related to repository radiographs and accompanying veterinary reports.

In layman’s terms, the 21st condition in Keeneland’s September catalogue gives buyers 24 hours to appeal to an arbitration panel in order to turn back a horse if a consignor’s mandatory veterinary report in the repository is “not accurate, valid or authentic in all material respects and … deemed to be materially misleading regarding the condition of the horse.”

Fasig-Tipton adopted similar language in its conditions of sale.

As a result of the new rule, consignors say, this year’s veterinary reports were so detailed and wordy in comparison to past sales that many buyers who looked at them in the back-ring area were scared off without even reading or comprehending what was written in them.

“It’s very evident at the three sales (Fasig-Tipton Kentucky July, Saratoga Sale, and Keeneland September), particularly at Keeneland, the veterinarians writing the reports were writing vast amounts of information, most of it totally nonmaterial to a horse’s suitability for racing,” said Reiley McDonald of Eaton Sales. “The vets were put on notice that if they see the smallest thing, they have to write it down.”

“We are lay people talking to lay people when we show these reports in the back ring,” said Pat Costello of Paramount Sales. “People don’t understand these reports. Nobody knew what to read in them. Some of them went beyond the beyond.”

The expansive veterinary reports had less impact on the front-end of the sale, particularly Books 1 and 2 where buyers are more likely to retain a veterinarian to examine the radiographs in the repository and make their own recommendations to clients. In the second week of the sale, McDonald and several other consignors said, buyers asking to look at the reports in the back-ring area were confused and put off by the lengthy descriptions. There were far fewer horses with the notation “NSF” – no significant findings.

“For that reason alone, it’s had a negative impact on people selling horses,” said McDonald.

The original purpose of the radiograph reports was to give consignors an idea of what to expect when buyers and their veterinary representatives examined repository radiographs. “Over time, consignors began to use the reports as a commercial product,” said Thomas Thornbury, Keeneland’s associate director of sales.

Buyers who did not want to go to the expense of paying for a veterinarian to examine the repository X-rays began asking consignors to show them their vet reports in the back ring before a yearling was sold. It’s now standard operating procedure.

Over time, Thornbury said, because the veterinarians were working on behalf of the consignors, many of the reports had “omissions or soft findings, and some buyers felt they were being whitewashed.” Thornbury said Kentucky statute gives the state’s veterinary board power to penalize vets for providing information that is not factual or has omissions.

During the Keeneland sale, according to Thornbury, only three arbitrations were conducted and one horse was turned back. The horse turned back, a consignor told the Paulick Report, had surgery in all four joints, with a veterinary certificate for the surgeries placed in the repository. However, it was the opinion of the veterinarian writing the report that the horse was 100% sound and the joints were clean.

“When you have vets fighting with vets, something is wrong,” said Costello.

Not every consignor opposed the change. One leading consignor said an increasing number of sellers were taking advantage of buyers by having their veterinarians leave some material defects out of the reports. “This levels the playing field,” he said.

A number of veterinarians who examine X-rays on behalf of buyers said their workload at Keeneland was reduced significantly because the radiograph reports are more detailed.

“I don’t think the sales companies should disincentivize buyers from going to the repository, especially early in the sale,” said McDonald.

“My view is it was Keeneland and Fasig-Tipton’s intention to put confidence in the reports,” he added. “The side-effects outweigh what they accomplished.”

From a buyer’s perspective, Florida pinhooker Eddie Woods said the reports “legitimized” things for him. “We did a lot of looking at reports this year, which we don’t normally do,” he said, “and we had a greater comfort level in reading them. We still read all the X-rays though.”

Bloodstock agent Tom McGreevy, who buys for Rick Porter’s Fox Hill Farm, said the more detailed reports had no effect on his purchases, which mostly came early in the sale. “We rely on our veterinarian to look at the X-rays, and if he doesn’t like one of the views, he’ll do his own. I think you have to rely on somebody you trust.”

Thornbury said Keeneland would prefer that consignors didn’t have the reports, a sentiment shared by many sellers and veterinarians.

Woods disagreed, as did several other buyers the Paulick Report spoke with. “I think it would be a step backwards,” said Woods.

