More September Yearling Profits, But A Lot Still Don't Make Money

You can spin the profitability results for the Keeneland September yearling sale two ways. You can say, "Wow, commercial breeders are making more money, so that's a good thing." Or you can say, "Damn, it may be getting better, but how can a lot of these people hack it financially?"

The Blood-Horse analyzes the results of yearling auctions taking into account the cost for stud fees, the cost to raise the young horses produced, and the sale company's commission.

For the entire September auction, 28% of the horses offered, only about a quarter, were profitable. However, the figure was up from 20%  (a fifth) in 2011. The price to stud fee ratio was 2.60, up from 1.94 last year.

For the select portion of the September auction, which was one session this year, 52% of the horses offered were profitable. Last year, when there were two select sessions, 46% of the horses were profitable.

Falling stud fees combined with rising sale prices contributed to the improvements.

For the entire auction, the average stud fee paid to produce the horses was $31,860, which was down 14.9% from 2011. The average price the horses sold for in September was $87,354, up 14.2% from last year.

For the select portion, the average stud fee was $85,624, which was down 8.9%. The average yearling sale price was $403,867, up 14.3%.

Yes, there were a lot of smiles on the faces of consignors. But when they sat down and really looked at the numbers, you have to think their conclusion was that breeding horses and making money by selling them as yearlings is still quite a daunting challenge.


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Layton Register

Mr. Tony Morris writes in the April 2012 issue of the Thoroughbred Owner and Breeder, "Have America’s owners and breeders not noticed that Europeans do not flock to Stateside sales in great numbers any more? Are they unaware that the rest of the world is suspicious about the value of the form in Graded events conducted under a permissive drug regime?" The peak of the select yearling market in the U.S. was arguably 1984 when the top 26 highest priced yearlings in the U.S. grossed $85,800,000. This was likely driven by 11 of Timeform’s 27 highest rated three-year-old horses in 1984 being North American-bred. Of Timeform’s 25 highest rated three-year-olds last year that raced primarily in Europe, only four of the horses were bred in North America. Of the four, Dream Ahead was sired by Diktat, a European-based stallion. Last year in the U.S., the top 28 highest priced yearlings grossed $24,500,000. In 1984, Keeneland’s sales yearlings grossed $240,411,300. In 2011, they grossed $223,487,800. The yearlings that sold at England’s Tattersalls in 1984 grossed 36,545,600 guineas. In 2011, they grossed 78,783,000 guineas. The reasons North American-bred horses have lost value may have a little to do with general economic conditions, casino gaming, the tax treatment of horses, and the political climate in Washington, D.C., but it has much to do with how North American Thoroughbred racing is organized and conducted, especially in regard to race-day medication.

29 Sep 2012 6:58 AM

Mr. Register:

I beg to differ. The main reason why the Europeans, and to some degree, the Arabs, are less smitten with our yearlings is the shift (through the years) in relative pedigree strength from here to Europe. In decades past, our sheer "pedigree power" was often enough to defeat them at their own game-turf (often at distances), despite the fact that even then ours were primarily bred for dirt/shorter. The erosion of our pedigree power (stallions/broodmares) came about through the decades long cherry-picking by foreign interests of many of our best broodmares and yearlings, the demise of a majority of our most elite breeding-racing operations, and perhaps to a lesser degree, the increased commercial mentality in the US. Our more recent emphasis on lucrative state-bred breeding programs also contributes to a dilution of genetic strength. Now that our decreased competitiveness has become more apparent, some have chosen to mistakenly focus on an area in which we also somewhat differ with the "rest of the world"-race-day meds-,jumping to the knee-jerk, superficial cause/effect conclusion.

01 Oct 2012 12:22 PM

At the higher end, the quality of our breeding stock, and consequently our racing stock has fallen off. It's causes are unrelated to the "drug culture" which is, in reality, essentially world-wide.  

01 Oct 2012 5:26 PM

Sceptre... wrong again.  American thoroughbreds are the chemical racehorse. The Europeans bred clean the Northern Dancers they brought at auction, the result the grandsons and granddaughters based outside the US have thrived, the US racehorse has become a fragile junkie.  Sunlight is the best disinfectant to flush those out into the open who support racing horses on drugs when they should not be in the game at all.  America is the only global jurisdiction who trains and races horses on drugs.  Frog Juice.  You couldnt make it up.  No one in UK or France even trains on the garbage Americans put in their horses.  Its just some people such as Sceptre project their own intentions on others.

03 Oct 2012 9:34 AM

Only the in the US will you find the chemical racehorse.  Therein lie your answer.  The grandsons and granddaughters of Northern Dancer who were bred clean in Europe have thrived, the same bloodlines have collapsed in the US due to all the stimulants and painkillers getting pumped through the barns. No one else races or trains on syringes.  Its all down to a perspective.  The Rest of the World simply doesnt believe in a level playing field and what is best for the horse.  Frog Juice.... you couldnt make it up.

03 Oct 2012 9:38 AM
Layton Register

It's hard for me to describe my reaction to drugs as knee-jerk and superficial when I consider the vet bills I've paid for my horses in training in Europe over the years compared to what I've paid for the horses I've had in training in North America. There is no doubt in my mind that the dependence North American trainers have on race-day medication has affected the class and quality of horses being bred in North America, and thus significantly decreasing their value.

03 Oct 2012 11:26 AM

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