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Keeneland, Fasig-Tipton Lobbying For Overseas Buyers

Overseas buyers are an ever-increasing fixture of the American yearling sales. It is not only the big-spending Maktoum family and Coolmore partners who are vital to the health of the market; an international presence stimulates spending at all levels of trade, fueled by visitors from all across Europe-not least the pinhookers who have enjoyed so much success with their buys at the breeze-ups-and Asia, Australasia and the Middle East.

Global travel restrictions resulting from the COVID-19 pandemic have, naturally, caused some unrest in the minds of sellers as they put the finishing touches on their yearlings ahead of Fasig-Tipton’s Selected Yearling Showcase in Lexington on Sept. 9 and 10 and Keeneland’s September Yearling Sale from Sept. 13 to 25. Foreign nationals traveling from Europe-as well as Brazil, Iran and China– are currently not permitted to enter the U.S., but Keeneland Vice President and Chief Operating Officer Vince Gabbert said that Keeneland and Fasig-Tipton are together working with government officials on an effort to allow foreign buyers to gain entry for the sales. Gabbert said he is “cautiously optimistic” that they will reach an agreement.

“The way we’ve approached this has been a combination between what we’re seeing with the sports leagues and what we know from a business interest side,” Gabbert said. “We’ve been working very closely with homeland security and we’ve essentially engaged every person we can get a hold of to help us with this, from Congressman [Andy] Barr, who has been extremely helpful from the outset-Senator [Mitch] McConnell, Ambassador [Kelly] Craft and Commissioner [Ryan] Quarles through his relationships with the USDA and Secretary [Sonny] Perdue [of the USDA]. All of them have been really willing to help us and to foster these conversations with homeland security because there are specific waivers that we will have to fill out for our customers who want to travel to make sure they’re able to get over here. All of our conversations with them have been, ‘tell us what protocols you need us to follow for you to have confidence that we’re not going to create an issue, and we’ll do that.’ All of those folks have been extremely helpful, and each individual I’ve mentioned has assigned a specific staffer to our issue so we have specific folks in each of those offices that we’re working with to make sure we get as many people over here as possible.”

Gabbert said ensuring government has an understanding of the importance and economic impact of the Thoroughbred industry is a priority for the Keeneland staff even during normal times, and so the foundation was already laid.

“I feel good about the conversations we’ve had,” he said. “I feel really good about the effort that our government officials are putting in on our behalf. A lot of it is just working through that bureaucracy that just automatically exists within government. I’m cautiously optimistic; we feel like we have a good plan in place for the entirety of the sale and we’re working in concert with Fasig-Tipton as well so we have the same protocols in both places and we’re working together with them on this request as well, so this has been a joint request on behalf of both sales companies. We have an unprecedented partnership with how we’re working together and I feel good about the request and what we’ve put in place. We just have to continue to navigate it and make sure we’re talking to the right folks.”

While overseas visitors may be faced with quarantines upon returning to their home countries, Gabbert said that doesn’t seem to have dampened enthusiasm.

“A lot of our international buyers, especially the Europeans, have expressed a strong, strong interest in coming over here regardless of what happens when they get back,” he said. “We are very excited about the amount of enthusiasm that people are showing in wanting to be here. We’re doing everything we can and we’re fortunate there are still a number of countries that are not on that prohibition. Japan, Australia, and a number of the South American countries that are our markets as well, people are free to travel to and from. They may have different requirements when they return to their home countries, but we are going to do everything we can from a protocol standpoint and everything we can to provide a safe and secure facility so people can come over here with confidence and return home with confidence.”

Gabbert said at this stage that it doesn’t look as if visitors will be required to quarantine when arriving in Kentucky, but COVID testing may be a part of the process.

“We don’t have everything finalized but we’re working very closely with our local health department and both us and Fasig-Tipton are working very closely with local health professionals to make sure that we’re following all the recommendations from the CDC and the local health department,” he said. “Right now we would not anticipate any need for a quarantine or for people to isolate once they get here, but we are looking at what might be available from a testing standpoint, how we monitor that-our goal is to give everybody the confidence that they’re coming onto the grounds in a safe and secure manner, and what all does that entail? Testing is part of that, enforcing social distancing and requiring a mask, reducing capacity in the sales pavilion but still providing other opportunities for people to bid on horses; those are the things we’re working through.”

Gabbert acknowledged that the presence of overseas buyers is “extremely important” and that the Keeneland and Fasig-Tipton teams will continue to lobby for their presence and update their customers along the way.

“I can’t emphasize enough how much we need and want everybody that can get here to get here,” he said. “Especially when you look throughout the sale, each book essentially has a really different feel to it and it’s imperative that we maintain that strength and that buying bench throughout the entire sale, and the international presence is a tremendous part of that. We’re going to keep working on it until we get definition and we’ll be communicating out to our customers and if there is paperwork they have to fill out we’ll be in a spot to assist them to navigate that process.”

