Juvenile Sales Offer Better Return for Buyers

By Nicole Sauer

Buyers at 2-year-olds in training sales have at least one distinct advantage over yearling buyers: they get to see the horses perform. As a result, 2-year-olds are typically sold at prices that more realistically reflect their potential racetrack performance (measured by earnings). Meanwhile, yearling prices can be inflated due to the premium placed on pedigree (bloodstock value).

From the 2005-07 foal crops at the major North American sales, 17,069 horses were sold as yearlings and 5,360 as 2-year-olds. Excluding unraced horses, each group had comparable average earnings: $66,926/starter for yearlings vs. $64,476/starter for 2-year-olds, a gap of only 3.7%. But there was a greater disparity in average sales price—yearlings averaged $80,663, 29% more than the 2-year-old average of $60,313.


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The rate of return (ROR) for each group suggests that 2-year-old buyers are more accurate in determining racetrack value. The ROR for sold yearlings from 2005-07 was -43%; the ROR for sold 2-year-olds was -6.1%, 37% better than the yearlings. The larger percentage of unraced horses from sold yearlings distorts the number slightly, but 2-year-olds still fared better when comparing the ROR of starters only: 6.9% for juveniles and -17% for yearlings.

In total, 43% of the 2-year-olds sold eventually earned back their purchase price compared to just 35% of yearlings.


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Listed below are the top five graded stakes winners by ROR for yearling and 2-year-old sales from the 2005-07 foal crops.

Yearling Sales:
Horse Sale Year Sale Price Earnings ROR
Blind Luck FTKJUL 2008 $11,000 $3,279,520 29,714%
Mine That Bird FTKOCT 2007 $9,500 $2,248,496 23,568%
Evening Jewel KEESEP 2008 $8,000 $1,221,399 15,167%
General Quarters KEESEP 2007 $20,000 $1,226,655 6,033%
Big Brown FTKOCT 2006 $60,000 $3,614,500 5,924%

2-Year-Old in Training Sales:
Horse Sale Year Sale Price Earnings ROR
Musical Romance OBSAPR 2009 $22,000 $1,681,885 7,545%
Haynesfield KEEAPR 2008 $20,000 $1,319,481 6,497%
Kara's Orientation KEEAPR 2009 $7,000 $455,127 6,402%
Secret Gypsy FTMMAY 2007 $10,000 $596,926 5,869%
Homeboykris OBSMAR 2009 $11,000 $457,109 4,056%

3 Comments

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sceptre

Another interesting piece...1st paragraph: I'd change "...potential racetrack performance..." to, potential racetrack earnings (or earning power). There is a difference and its consequence may, in part, be reflected in the eye-opening disparity between avg. yearling (despite a 3x + larger group) price vs avg. 2 yr. old price. Many of the higher priced yearlings are sold to export where, aside from Japan, the purses are often lower (than in the US), and with somewhat less opportunity to race (starts/career)...More importantly, perhaps, one could reach the potentially false conclusion that it is fiscally safer to purchase the 2 yr. old rather than the yearling- even granting the additional "carrying fees" from say the Sept. yearling until say an April 2 yr. old. Reason- there is a far greater withdrawal and buy-back rate seen with the 2 yr. olds. So, all else equal, a greater sale 2 yr. old demand should = a drop in both these rates/greater number of sold 2 yr. olds. Let's assume that the withdrawals and buy-backs are, as a group, more likely to have less (net(=another not calculated variable)) earning power. Such a drop could lower their edge...Granting there is some overlap; it's a bit surprising to see a higher avg. earnings for sale yearlings vs sale 2 yr. olds.

25 Mar 2014 4:17 PM
Machmer Hall

Big brown was sold as a 2 yr old in training and a yrl. You have him only on the yrl list

30 Mar 2014 8:25 AM
nsauer

Machmer Hall,

You are correct, Big Brown was sold as a 2-year-old at Keeneland April in 2007 for $190,000. However, his ROR based on 2-year-old sales price and racetrack earnings was not in the top 5 of 2-year-olds for this group of horses. His ROR was 1,802%, and he was ranked 20th by greatest ROR.

31 Mar 2014 8:10 AM

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