Rising from the Ashes - by Eric Mitchell

By Eric Mitchell - @BH_EMitchell on Twitter

Look to manufacturing for a key indicator of any economy's health. Businesses will invest in production only if they are confident consumers are ready to buy.

With this in mind, we looked at the Keeneland November breeding stock sale's progress so far for indicators of the Thoroughbred industry's health. Broodmares, as we know, are the manufacturing side of the Thoroughbred industry.

The numbers so far through the first six days of the 11-day sale show the market continuing to grow its way out of the Great Recession and an industry collectively optimistic about the future.

A straight comparison with the first six sessions of last year's Keeneland November sale won't provide much insight because 2011 offered an embarrassment of riches in the broodmare market. The quality and the dollars were skewed significantly higher by the Edward P. Evans and Palides Investments dispersals. The Evans estate dispersal sold 166 broodmares and weanlings for $55,820,000, and the dispersal of Saud bin Khaled’s Palides Investments stock brought a total of $16,939,000 for 30 horses sold, including Royal Delta, whom Benjamin Leon Jr. purchased for $8.5 million.

To find out where the market really is, we took out the results from these two premier consignments and recalculated key statistics for the first six sessions for broodmares and weanlings.

Broodmare and broodmare prospect sales so far are tracking ahead by double-digit percentages for gross, average, and median. Total sales through Nov. 11 are up 10.3% to nearly $86.4 million compared with gross sales of nearly $78.4 million through the first six sessions of 2011. The average broodmare price is up 12.8% so far, tracking around $125,400 compared to $111,145 at this point a year ago. The broodmare median is up 10% to $55,000.

Buyers are showing a willingness to spend more at the top end as well. Apart from the dispersals, the top-selling 2011 Keeneland November broodmare was Unrivaled Belle, who sold for $2.8 million to Brushwood Stable. During the first two sessions of this year's sale, three mares sold for more than $4 million—Pure Clan ($4.5 million), and Changing Skies and Plum Pretty ($4.2 million apiece).

The weanling market is not as strong as the broodmare market so far, but more horses are changing hands. Through the first six sessions, a total of 512 weanlings had been sold this year compared with 469 during the comparable sessions of 2011. Gross weanling sales are nearly $37.5 million compared with just under $36.9 million in 2011. The average weanling price is tracking around $73,200 compared with $78,900 a year ago, a drop of about 7%. The median so far is $47,500, down around 5%.

Last year's star weanling was a half sister (by Henrythe-navigator) to multiple champion and 2010 Horse of the Year Zenyatta that sold for $1.5 million to Adena Springs. No million-dollar weanlings have been sold this year, but there is a silver lining. Seven weanlings sold so far this year have brought $400,000 or more compared with only three a year ago. Clearly the quality is available, and buyers are willing to pay for it.

Equally encouraging is to look at the leading buyers list and see a wider variety of names at the top. So the dark days begin to fade behind us and the production cycle begins another climb, but let's not forget too soon our most recent and particularly painful economic lesson. The longevity of our prosperity going forward depends solely on a commitment to quality over quantity.