Tag: Book 1

Analysis: Declines At Keeneland September Came From The Top Down

Given the amount of uncertainty surrounding the world's economy, and the microcosm of it that is the Thoroughbred marketplace, the 2020 renewal of the Keeneland September Yearling Sale had the widest range of plausible outcomes of any major North American sale in recent memory.

In a best-case scenario, the market hunkers down and keeps up the momentum that has repeatedly set records over the past decade, looking ahead to a future when the horses in the ring are running or breeding, and COVID-19 is hopefully in the books.

In a worst-case scenario, a marketplace already showing signs of being wobbly at the wheels before the pandemic gets abandoned by everyone but the most financially secure, and the bottom drops out before the sale even reaches its second week, bringing back that sinking feeling from the crash of the late 2000s.

What actually transpired was a little bit of both.

The numbers were down across the board, as expected, and someone seeking reasons for long-term concern would have no trouble finding them. The market was polarized to an even greater degree than the already fickle previous years, as evidenced by this year's higher buyback rate, and the overall number of horses sold versus the number cataloged.

However, that polarization also meant the pockets of the market where buyers retreated remained solid-to-strong. The number of seven-figure horses (15) was still the fourth-highest since the bottoming-out of 2010, and comments from both buyers and sellers noted that bidding remained competitive into the later books for the horses that were coveted by that section of the market. This wasn't a callback to the desperate times of the recession when nobody was spending money, but the people that have the money were spending it differently and more carefully.

If your horse had the right pedigree and physical for its spot in the catalog, chances were good it was met with a fair price. Anything less had some hard truths to face, and this dictated the narrative for the sale from the first session.

“I didn't really want to be right, but we expected the market to be down about 30 percent overall, and I think that's about what happened,” said Meg Levy of Bluewater Sales. “It seemed to be all or nothing. I saw more polarization than there has been. I saw big, special, physical colts tend to sell better than fillies overall. Even people with smaller budgets, the target has gotten a lot smaller as far as what everyone's looking for. Whether they have a million dollars or $100,000, they're looking for the same individual.”

This year's 12-day Keeneland September sale finished with 2,346 horses sold for revenues of $238,454,300, down 36 percent from last year's gross of $372,348,400 from 2,974 horses sold.The average and median sale prices were each down 19 percent to $101,643 and $37,000, respectively.

This year's gross marked the lowest return since 2012, when 1,362 yearlings sold for $226,667,500.

It was also the sharpest single-year decline in gross since the drop from 2008 to 2009, when revenues fell 39.6 percent, from $327,199,100 in 2008 to $198,055,200 the following year. The stock market crash of 2008 happened in the middle of that year's sale, and the full effect of the economic recession was felt the following year.

The bulk figures also took a hit in terms of the horses that sold and didn't sell. The RNA rate finished at 29 percent compared with 24 percent last year. Combining outs and RNAs, 42 percent of the horses cataloged in this year's sale did not change hands either in the ring or privately afterward. In 2019, that figure was 36 percent.

The attrition rate is often rather high in the later books, when sellers look at their non-commercial horses and decide to leave them on the farm. One thing that stood out about this year's sale was the “not sold” rate in the select Book 1. Of the 448 horses cataloged over the two-day portion, 49 percent of them were either scratched or didn't meet their reserve, with no private sale recorded thus far on the Keeneland website. Last year's first book, spanning three sessions, only saw 35 percent of its 569 cataloged offerings fail to change hands.

There are plenty of reasons for this shift in the upper marketplace, beyond the obvious ones surrounding the economy and the pandemic.

Sheikh Mohammed Al-Maktoum of Godolphin, a driver of commerce at the top of the market, was absent in person and on the buyer line at this year's sale. Shadwell Estate Co., owned by Sheikh Hamdan Al-Maktoum, was present, and it secured one seven-figure horse, but the operation did not buy with its usual high-end vigor seen in previous years.

Among the big-time buyers that remained, many elected to team up on big horses, instead of fighting amongst themselves. The $2-million sale-topper by Tapit was purchased by Eclipse Thoroughbred Partners, Robert LaPenta, Gainesway, and Winchell Thoroughbreds, while breeder Stonestreet Farm remained in for a piece after the sale. Earlier, the team of Mike Repole, St. Elias Stable, Gainesway, John Oxley, and Grandview went in together on a $1.2-million Curlin colt.