“Pandora’s Box has been opened,” said McDonald. “If you put X-rays in the repository you have to put in the certificate. If you want to sell your horse, you have to carry it around with you in the back ring. Taking those certificates away would be like pulling the rug out from under the buyers.”

Despite consignor concerns over the new veterinary reports, the Keeneland sale – which had 16.5% fewer horses catalogued than in 2011 – was a success, gathering momentum as it went along, with waves of buyers arriving from Europe, Asia, and South America.

“Keeneland has done a great job of recruiting people from all over the world for this sale,” McDonald said. “On the last day, there still a lot of buyers there, and they were trying hard to fill their orders. I think the success of the sale had a lot to do with that recruitment, along with supply and demand.”

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  • http://Bellwether4u.com James Staples

    like the man said…”the BOX is open”…GOOD!!!…cause HIDING bad goods is CHEATING…ty…

  • Jerry McMahon

    The proof of the effectiveness of the new policy is reflected in the outstanding results.  Congrats to FT and Keeneland for making this change.  Instilling confidence among buyers is always good policy.

  • ASL

    I can appreciate the confusion that such detailed veterinarian reports can cause, and that there can be disagreement among the vets on various issues (even on what is material and what is not), but how can it be a bad thing when the sales prices jumped as large as they did?  Seems to me that perhaps the buyers liked the added information.  Perhaps it gave the more security in their buying decisions.  Otherwise, if it really was that confusing, people would not have loosened their purse strings. 

  • http://fmitchell07.wordpress.com frank mitchell

    The improved prices at the Keeneland auction were the result of Keeneland recruiting an excellent volume of buyers, a diminished catalog for greater competition, and some improvement in the US and world economy. It was not the result of changes to the conditions of sale.

  • Ben Berger

    As a buyer and a seller, I prefer to trust my veterinarian’s opinion instead of someone else’s, and would prefer that all buyers have their own vet inspect the radiographs in the repository. Unfortunately, now that radiograph reports have been incorporated into the sales process to such a pervasive degree, I agree that there is little chance of their removal from the sales grounds. Typically, buyers of the higher priced yearlings can afford to vet multiple horses on any given day, and do so to protect the significant investment they are about to make. Unfortunately, when the middle to lower tiered horses sell, many buyers can only purchase a horse for what others may spend on their vet bill. I don’t believe that the vets intend to “fight” with one another. They just have different comfort levels and different opinions on the various radiographic changes which show up on radiographs, that’s why buyers tend to use the vet that they trust and understand. These reports are opinion, and as such are subject to the experience of the vets writing them. They aren’t infallible. Many “clean” horses can’t stand training, and just as many radiographic train-wrecks never take a bad step. That doesn’t mean that either of them will be competitive racehorses, just that they can or cannot stand up to training. I would bet that a large percentage of farm managers, consignors, bloodstock agents and even trainers can’t decipher all of the possible variations of “vet-speak” that darkens radiograph reports, and unfortunately, unless the buying public becomes more educated in veterinary terminology, horses with “NSF” down the page will continue to sell well and those with any other comments will be discriminated against. I for one, would rather provide truthful, representative reports for the horses I am selling, and pay my vet to explain anything I don’t understand on my horses, or those I am attempting to purchase.

  • Jerry McMahon

    Glad there’s at least one omniscient in the room.  The point is that the new rules were obviously well received by all those buyers so well recruited by Keeneland.

  • Ben Berger

    I agree. Buyer’s now know that the reports must be a true representation of the horse. Leave it up to the buyer to decide how much risk they are willing to live with and whether a defect is material to them or not. If people don’t understand the report, educate yourself so you can allay their concerns, or better yet, have a vet available to do so.

  • Hossracergp

    Like it or not, the vets are just as involved in the selling of horses as they are in the racing of horses. The question remains, how involved should they be. And, if these yearlings were primarily intended to race instead of be flipped for resale how many of those that walk away from horses without perfect reports would be willing to buy them to race. It seems that we see more horses retire due to soft tissue injuries than skeletal ones, so maybe perfect radiographs aren’t the be all end all that some have been lead to believe they are.

  • Forthegood

    As the industry has been calling for more transparency and full disclosure during sales transactions, this appears to be responsiveness to that call.  Let the buyer beware, but also be fully informed.