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Analysis: Fasig-Tipton Racing Age Sale Marked Latest Chapter Of Lengthy Zayat Stables Dispersal

The dismantling of Zayat Stables' equine stock in order to pay off a multi-million dollar trail of debt has spanned months of public and private transactions, and the latest stop on that road once again proved that the perception of value can vary wildly between a seller and the marketplace.

Six horses under Zayat ownership were offered Monday at the Fasig-Tipton July Horses of Racing Age Sale, bringing a combined $337,000.

The same group of six horses were valued at a combined $3.5 million in an assessment of owner Ahmed Zayat's equine holdings submitted to creditor MGG Investments in mid-December 2019 as a liquidation plan to pay off a $23-million loan and stave off a lawsuit. MGG ultimately filed suit in late January over allegations that Zayat had defaulted on the loan, and Zayat's equine operations were placed in the hands of a third-party receiver to maximize income for paying off creditors through racetrack earnings and liquidation of the stable.

A lot can happen in seven months to fluctuate the value of a Thoroughbred, and assigning valuation to a horse is far from an exact science, but bringing in 9.62 percent of assessed value through the sale ring is a remarkably wide gap in opinion.

In comparison, six Zayat horses were offered in February at this year's Fasig-Tipton Kentucky Winter Mixed Sale with an estimated value of $1.9 million, and just four of the six finished above reserve for a combined $366,000 – about 19 percent of the estimated total. One mare, offered in-foal to American Pharoah, accounted for $310,000 of that total amount.

Though the chasm between hopeful assessment and market reality for the July offerings was Grand Canyon-sized, the explanation for the far-flung differences goes far beyond the extremely generous valuations.

First, there is the issue of timing. One method of assessing value to a Thoroughbred is through income projection – basing their worth on their opportunities to achieve in the future as much as what they already have achieved.

This is the most apparent among the July offerings in Salow and Zyramid, a pair of colts who were 2-year-olds at the time of the assessment. Both colts are well-bred, meaning a stallion career would be easily attainable with a few graded stakes wins, especially on the Triple Crown trail or in the Triple Crown races themselves. Every 2-year-old in December is a potential lottery ticket with a few fortunate bounces, and their respective seven-figure values reflect that potential.

Fast-forward to July, and many of the doors that were open seven months ago are now closed, as many of the elite 3-year-old races have been run. Even with the Kentucky Derby and Preakness Stakes pushed back into the fall due to COVID-19, the opportunity to become a Triple Crown winner already left the station without either horse even in the gate for the race, and past form suggests a monumental jump in form would be needed to join the elite in their class.

Salow, a 3-year-old son of Distorted Humor, was ultimately the centerpiece of the Zayat slate at the July sale, going for $175,000 after winning on debut in a Gulfstream Park turf race on July 3. Zyramid, on the other hand, has been winless since last year's Saratoga meet and sold for $20,000, tied for the lowest of the group.

Though his value took a hit due to the opportunities that are no longer available to him, Salow was the rare horse in the Zayat dispersal to offer some semblance of blue sky on his resume, with his 2 3/4-length debut win.

This brings about the second point toward the price gap in the dispersal offerings – the horses didn't do much to help themselves in the time between the assessment and the sales.

None of the horses were stars before or after the December assessment, but just 27.6 percent of the six horses' combined $199,545 in career earnings at sale time came after the assessment. This is with two of the horses being unraced at the time of the valuation, and another two having raced just once. Four of the six entered the sale as maidens. Whether an assessor is basing their valuation on comparative value with other horses with similar resumes or by earning potential, the projection is going to take a dive as the spring rolls into summer.

This was most apparent in the case of Super Sol, a 5-year-old Awesome Again horse who was valued at $500,000 in the December assessment. It was a generous figure for a horse with no black type whose only start of 2019 came on Jan. 6, and he just made his 2020 debut during the recent Keeneland summer meet, where he finished last in an optional claiming race.

Working in his favor was a bit of back class. The horse won two races in a row in Southern California during his 3-year-old season, breaking his maiden by four lengths and taking a Los Alamitos Thoroughbred meet optional claimer by three lengths.

Super Sol went on to sell for $30,000.

Zyramid also had one of the longer resumes of the group, winning once and making 88 percent of his lifetime earnings before the December assessment. He was tried in the Grade 2 Saratoga Special Stakes and G3 Iroquois Stakes, but finished well off the board on both occasions. His 3-year-old season started with a distant third in an Oaklawn Park allowance, followed by far-back out-of-the-money tries at Oaklawn and Lone Star Park.

Salow was the only horse in the group to earn five figures post-assessment, making $24,000 for his maiden score. That victory alone made the colt the fourth-highest earner for the Zayat Stables operation in 2020.

Rounding out the group were Mony, Perlman, and Paynted, a trio of 4-year-old lifetime maidens who were valued from $300,000 to $400,000 in December, and sold at a high point of $60,000 (Mony) and a low of $20,000 (Paynted).

Mony, a son of Scat Daddy, has shown the most upside of the group. In addition to being a son of Scat Daddy, whose foals have become increasingly scarce and sought after following the sire's untimely death and the Triple Crown success of son Justify, Mony most recently finished a gaining second in a Gulfstream turf maiden special weight on July 5.