When a quintet of buyers who are typically reliable competitors from the $250,000-to-$1 million range pool their resources on one horse to the tune of $400,000 each for the $2-million topper – assuming the horse is divided evenly five ways – this leaves potential gaps a rung or two down the ladder on the buyer line. The aforementioned purchases alone turned 10 potential upper-level transactions into two.

This ripple effect was felt all the way into the middle books, when it came to how many hands were going up for horses, and whose hands they were.

“In years past, I might have been on six, seven, eight [horses] before I got one,” said bloodstock agent Marc Wampler, who started shopping in Book 3 for Pocket Aces Racing. “I was going up there and I knew I might not even get my hand up, but I'd eventually get something done. It was probably two or three horses this year.”

Wampler landed two first-crop yearlings for Pocket Aces at this year's Keeneland September sale for a total of $45,000. In previous years, he said either of his purchases could have commanded that amount on their own. With that being said, he felt he'd benefitted from a market that turned cold on a rapidly-expanding group of “have nots.” If there's competition, it will be fierce and deep-pocketed. If there's not, bargains are there to be had.

“On the nice ones, you've just got no hope on them,” he said. “We go up there with a budget, thinking we'll spend X-amount of dollars on certain horses, and we feel like the competition, they just don't even have a budget. They're just going to go get the horse. We all land on the same horses, and that's what we're up against. I've got a cap where other people have the mentality of, 'Whatever it costs, we're bringing it home.'”

Book 1 took some of the sale's steepest dives in terms of average and median sale prices, and that's significant given how much of the sale's overall returns are dictated by those opening sessions. However, the rank-and-file of the catalog held surprisingly steady.

Of the six sessions that comprise Books 4 through 6, four of them posted gains in average sale price and three showed increases in median sale price.

“The second week has been a lot stronger than I'd anticipated,” said Geoffrey Russell, Keeneland's director of sales operations. “I think Books 3, 4, and 5, even into 6, the market has held up well.”

Russell speculated the reason for the relatively solid mid-to-low-end market had to do with the intention of the purchase. A horse bought in the opening sessions is done with residual value in mind, eyeing big returns as a stallion or broodmare prospect that would be almost impossible to recoup strictly on the racetrack. With a lower entry point comes a lower threshold to make money.

On the other side of the transaction, blue-collar breeders and sellers might not have the means to hang on to a horse and race them if the price isn't right in the ring, forcing their hand to move the product and set a lower reserve, even if it's not at the margin they'd like.

“At a certain price, a horse has great value in its return on investment,” Russell said. “Racing is doing well, purse structures are doing well, so there is potential to get a good return. In the middle markets, they're really buying the product to race and get a return on the investment. I think at the moment, we can still do that on the racetrack.”

Even in that level of the market, though, the margin for error in the eyes of the buyer was slim, especially for the pinhook contingent. The group had to reload for whatever 2021 might bring after a 2020 juvenile sale calendar that saw myriad cancellations, postponements, and gnashed teeth due to COVID-19, while also getting into the mind of what a buyer in next year's murky climate might want.

“There's less money in circulation,” said Kip Elser of Kirkwood Stables. “The perceived top on any given day held up very well. It was a real struggle for some farmers to sell their crop, and it was as picky as the market has gotten. It was very difficult for pinhookers to buy horses that a couple years ago, you might have been able to take a little bit of a fault here and a fault there, but pinhookers have to buy looking at the next buyer's criteria, and that has narrowed the field again. There are plenty of good horses with a minor fault here or that that did not reach full value that will be successful racehorses.”

For many at the sale, it seemed as though success came on a case-by-case basis. The numbers were down, but there were victories in some unexpected places that carried at least a few of the defeats.

When the yearling market was watching the juvenile market try to navigate this summer's uncharted waters, anything on the spectrum of expectations for the fall seemed both far-flung and realistic. Even in a market as volatile as it's been in a decade, there was still a mild sense of relief that horses were being traded at all.

“I think if we knew now what we didn't know three weeks ago, that it's going to be off that amount, I think we would have signed up for it all day long,” said Zach Madden of Buckland Sales Agency. “Especially in June and July, when COVID was going nuts, and everything else going on just rolled into one. I don't know how everyone else feels, but I just feel fortunate to be over here, and not just pounding my head against the pavement.”

