Keeneland Forecast: Average Up, Gross Receipts Down
Thoroughbred breeders will be on pins and needles these next two weeks as they bring their 2011 foal crop to the most important auction place they know: the Keeneland September yearling sale.
A single Book 1 select session that has 132 horses catalogued begins at 4 p.m. Monday, followed by three sessions Tuesday-Thursday comprising Book 2 and offering 915 yearlings. Those sessions begin at 11 a.m.
Friday will be an off day, followed by seven consecutive days, from Saturday, Sept. 15, through Friday, Sept. 21.
This much we know. The all-time record for gross receipts – $399,791,800, established in 2006 – will not be in jeopardy. It's also a longshot that this year's results will threaten the record September sale average yearling price of $112,427 or the record median of $45,000, also set in 2006.
Bloodstock prices were negatively affected when the global economic crisis hit midway through the 2008 September sale, and while there have been signs of recovery and more favorable conditions for breeders (mainly through reduced stud fees), this is not the same market that existed five years ago.
Having said that, where will this year's sale wind up in comparison to 2011, when 2,921 yearlings sold for $223,487,800, an average of $76,511 and median of $30,000?
For starters, the 2012 catalogue is 16.5% smaller than last year's, with 3,604 yearlings entered to sell. By the time the outs and buy-backs are factored in, we project 2,378 yearlings will sell this year. That would be the lowest number sold since 1989. The difference between now and then, however, is the 1988 foal crop totaled 49,221, nearly twice the size of the 25,500 reported for 2011.
The assumption here is that the biggest reduction in foals comes at the bottom, from unproductive stallions and non-commercial mares that have been taken out of the reproduction chain. That addition by subtraction suggests the typical yearling to sell in 2012 is of somewhat higher quality than those produced when the foal crops were in the 32,000-38,000 range in the first decade of the 21st Century.
How much more they may be worth is entirely up to buyers.
An overall increase in average of 10.5% at this year's Keeneland sale seems well within reach. If that occurs, the September average will wind up at about $84,500, significantly better than the last three years but still shy of the $90,988 average in 2009 when the global economic meltdown began.
At that average price, and with the projected 2,378 yearlings selling, Keeneland September's gross receipts should be right at about $200 million. That's half the revenue the September market generated in 2006, but it's above where we were in 2009 and 2010, with fewer horses contributing to higher revenue at significantly reduced production costs.
That's not an entirely bad scenario.