One final factor that's important to note in the review of the dispersal against its original valuation is intent.

Several of the horses pointed for the July sale in the December assessment have since been sold privately, including River Boyne, who found new owners after winning the G2 San Gabriel Stakes in January. He was valued at $750,000 in the assessment, at which point, River Boyne had never won a graded stakes race.

There is a strong likelihood that the horses that were pointed toward the July sale and made it all the way to the ring were ones where attempts to move on from them privately were unsuccessful. In that case, the open market becomes the most efficient way to turn the horses into cash, even if it's for pennies on the dollar from where they were appraised.

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Letter to the Editor: Doug Cauthen

Doug Cauthen is the managing partner at Doug Cauthen Thoroughbred Management LLC.

As anyone not under a rock is noticing, COVID-19 hospitalizations and infections are on the rise across the country, and this tragedy is causing renewed shutdowns and concurrent economic damage to many businesses and families. As everyone is learning, a positive step towards avoiding rollbacks and future shutdowns is to wear a mask and socially distance, and to accept and follow protocols which are put in place to screen event attendees. In order to have a successful horse auction in Kentucky, the creation of effective safety protocols have been in the works for months, and after having recently attended the Fasig-Tipton HORA sale at their complex on Newtown Pike, I can enthusiastically endorse the sensible and practical protocols that were in place there. Temperatures were checked; names and numbers were recorded; health and travel questions were asked and answered; masks were required for attendance; and if you passed the test, wristbands were distributed–all in less than two minutes per car.

This was a great test run for everyone to experience in preparation for the September sales at both Fasig-Tipton and Keeneland. A key point every industry participant should consider as they, hopefully, support these protocols is that more buyers will attend our Kentucky sales and support our local economy when they know that it’s a safe environment. It’s not a political issue whether people should wear a mask, socially distance, and sanitize their hands–it’s an economic issue. A safer venue means more buyers will likely show up and spend more money, so kudos to Fasig-Tipton for getting it right! And I would be remiss for also not applauding the fact that Keeneland is collaborating to have similarly effective protocols in place for their September sale, and just completed a successful five-day meet that handled $63 million. Well done!

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Graded-Placed Juvenile County Final Tops Modified Fasig-Tipton July Horses Of Racing Age Sale

Live auction action returned to Kentucky on July 13 with a robust renewal of the Fasig-Tipton July Horses of Racing Age sale at Newtown Paddocks in Lexington.

Conducted as an open sale for the first time, the sale was modified to serve an industry that has been balancing limited racing and sales opportunities since March. All horses offered were on the sales grounds, and buyers had the option to bid in-person, on the phone, or via the new online auction tool.

Graded stakes-placed juvenile County Final topped the sale when sold for $475,000 to West Point Thoroughbreds, L.E.B., agent.

The gray or roan colt by Preakness Stakes winner Oxbow was consigned as Hip 166 by John Ennis Training, agent. The sale-topper broke his maiden on debut going 5 1/2 furlongs on the Churchill Downs turf on June 5, wiring a field of straight maidens to win by four lengths. He followed up that effort with a second-place finish in the Grade 3 Bashford Manor Stakes on June 27, this time going six furlongs on the Churchill Downs main track.

County Final earned $65,000 in his first two starts for owner-train John Ennis and owners Hayden Noriega, and 47 Roses LLC. The colt is a half-brother to two other winners out of the multiple stakes winning Tapit mare Tapajo, from the immediate family of Grade 1 winner Currency Swap.

Per Capita, a winning 4-year-old colt by Tapit, sold for $325,000 to Red Oak Stable, agent for Rick Sacco, to become the sale's second-most expensive offering.

Offered as Hip 85 by Gainesway, agent, Per Capita was a winner last out, breaking his maiden going a mile on the dirt at Churchill Downs on May 24. The colt won once in four starts for owners Peter M. Brant and Gainesway Stable and trainer Chad Brown, earning $65,150.

Per Capita is out of the graded stakes winning Orientate mare Successful Outlook, making him a half-brother to Grade 1 winner Sweet Lulu and a full brother to Grade 2 winner Anchor Down and Grade 3 winner Iron Fist.

The session's top filly came in the form of recent G3 Indiana Oaks runner-up Impeccable Style, who was purchased for $275,000 by Bradley Thoroughbreds, agent.

The 3-year-old winning daughter of Uncle Mo was offered as Hip 53 by Gainesway. The dark bay or brown filly broke her maiden on her second try last year at two at Churchill Downs and was most recently second in the Indiana Oaks on July 8 at Indiana Grand. Impeccable Style has won or placed in four of six career starts to date for Gainesway Stable, Catalyst Stable, Paul McInnis, Patty Slevin, and Magdalena Racing and trainer Kenny McPeek, with earnings of $134,912.

Overall, 81 horses changed hands for a total of $5,072,000. The average was $62,617 and the median was $30,000.

Results are available online.

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