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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