Numbers Down, Energy Up at Keeneland

The final figures ultimately were down, but by most accounts, the 2016 Keeneland September Yearling Sale, which wrapped a 13-session run Sunday in Lexington, felt like a step forward for a marketplace still defined by its polarity. At the close of selling Sunday, 2,792 horses sold for gross receipts of $272,890,500. That resulted in an average of $97,740 that was down 4.7% from last year's average of $102,549. The 2016 median was $40,000–off 20% from 2015. The cumulative RNA rate was 26.5%. It was 24.2% in 2015.

“All the people I've talked to, both consignors and buyers, have indicated it was a strong sale,” said Keeneland Director of Sales Geoffrey Russell. “It's always a good sign when the buyers are saying they're having a hard time buying, and sellers are saying they're having a hard time selling.”

Bloodstock Marette Farrell agreed.

“It was far stronger than I expected,” she said. “And I think it got stronger as the sale went on, which was great for the consignors and breeders, and not so great for us buyers.”

Said Andrew Cary from Select Sales, “It's been surprisingly good. It was a lot better than we anticipated coming in. All in all, we're very pleased. It was a little soft in spots early in the sale, particularly in Books 1 and 2, but Books 3, 4, and 5 were very strong. Overall, good horses sold well.”

There were reasons to be cautious heading into the world's largest yearling auction. The first two major yearling sales of the year, Fasig-Tipton's July and Saratoga auctions, saw declines in both average and median, and there were weak spots for middle-market horses at the juvenile-in-training auctions this spring.

But to the surprise of many, the strongest segment of Keeneland September was for that middle-market horse that makes up the bread and butter of the six-book auction.

“I think the industry in general was apprehensive about the middle market,” said Russell. “Everybody was content with the upper-middle and upper segments of the market, but it was Books 3, 4 and 5 that they were worried about. But the sale started off strong, and continued strong all the way through. Early on, the increase in $500,000+ horses from this year to last year was very impressive. Then when we got into the second week, after a successful Book 1 and 2, and that part of the market seemed vibrant and strong, as well. The amount of buyers we had here was incredible.”

Toping the sale was the $3-million Scat Daddy half-brother to champion Beholder and the successful young sire Into Mischief who sold to M.V. Magnier. The colt was bred by Clarkland Farm, as was consigned by the Mitchell family's operation as hip 454.

The colt was one of nine horses to sell for $1 million or more at September. Last year, 11 horses reached the seven-figure mark, led by a $2.1 million Tapit–Silver Colors colt.

If that metric remained relatively static, the number of horses selling from between $500,000 and $999,000 increased significantly in 2016. There were a total of 84 horses that fell in that range, compared to 58 a year ago.

Another arbitrary, if not insignificant, range–$250,000 to $499,000–yielded different results. There were 209 horses that fell within those parameters in 2016; last year, there were 252. In yet another range–those selling between $100,000 to $249,999–a similar story: 519 in 2016 vs. 579 in 2015.

But those numbers didn't tell the whole story, as many buyers felt the going was especially tough landing the horses at the tops of their lists.

“At every level, all the way through the sale, the good ones filtered up, and those horses were found,” said Farrell. “Even through Book 5, things were very strong, and it really only softened up the last two days of the sale. Our sweet spot has always been the $40,000 horse, but I can't find the same quality of horse at that point anymore. You have to pay a bit more now.”

Leading the buying bench at September was Sheikh Hamdan's Shadwell Estate Company, which purchased 15 head for $10,750,000, good for an average of $716,667. Bloodstock agent Mike Ryan was the sale's second-leading buyer, with 29 yearlings purchased for $6,525,000, an average of $225,000.

Joining the usual suspects on the leading buyers list was Winchell Thoroughbreds, which signed for 17 horses for $3.4 million ($200,000 average). By contrast, over the last three years combined, the Winchell name appeared on the docket just five times.

