Mulligan on the Market: Cautiously Optimistic

Leprechaun Racing's Mike Mulligan, the president of the National Association of Two-Year-Old Consignors, talked about his outlook for the upcoming juvenile selling season and the pinhooking business recently with The Blood-Horse. Read what he had to say:


The Blood-Horse: How do you think this year's juvenile auctions will perform in this challenging economic climate?

Mulligan: "I think there certainly is a positive outlook from a standpoint that horses that are perceived to have some quality are going to still be rewarded, but not at the levels they once were. The $200,000 and north range -- those horses that are showing that sort of value -- will probably be just fine. While the elite horses might not hit the levels that they hit in years past, I think they are going to be very desirable. What we've seen in the mixed sale market is that the weanlings that were superstars or were outstanding horses sold very well. Whatever horse was in the top 10% still did fine.

"We are cautiously optimistic. The first two select sales (the Ocala Breeders' Sales Co. February auction and the Fasig-Tipton Florida auction) we feel like are going to be well attended. There are going to be nice horses there, so we feel pretty good about them. We're making a big effort to make these sales successful because we think it's important for the industry and for all of us.

"At the (Ocala Breeders' Sales Co.) April and (Fasig-Tipton) Timonium (open sales), I think those horses that used to bring $20,000 might bring $10,000 or $7,000. The horse that used to bring $7,000 might not have a buyer or bring $1,000. From that standpoint, I think the market will be difficult. But in April, the top 30 or 40 horses of every day, I think, are going to be fine."


The yearling market was down last year. Did that give pinhookers a break on prices?

"Every year we've kind of had to get a little bit more particular and less forgiving on the physical horse. Also, in August and September, you had to have the feeling that the economy -- which certainly wasn't as distressed as it was in November -- was going to impact the $50,000 to $150,000 2-year-old buyer. So it was hard for us to go buy a $20,000 or 30,000 yearling hoping to take it to market and get $75,000 when we felt like that market might be a little soft.

"As a general rule, most pinhookers probably have fewer horses but more quality. It was very tough to acquire nice horses, particularly in September. The horses that were perceived to be horses that we could use to resell were really hard to buy. Our standards were up a little bit, because we felt like our buyers' standards were going to be up a little bit. Those horses were expensive.

"We would all like to be able to buy $30,000 horses and have a lot buyers in the $75,000 to $100,000 range for those horses. But I think that buyer is a little cautious right now, so we kind of got away from those horses, which hurt the middle market for yearlings."


What if the juvenile auctions are down as much as the mixed sales were?

"It will be unfortunate if the 2-year-old sales are down 40% or 50% because then it's really an issue for all of us. If the pinhookers and everybody else who invests in yearlings to go to 2-year-old sales are left with a not-so-profitable year and not as much money to bring to the market for the next year, then that's going to be tough on all of us.

"For example, in just our pinhooking operation, every year we are going to look at about 5,000 yearlings. We're going to ‘short list' what we believe to be the top 10% of those horses, which is going to be 500, and we are going to vet those 500 horses.  We'll probably lose about 15% or 20% (because of veterinary issues), so we're going to bid on 400 horses to buy 40, and that's a lot of activity in the yearling marketplace. It's not as much the horses that we actually buy, but it's the underbidding and the activity and the interest we show in the horses that we don't actually acquire that helps the yearling market stay stable. It (the success of the juvenile auctions) could be a key factor in the success of yearling sales in 2009."

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