Up Off the Floor by Eric Mitchell

 (Originally published in the November 19, 2011 issue of The Blood-Horse magazine. Feel free to share your own thoughts and opinions at the bottom of the column.

By Eric Mitchell - @EJMitchellKy on Twitter

By Eric Mitchell

Broodmares are the true measure of recovery in the commercial Thoroughbred market.

When horsemen invest in broodmares, they are looking with hope two to three years down the road.

In the spring the commercial market got off a bit slowly. The select 2-year-olds in training sales were relatively flat, with their collective average dipping 2.8% below 2010 results. Granted, this year included only four select sales instead of the five held in 2010.

Momentum, though, began picking up through the open 2-year-olds in training sales and gained speed through the summer yearling markets. By the time of the Keeneland September sale, the commercial train had a good head of steam. The 13-day September sale closed with the average up 18% and the median up 12.7%.

Now we’re here in November, and horsemen are telling us with their wallets that the future looks brighter.
From Nov. 6 through Nov. 10, the Kentucky mixed sales have been a real fireworks display. Fasig-Tipton’s sale showed a 31.8% increase in average price and a remarkable 53.8% jump in median. Keeneland November has been fueled by two top-notch dispersals—the estate of Edward P. Evans’ Spring Hill Farm and Prince Saud bin Khaled’s Chanteclair Farm. The Evans dispersal included 12 horses that sold for $1 million or more. The topper was the grade I winner Christmas Kid, a daughter of Lemon Drop Kid, who sold for $4.2 million to Ashford Stud. In total, the Evans dispersal thus far has generated $52,685,500 at the November sale and set a North American record. The previous record was $46,988,000 set by the Newstead Farm dispersal in November 1985 at Fasig-Tipton. The Chanteclair dispersal rocked the house when Breeders’ Cup Ladies’ Classic (gr. I) winner Royal Delta sold for $8.5 million to Benjamin Leon Jr., owner of Besilu Stables. In total, the Chanteclair stock sold for $16,813,000.

These dispersals pumped up the Keeneland November gross receipts through Nov. 13 to $196,056,500 for 1,628 lots (1,624 horses and four stallion shares), up 48.1% from last year’s gross of $132,349,800 for 1,664 horses. Average price of $120,428 increased 51.4% from $79,537 in 2010. Median price continued to hold strong, increasing 31.4% to $46,000. With four sessions remaining, the 2011 edition of the sale had far outpaced last year’s entire run, which grossed $147,392,900.

The dispersals have put a lot of high-quality mares on the market and generated a lot of buzz, but the good news for the market does not stop there. If the dispersals are backed out of the results, the average price of broodmares and racing/broodmare prospects is still tracking ahead of 2010. Minus the dispersals, the average broodmare/broodmare prospect sold for $170,478 compared with an average of $154,898 through the fourth session of 2010. Weanlings are selling well, too. The average weanling price without the dispersals considered was $117,504 through the fourth session compared with $94,407 through the same period a year ago.

Not only does it seem we’ve seen the bottom of the market, it’s nice to see evidence that we’re rising off the floor.

Dollar to Dollar

We all know a dollar today doesn’t buy what it did 26 years ago. So without taking anything away from the phenomenal success of the record-setting Evans dispersal, we were curious what the other two dispersals from the 1980s were worth in today’s dollars. Besides the previously mentioned Newstead dispersal, which offered 42 horses and 20 stallion shares, Nelson Bunker Hunt dispersed 580 horses in 1988 and grossed $46,912,800. If the Newstead dispersal gross is adjusted to reflect the current value of the dollar using the Consumer Price Index, then that dispersal today would be valued at $95.2 million. Another model used that adjusts for dollar value called the Gross Domestic Product deflator represents the average price of all goods and services and makes adjustments for inflation. Using the GDP deflator model, the Newstead dispersal would be worth $84.7 million. The Hunt dispersal adjusted for today’s dollars would be worth between $77.7 million and $86.5 million.

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