“We also saw buyers from China [making an impact],” said Russell. “China Horse Club, with their relationship with WinStar Farm, they were very strong. And there was a new buyer from Australia [Aquis Farm's Hong Kong-based Tony Fung] who was very strong in Book 1.”

Russell added, “Keeneland looks at itself as the marketing arm of the Thoroughbred industry, and the work we do 52 weeks of the year yields dividends. You could see that in the last few years, and especially this year, in the second week of the sale. We spend a lot of time on it, and are committed to doing it. It's good to see people from the four corners of the world here. And we made a real effort to get more people here from the regional markets in the U.S., particularly the Southwest, and that reaps rewards, too.”

One buyer who was relatively quiet, at least by his own historical standards, was John Ferguson. The Darley rep signed for just five yearlings. They weren't minor purchases, however: at a gross of $2,245,000 million, those five averaged $449,000. Ferguson was the leading buyer at September in both 2015 (15 bought for $6.3 million; $420,000 average) and 2014 (22 bought for $7,880,000; $358,182 average).

Two sires again dominated the top end of the market. Gainesway's Tapit had 31 sell for $19,835,000, an average of $639,839. Claiborne's War Front had 19 sell for $12,045,000, an average of $633,947. Together, they combined for 1.8% of the yearlings sold at September, but 11.7% of gross receipts.

“War Front and Tapit have been at the forefront for the last few years, and they're sires that did it the hard way,” said Russell. “It was the success of their progeny on the racetrack that's been transferred into the sales ring.”

Taylor Made Sales was, once again, the leading consignor at September, with 282 head sold for $32,899,300. Taylor Made-sold horses averaged $116,664.

One point of debate among buyers, consignors and sale officials was a familiar one: the format of Book 1. September was in its second year of the three-day Book 1 format, which followed a four-day Book 1 format in 2014. In previous years, evening sessions were experimented with.

“It's hard to figure out what to do,” said Woodford Thoroughbreds' Matt Lyons. “Every year we say the same thing–what are we going to do with Book 1? But there was a lot of downtime this year, and people were looking for stuff to do. They wanted to just rock on. I heard a lot of people say there shouldn't be a break [a dark day]–let's just keep going. But I don't know what the answer is.”

Cary echoed those sentiments. “It's hard–they've tried a variety of formats,” he said. “People had a lot of time to look, and there weren't 600 legitimate Book 1 horses. So the ones that aren't quite at that elite level are going to be exposed, because there's no one there to pounce on them.”

What They're Saying…

Allaire Ryan, Lane's End:

“For us, it started off slow and then picked up. I don't know if was the luck of the draw as far as how they were cataloged, but the last day of Book 1 was the strongest for us. And Books 3 and 4 were great. There was a high demand for physicals, and during Book 3, there was definitely a sense of urgency. Both pinhookers and end-users were still really active at that stage. We'd take horses up there with a certain appraisal on them, and they'd bring three times as much. So I think [Fasig-Tipton] October should be pretty strong, as well, because a lot of people didn't get their orders filled by Book 4 and they weren't quite liking what they saw in Book 5. The 2-year-old guys, in particular, would come to me and say, 'I can't buy a horse off you guys, it's so strong.' So I think we'll see them back in October.”

Matt Lyons, Woodford Thoroughbreds:

“Overall, it was a pretty steady sale. We had some good results in Book 1, and overall we're pleased. It started off a little shaky. People were worried about how it was going to go, but it seemed to gain momentum. If you had the right horse who jumped through all the hoops–which wasn't easy to have–you got paid plenty. But then, horses by sires who were perceived to be doing not as well right now, it was tough. You got paid extra for the really good ones, and the rest of them, it was hard to find homes for. There does seem to be a ceiling on the top, however. You see these groups partnering up and buying horses together, versus bidding against each other like they used to. As a breeder, you hate to see that happen [laughs]. But that's the world we're in today.”