  • Drstevesphone

    As both a consignor and a veterinarian, I agree with your statement about “leaving it up to the buyer to decide how much risk they are willing to live with” but take exception to your use of “defect” instead of “finding”. All “defects” are “findings”; the inherent misunderstanding is that all “findings” are then “defects”. They are not.
    A horse passing through the ring with veterinary comments “OK to race”, means what?

  • Drstevesphone

    Exactly. And every horse has some radiographic findings. The use of the phrase “NSF” is then like the phrase “Sunny” versus “Partly Cloudy”.

  • Susan Watkins

    If you are going to Keeneland to buy then educated yourself before pick out just what you can afford to have your vet check for you and if you can’t afford to do it that way maybe think about saving money till the next sale.  We are very small breeders and buyers and I have learned if we can’t do it correctly then we will wait.  I think paying a vet to help you out on the front end is well worth it…..

  • Ben Berger

    It means I don’t pay any attention to that statement and don’t believe it belongs on the reports. I was mistaken in my earlier post. I agree with your assessment of not all findings being defects. It was late and I should have said that reports should be required to state findings that are different from normal. I think we are putting veterinarians in a tenuous position when they are asked to include subjective analysis of the findings. They may be considered material to some and not to others. State the findings and place the onus on the buyer to decide whether they understand them in relation to their purchasing decisions. I happened to look at several reports during the September Sale and had my vet read some of films afterward. In several instances, both veterinarians reported that the findings were exactly the same but the analysis provided differed. Sometimes my vet was more concerned with the findings than the vet who wrote the report. Alternately, the opposite was true, my vet was less concerned than the vet who wrote the report. I weighed both reports made my decision based on my risk tolerance.

    I realize that many buyers don’t examine the horses or reports until they are in the back ring and that many buyers, myself included, may not understand some of the terminology used to describe the findings, but I don’t believe that the findings should be omitted or called insignificant just to appease some of the buyers. They should represent the radiographic findings and leave the analysis to the potential buyer. I had buyers walk away from my horse in the back ring due to the amount of writing on the vet report but I felt good about the report and was confident that should they be purchased in the back ring the sale would stand any scrutiny.

  • john greathouse

    When I see people ask for the vet reports
    and say>..Oh too much writing without looking at it then I have to ask if
    they have any idea what they are looking at..the other side of the coin..for
    they guy doing his/her homework then it becomes professionals working against
    armatures

  • journeyman

    The truth is that the reason for this change is that a lot of reports that some of the consignors were showing in the back ring bore little resemblence to the true findings. I applaud Keeneland and Fasig Tipton for taking this stand

  • journeyman

    I agree with Frank that the prices were not impacted by the better reporting. But none the less, the consignors have a responsibility to show you a factual report if they show you a report at all

  • Tbhorseman

    Slightly off topic but I have always felt that every horse sold at public auction should be subjected to drug testing at consignor’s expense to help clean up a lot of the shady things that happen to these babies…

  • Ben K McFadden

     In spite of digital x-rays that can spot a pinhead or smaller “image”, there are horses that go through with a clean page.  This sale even “nothing” became “something” as vets were forced to cover their backsides under the new return rules. Interesting that agents will still often pay more for a horse with a chip than a clean one with an A throat if they like the pedigree, confirmation,  “presence”, and the story they can tell their buyers.  Clean doesn’t guarantee they can win or hold up.  A chip doesn’t mean they will break down.  How many truly great champions ran with “defects” that were not detectable by existing technology?

    If the current standards applied to yearlings were applied to human athletes, few would ever be offered a pro contract.  The buyers, vets, and sales companies are well protected, if not overly so by the current system.

    The vets have also set up the system so my vets reports and radiographs require reading by your vet.  Then if you or I buy an expensive horse, we can pay them to scope and x-ray again.  Nice work if you can get it.

  • Ben K McFadden

    Long term economics of the sales ring; who makes money?

    Sellers = Occasionally
    Buyers = Rarely if you race, Occasionally if you’re a good pinhooker (reseller).
    Consignor = Usually if you have enough horses to sell
    Sales Company = ALWAYS
    Vets = ALWAYS

    Exactly whose interests are being protected by all of the conditions of sale? Please remind me again.

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