Tough Times - by Dan Liebman

Disaster. Brutal. Blood bath. Just a few of the many descriptive words being used by breeders to describe the Keeneland November breeding stock sale, which at this writing still had a week to run.

In light of the recessive global economy, everyone thought the sale, the largest of its kind in the world, would be down. But a drop of 10-20% was expected, not 46% in gross, 37% in average, and 31% in median through seven of 15 days. No one saw this coming.

Generally, the spring juvenile selling season sets the tone for the yearling sales that are held during the summer and early fall. The yearling auctions provide a read for what will happen at the fall and winter mixed sales.

The biggest barometer of all is the Keeneland September yearling sale, which saw a significant drop in gross of $57,019,500. Still, the 3,605 yearlings sold for $327,999,100, the fourth-highest total in the auction’s history. While the gross was down 14.8%, the average ($90,984) decreased 10.2% and the median ($37,000) dropped 11.9%.

Despite those numbers, most agreed the September sale held up as well as could be expected considering the change in the value of the dollar, struggles on Wall Street, and a myriad of negative headlines describing the current state of the Thoroughbred industry.

A downturn in November mirroring September looked inevitable. Instead, the bottom seems to have dropped out of the Thoroughbred market.

Much has happened in the weeks between the end of the September sale and start of the November auction: The Dow Jones Industrial Average lost more than 20% in the first seven trading days of October; Congress approved a $700-billion bailout to add liquidity to credit markets; 19 banks have failed in the United States so far this year; and the jobless rate is at a 14-year high.

Closer to home, wagering on horse racing declined again in the third quarter of the year; disputes between racetrack management and horsemen over advance deposit wagering have caused purses to be cut and horse players to become disillusioned; and now, the value of bloodstock is dropping.

At the November sale, much like at the final Keeneland July yearling sale in 2002, many breeders decided to withdraw their horses once the sale had started when they realized the state of the market. This was deemed a better result than sending a horse through the ring and buying it back, a fact buyers would see if the same horse was put back through the ring a year from now.

In those cases, breeders don’t have to sell, an enviable position to be in. So, hoping the global economy will begin to show improvement in 2009, they are willing to wait another year before selling a mare, or will sell a yearling rather than a weanling.

Those, however, who need to take some cash off the table are taking less than they thought, leaving them in the same predicament as many businessmen in other professions: facing tough times.

One breeder at the Keeneland November sale said one of the reasons the sale is down more than anticipated is that the equine lending departments of financial institutions are not as willing to help those in the Thoroughbred business.

Current market conditions have caught many farm owners and breeders in a squeeze play. In a time where the value of bloodstock is coming down—rather drastically at the present moment—the cost of farm management is continuing to rise.

Watching the prices fall at the sale, breeders are at least heartened to see that most stud fees are being adjusted downward. However, many of these same fees should have been lowered earlier, and some of those that have come down need to come down even more. Still, it will be more affordable to breed a mare to most stallions in 2009, and one would think a breeder’s imagination can be put to good use when negotiating deals and terms on stud fees.

Thoroughbred breeders are a resilient group. In light of the results of the November sale, that’s a good thing. 


Leave a Comment:


Plus , in addition , what effect will President Elect Obama's tax plan have ( those making $250,000 and up ) ?

11 Nov 2008 6:18 PM

Hello Dan...There was an point in time when not only the racing industry was impervious to the economic meltdowns and Wall Streets gyrations as well as the overall gaming industry..however it should be no surprise to anyway that the thoroughbred industry is every aspect to not only the country's catharsis but the global economy as well as its all  interconnected..That always wasn't the case..however foreign markets are as vital to our economy today as we are to them...Its simply an trickle down effect and the breeding industry is no different...Irrespective of how deep ones pockets such uncertain times...people are behaving rather cautiously..and rightfully one is spending w/reckless abandon..The gleaming Borgota Casino Hotel in Atlantic City just jettisoned off 400 employees resultant in plummeting gaming business..The Pinnacle Hotel and holding in abeyance in Atlantic City breaking ground for its new billion dollar casino hotel until the economic landscape rebounds...Las Vegas is also suffering appreciably.....So why should the racing and  breeding industry be any different?...All we can hope for now is that w/an new Washington administration assuming the reins in late January..people will have renewed confidence..hopefully sooner...and we all can start to prosper again...and as you noted..thoroughbred breeders are an hardy group..lets all hope that everyone else is also...only time will tell...Thank you always Dan for another impactful op-ed piece and for your kind window.. Best regards always..Steve Stone..East Jersey