History has proven that the market is cyclical, and with such a sudden and unexpected shot across the bow like COVID-19 and its complications, it's hard to determine just what the ramifications of the past two weeks will be. A quick and effective vaccine and a steady economy might make this a brief hiccup, or it might be the tipping point for a full-blown market downturn regardless of the world's situation. Or, like this year's sale, it might be a little bit of it all.

Until there's a solid answer, most will remain in a holding pattern.

“I don't think pinhookers have as much money to spend or as much confidence in what next year's market is going to be,” Elser said. “I think if there was real confidence in next year's market, they would have found the money in some fashion, but I don't see brimming confidence in next year. I don't think anybody's predicting disaster, but I don't think people are predicting a big, huge rebound. I think we'll probably hit bottom and start incrementally growing again.”

The post Analysis: Declines At Keeneland September Came From The Top Down appeared first on Horse Racing News | Paulick Report.

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Veteran Horseman Beau Lane Still Pursuing a Dream

Beau Lane has been in the horse business for half a century. He came to Lexington 23 years ago with six broodmares in tow and $50 in his pocket. Not long after, three of those mares became stakes producers–a harbinger of things to come.

Since then, the veteran horseman has grown his band of breeding stock and now has 30 broodmares at his Woodline Farm near Paris.

While he’s never been able to sign tickets on million-dollar broodmares, he said he doesn’t find it necessary.

“I usually don’t spend over $40,000 for a mare. I don’t think you have to,” Lane said. “I’ve never been able to afford those $500,000 mares, but I’ve had to compete with them. I see the advantage of buying a hard-knocking race mare.”

This year, Beau Lane Bloodstock’s offered six yearlings for Book 1 at Keeneland September. While none approached the coveted seven-figure mark, for Lane it was a successful two days of sale.

His first yearling to go through the ring, a colt by Flatter bred by Lane in partnership, brought $330,000 from Ben Glass, on behalf of Gary and Mary West.

“This colt was about as nice of a Flatter that you’re ever going to see,” he said. “He had a way of moving that would catch your attention. A lot of people looked at him because they knew the family.”

The colt is out of the Smart Strike mare Abraqat, a daughter of dual Grade I winner Spun Sugar (Awesome Again). Lane picked up the mare in foal to Albertus Maximus at the 2016 Keeneland November Sale for $55,000.

“I thought she was a beautiful mare and I love the way she’s bred,” he recalled. “I thought she would bring more than she did.”

The mare had gone through the ring during the 11th of 13 sessions of the sale. Lane said he had not been planning on bidding that day.

While recounting the purchase, Lane nodded toward the back walking ring at Keeneland and said, “If you just wait up there until you see ‘that one,’ it doesn’t have to be the first day, the second day, or even the first week, but when you see that one walk up and you get that feeling, go for it. They’re the ones that will make you money.”

Hip 29 was easily the most expensive of the mare’s three foals Lane has led over to the sales thus far. The Albertus Maximus filly Abraqat was carrying at the time of her purchase made $20,000 here two years ago, while the mare’s colt by Carpe Diem fetched $65,000 last September.

During the second day of Book 1 this year, a yearling filly by First Samurai out of the unraced Unbridled’s Song mare Team Hansen sold for $250,000.

Lane purchased Team Hansen in 2014 at the Keeneland November Sale for $75,000. Two years ago, her Into Mischief filly brought $600,000, the highest-priced yearling Lane has ever sold, and last year, her Awesome Again filly brought $185,000.

Of this year’s First Samurai yearling purchased by Frankie Brothers as agent for Bruce Lunsford, Lane said, “Frankie trained First Samurai [for Lunsford and Lansdon Robbins III] and when we pulled her out he said, ‘Woah, she looks just like the old man.’ She was the real deal–a lot of presence, a lot of class. We knew she was going to be one of the top-selling First Samurai yearlings.”

The filly was the only representative for her sire in the first two books of the sale.

Lane said he prefers to match his mares to stallions that will complement the mare best, rather than always breeding to the traditional commercial sire.

“I spend a lot of time on it. I try to take a young mare to a proven horse when I can, but I will sometimes do the opposite if the pedigree fits,” he explained. “My son-in-law is always telling me I need to breed to more freshman sires because that’s where the market is. I will do that, but I have to see the types match and have the pedigree come together. If you can get on a stallion’s train, like Into Mischief, like Constitution, they will take you far and fast.”

