In a response to yesterday’s post regarding the November sale as a marker of the bottom of the recession, “Trapped down on the Rail” disagreed. “Trapped” wrote that “I was watching the last day and for every one horse sold there were five or six scratches and a couple of RNAs.” (Read the complete response here.)
Now, I’ve no generic dislike of hyperbole. Every horse sale needs a little, but “Trapped” has stepped in a hole here.
While the last day at Keeneland November resembled the last day of most long sales, they were doing quite a bit better than selling one out of every seven or eight horses. Keeneland cataloged 294 horses for the final day of the November sale. Of those, 186 went through the ring (63.26 percent), with 55 RNAs and 131 sold (44.58 percent of the horses cataloged).
A broad indicator of the entire November market is the median price, which was exactly the same as last year. I found that statistic absolutely stunning because it indicates that the center of the market is in the same place as a year ago.
Part of the increasing stability in the marketplace is due to an improvement in confidence. Keeneland’s director of sales Geoffrey Russell said that “Overbrook gave confidence to the market because they sold without reserve. Buyers and sellers felt it was a baseline figure for appraising their horses. Straight market forces were in place and gave everyone a solid base on which to make their decisions.”
More statistics from Keeneland: Total receipts for the 13-day auction, held November 10-22, were $159,727,800, down 13.92 percent from $185,552,300 grossed during last year’s 15-day sale. Average price of $57,477 decreased 6.48 percent from $61,462 reported in 2008. The median of $20,000 remained unchanged from last year. A total of 2,779 horses sold, compared to 3,019 a year ago, an 8 percent decline that represented most of the loss in gross returns.
Well, Frank, I do respect your point of view. You have been around long enough to see some market cycles in your time. I have too and I have to continue to disagree about the tone of this sale, especially that final day. This from the DRF this morning regarding that last day of the sale: “The final Keeneland November session on Sunday saw gross fall 64 percent with 131 horses sold, as compared with 242 in 2008. The average price was $6,134, down 34 percent, and the $2,700 median was 49 percent lower. Sellers at that level this year were less willing to let their horses go than were their early-selling counterparts: The 2009 final session’s buyback rate climbed from 18 percent last year to 30 percent.” Not in the public record yet is how many of those buyers will pay their bills!
Anyway, these encouraging statistics you cite for the sale overall were substantially skewed by the Overbrook dispersal, which, hopefully, will not recur under a different name next November. Take out Overbrook and it was a lousy sale, no matter how clever be the writers of the Keeneland press release. To me these dismal figures are not a cause for celebration, but a portend of things to come as farms and breeders struggle to meet debts incurred when the market was much higher. (As a sign of the times, I had a firm call me the other day offering to collect any farm debts outstanding. A first!)
We have been spoiled over the past few years by the bidding battles between Coolmore and Dubai. The Irish breeding industry, if one believes the media reports, is in crisis, as are the financials of Dubai. One would assume that we can look less to those major driving forces at least in the immediate future and that will cause downsizing throughout the Bluegrass, one would imagine.
I would submit that some of the money sloshing around this sale was the residue of those past bidding battles. High prices brought a couple of years ago emboldened bidders at this sale to believe they were getting ‘bargains.’ I hope they are right. I fear they are not.
As for the health of the racing industry in this country which provides demand all the way down the line, well, it is positively weak, to say the least. Purses are being cut. Tracks are closing. One does not see an end to the bad news. And there does not seem any ready help from overseas either. Even Australia, in the midst of a resources boom, is worried for its racing industry’s outlook.
In the case of the vulnerable major bidders, the financial hardship facing many breeders in States such as Kentucky, Ohio and Maryland and the contraction in the local track industry, all these factors will have a negative effect some months down the way.
As I say, I hope you have the right spin, Frank, and that I am blowing smoke, but I suspect that this is more 1928 than 1933.
It seems to me that the median (as well as the average and buyback rates) were propped up almost exclusively because of the Overbrook dispersal. All the stats seemed to drop precipitously–and in line with previous auctions this year –after the Overbrook consignments were done. So, at least in my opinion, any confidence from the final numbers rings false.
Greg,
The Overbrook horses accounted for only 148 animals and, with nearly 2,800 horses sold, had no effect on the median number. Not even a blip.
The overall stability of the market (comparing the last-day stats this year with the last-day numbers a year ago) was a surprise. I expected the market to be much worse than this.
Aside from the massive influx of export spending, the second week’s demand was driven notably by domestic buyers looking to bag bargains.
Black Friday came early for Keeneland, eh?
Frank.