11 Nov 2008 10:30 PM

new player in the game, if you race them like we have to find them a (GOOD we hope) home when they can't pay their way anymore...can't just throw them away like a paper cup...Maryland Jockey Club(Laurel Park) & Suffolk Downs have STEPPED UP TO THE about CDI & the rest of THE HORSE LOVERS???...our first race Horse Mr. Squeaky should have never been sold as a race Horse...but i was green & they threw it to me!!!...told the guy i was new @ the game but he socked it to me anyway!!!...kinda like going to the corner AUTO DEALERSHIP in Amercia if you are green...CHANGE BABY CHANGE...Long Live The King!!!

12 Nov 2008 1:21 AM

Standard economics do not apply to thoroughbred horse racing.  Wall Street and Kee. Sales do not go hand in hand.  The thoroughbred market has been so overdue for a major correction and it simply has failed to occur.  Until now!  Out of whack state bred programs such as Indiana and PA have distorted the market.  Churchill Downs is not helping anything dropping purses like they are.  

12 Nov 2008 4:25 PM

Millions of horses are being abandoned, neglected and starved everyday, yet we continue to breed. Not all of these animals are grade or "muts". A great deal of them are well bred and papered. And it's not just horses, PLEASE think before you breed more. The system is overloaded and rescues are FULL and financially unable to take anymore in. If you have a rescue in your area, please consider supporting them.

Thanks You!

12 Nov 2008 10:34 PM

Sure wish I knew what BELLWETHER thinks Maryland Jockey Club and Suffolk Downs did after they stepped up to the plate.

13 Nov 2008 8:48 AM

Too much breeding equals too many horses... who is caring for all of those that now are finished racing? And who is paying the bill? There are many good small rescues bursting at the seams today trying to find good homes for healthy TB's (that are well deserving) that have been saved from the killers..and are very WELL bred I might add.. Add the bad economy to this and it is not pretty. Wish more horse/farm owners like myself would step up and volunteer for a few hours a is everyone's problem!!

13 Nov 2008 5:48 PM
R. Lees

At the end of the day with stud fee reductions and the current hardships facing breeders and horsemen in the industry it seems patently absurd that "consignors" and "sales companies" are not offering to reduce their hefty commission base from say 5% to 3% they take none of the risk and are the first to stick their hand out for a hefty remuneration for  two days work! Definitely unjustified anytime - but especially in this economic environment!

14 Nov 2008 11:41 AM
Old Gray Mare

Builders still build though foreclosures rise and prices fall. The breeders still breed though stud fees drop and FT prices plummet.

Empty houses don't have empty bellies. I can mow the lawn of the vacant house next to me but who will float teeth or trim hooves for free.

14 Nov 2008 7:34 PM
Alex JH


MILLIONS? That kind of rhetoric is what makes it difficult for anyone to take racing, rescue etc seriously.

15 Nov 2008 4:32 PM

Probably the biggest threat to Racing is Casino's now also sharing the shrinking Gambling and entertainment buck in a dwindeling Economy.Indiana is expanding both, though at a limited rate,pulling from Kentucky that has no Casinos and neighboring Ohio that is Casinoless and Ohio has little Racing Industry as such.The local Harness Horse Farmer is deceased and His relatives are out of work.The Wal-Mart boom lifestyle and McD not Steakhouses is in full swing.The World wide recessions have knocked the Big Players and non players out in Breeding,Oil Money is leary of the future and those that have it cut back on toys,the true Horsepeople plod along and cutthroat competition for the buck almighty prevails.


16 Nov 2008 5:18 AM

Yeah, there were lots of outs - and Keeneland still went in and took their fair share - averaged out the horses of the day and sent the owners a bill for their 5% commission.   So, it was a pretty price to pay to "out" your horse.  

17 Nov 2008 1:58 PM

It's now over and the average was down 39% - probably more if you remove the horses of racing age figures, never mind counting the rna's and no bids. How many stud fees have been reduced 39%?

17 Nov 2008 8:09 PM

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