I remember this time last year when I was constantly clicking my computer keyboard to get the latest update on the stock market. It was horrifying to watch its plummet, and I couldn't stop checking in to see how low it would go.
But earlier this year, the stock market found its bottom and started to rebound a little bit, providing a glimmer of hope that the economy was slowly getting better. Unfortunately, the same can't be said for the Thoroughbred auction business, which experienced a huge decline in the latter part of 2008 and has shown few signs of recovery. It's still looking for its bottom.
And where will that bottom be? We might start getting some idea of that during the upcoming fall mixed sales, which took such a big hit last year in the midst of the world economic meltdown. A slowdown in the 40% or more spiral downward in that sector of the market would be welcome, and with fewer horses in the huge Keeneland November sale, it could be a possibility. However, with more and more people talking about breeding fewer mares, there still is a lot of stock that nobody really wants that will be pouring into the market and that could prevent the stabilization process from beginning.
While the results of some recent European yearling sales have looked encouraging, probably the first good opportunity for the Thoroughbred market to show any sort of significant improvement in this country will come in the next round of juvenile auctions. Pinhookers, who can adjust much faster to market changes than breeders, were much less active as yearling buyers this year and that means there should be a lot fewer 2-year-olds offered for sale, bringing the supply back more in line with demand. Juveniles also are attractive to buyers interested in racing because they are much closer to making their first start than a yearling or a weanling, and that offers the possibility of a quicker return on investment.
The prospects for the yearling market aren't so bright because even if the economy continues to improve, breeders' expenses still will be substantial because the price of stud fees still was high in 2008, when the matings took place that produced to yearlings-to-be of 2010. There is little possibility that prices will rise enough to cover the expenses of most young horses by next summer.
Revenues for sale companies are sure to fall. While we focus on such statistics as the average and median prices, sale companies' income rises and falls based on rise and fall of their auctions' grosses. With the commercial marketplace in the process of contracting, most auctions will be smaller next year and that is not good news for the sale companies.
Overall, 2010 will be another difficult year, and for most commercial breeders, 2011 will provide their first real opportunity to see a reversal in their fortunes - provided the economy doesn't go into another nosedive and Thoroughbred purses and handle stop falling, too. Stallion managers made big cuts in stud fees for 2009 and those horses will come to market as yearlings in 2011. Another wave of stud fee reductions is almost assured for 2010, giving breeders even more opportunity to turn a profit in 2012.