On finding the right mares for his program, Lane said he relies on advice he received years ago from the late Marvin “Junior” Little of Newstead Farm in Virginia.

“Junior told me many years ago, ‘Beau, you can buy mares that aren’t stakes producers, but you’ve got to have a great family.’ So all the mares in our operation are from great families,” he said.

A Virginia-bred himself, Lane got his start in the horse world with show horses.

“I once had the national champion Appaloosa stallion,” he recalled. “I got started breeding Appaloosas and Quarter Horses. But then I found the best Quarter Horses I had were out of Thoroughbred mares. I just kept looking for better and better horses, and I think somebody that does that will end up with a Thoroughbred. The business has been awfully good to me. I’ve been very blessed that I’ve been around good horses and good people.”

For Lane, his greatest pride comes when people seek out horses from his consignment.

“We had a lady come by the other day shopping through Book 2 and she asked what we had,” he said. “When I told her we didn’t have anything, she said, ‘That’s a shame. I’d rather buy a horse from you than anybody because you raise good horses.’ So that always makes you feel good. We really take pride in the horses we raise. We try to be straight with people and we’ll tell them anything we know. We want to represent a good horse,” Lane added.

Beau Lane and wife Gail at their consignment at Keeneland | Katie Ritz

The Beau Lane Bloodstock consignment is a family affair. His daughter J.B. Orem can be found at the end of a shank throughout the day, while Lane’s wife Gail and son-in-law Michael assist with the many tasks of running the consignment. Before long, the next generation will be lending a hand.

“I have a grandson learning the business and I’m trying to keep him in it,” Lane said with a proud smile. “I feel there’s no better business in the world than the horse business.”

Even in the current climate, Lane said he has confidence in the horsemen and women that make up the industry.

“The way the market is going now, I think it’s going to correct itself if we don’t make it more difficult,” he said. “There are a lot of young people coming in that are very intelligent. I see a lot of people that started 15 or 20 years ago that have really sharpened their tools and have gotten really good at what they do. I’m tickled to death for them.”

He cautioned that the industry needs to do better in supporting the underdogs of the business.

“There’s a lot of really good horsemen that feed this industry,” he noted. “From what I can see, we have a tendency to make it harder for them. They have a right to enjoy this just as much as anybody because they work just as hard. To me, money should not qualify you to have a good horse.”

Lane has raised several graded stakes contenders, including dual GISW Carpe Diem (Giant’s Causeway) and this year’s talented undefeated juvenile Jackie’s Warrior (Maclean’s Music). But he’s still searching to find a top-class horse to race under his own banner. Luckily, he has a few prospects in the pipeline.

When his Gun Runner colt out of the Grade II-placed Blip n’The Bye (Tale of Ekati) did not meet his reserve and was led out unsold at $435,000 during Book 1, Lane said he was a bit relieved.

“I’ve had that family for four generations and I liked him so much from the time he was born. I really didn’t want to sell him so I put a high reserve on him,” he admitted. “We came within $5,000 of our reserve. But he’s one of the very nicest horses I’ve raised in the last 25 years. I don’t think I’m going to wait for the next one, so I want to keep him and race him.”

The 78-year-old horseman said he finds no place for himself in an “old folks home” until he has reached his ultimate goal.

“I came from a little red-clay farm in southern Virginia. I had a dream. I wanted to raise a really great horse. I’ve raised a lot of really good horses, but I still haven’t raised that great horse yet. I’m running out of time, but I’m getting closer.”

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Marlhill House Stud Starts New Website

A new website was launched by Marlhill House Stud on Wednesday. The site will be a comprehensive platform for buyers to learn about Marlhill House Stud yearlings in advance of the sales, including photos, conformation videos and pedigree information. To view the 10 Marlhill yearlings, split evenly between Tattersalls October Book 1 and Goffs Orby, go to www.marlhillhousestud.com.

“We have done our best to move with the times this year by bringing ourselves online with a new website and greater use of social media,” said Marlhill House Stud Manager Brian McConnon. “We hope that it might give those who are unable to attend the sales due to COVID-19, as much opportunity as possible to look at our yearlings. We are particularly excited about our group of horses heading to the sales this year and hope that our website will help to showcase them to the best of our ability.”

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