A Time to Replenish for Breeders and Sellers

Where are we in the recovery phase of the Thoroughbred marketplace? According to Bayne Welker, vice president of sales for Fasig-Tipton, we are in the replenishment period of the process.

"What you see in the Thoroughbred industry is that when things are really good, people jump in with both feet, so there is an excess on that side," he said. "When things start to get bad, people really jerk back, so when the pendulum starts to swing back the other way, you've seen a bigger pullback than might have been necessary. It just seems to be how those shifts work in his industry."

During the mixed sales held during the fall and winter, "people were realizing they're more comfortable with the situation and they saw there was going to be a void (with the downturn in the size of foal crops in recent years)," Welker said. As a result, they began buying breeding stock.

"We saw people who just needed to replace mares or supplement their (smaller) mare portfolios," Welker said.

Horsemen also saw a void when looking ahead to the 2012 yearling sales and that made weanlings and short yearlings hot commodities. The thought process, according to Welker went this way: " ‘OK, I'm not breeding as many horses and I've got ‘X' number of mare out of production. And here's my (smaller) yearling crop for 2011. I'm going to go out and supplement that by buying a few foals.' Then people started landing on the same horses and those horses became very difficult to buy, creating a very vibrant market for weanlings and short yearlings."

Should prices rise at the yearling auctions - and with supply more in line with demand they should -- the replenishment process will continue when the mixed sales roll around again later this year.

The Fasig-Tipton Kentucky winter sale closed out the 2011-2012 mixed auction season Feb. 6. It results included a gross that rose 63.1% and an average price that increased 10.5% from the statistics for the 2011 edition of the sale. The median price grew 5.3%.

Does that mean the bad times are over? Not necessarily. The shakeout will take awhile. There are still people who have been able to survive so far that have built up a lot of debt and some won't be able to pay off what they owe fast enough to suit creditors.

Interestingly, one stallion farm in New York worked out arrangements in which they got the rights to share in future breeders' awards from some horsemen who couldn't afford to pay for the stud fees they used to breed their stock. In essence, the farm became a co-breeder of the foals that were produced. When those foals grow up and start racing, this farm will be able to recoup a portion of its money from a New York program that has gotten a lot more lucrative thanks to the opening of a casino at Aqueduct.

That's one little ray of hope shining down from a financial sky still full of dark clouds.

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