Solid Through the Middle - by Eric Mitchell

(Originally published in the August 17, 2013 issue of The Blood-Horse magazine. Feel free to share your own thoughts and opinions at the bottom of the column.)

By Eric Mitchell - @BH_EMitchell on Twitter

By Eric Mitchell The day before Fasig-Tipton’s select yearling sale in Saratoga Springs, N.Y., the auction company’s president Boyd Browning Jr. had the jitters.

Ahead lay two-days of unpredictability shrouded by a mist of optimism.

“I’m like an expectant father,” Browning said.

Helping, perhaps, make Browning jumpy was an extraordinarily positive vibe circulating through the sale barns. Consignor after consignor told similar tales of brisk activity, particularly on that day Browning confessed his jitters. Nearly every horse on the grounds had been pulled out of its stall for inspections at least 50 times. More activity took place on that Sunday than had been seen for several years.

It is great to feel good headed into a sale, but sale company executives know not to get ahead of themselves. The Thoroughbred marketplace can be tricky.

This year’s catalog was slightly smaller than last year’s yet consignors had a tough time singling out just a few horses in their stalls as top horses to watch. Most sellers felt they had brought a deep selection of horses “that fit” Saratoga’s highly selective market.

On the heels of the Fasig-Tipton Kentucky July sale that produced double-digit increases in average (10.45%) and median (20%), good horses and busy buyers at Saratoga were driving the optimism.

What caused the jitters was that the average price at this particular select sale had fallen in four of the last 10 editions.

When the last yearling left the ring Aug. 6, the optimism remained, even though the average was essentially unchanged from 2012. What gave everyone a lift was a significantly lower buy-back rate, which fell from 34% in 2012 to 21%. And it wasn’t a bunch of additional buyers that changed the climate. Sixty unique individuals and partners bought at this year’s sale compared to 72 unique buyers a year ago.

One factor that contributed to the stronger trading was that consignors had set their reserves to move horses.

John Sikura of Hill ‘n’ Dale Sales Agency said it best after selling a daughter of Distorted Humor—Cascading, by A.P. Indy, to Charlotte Weber’s Live Oak Plantation for $1 million.

“The reserve was $400,000,” Sikura said after the filly sold. “We wanted to offer her to the market and let the market appraise her. I’m in the horse business, and the only way you’re in the horse business is if you sell horses.”

The other market driver was the intense competition for horses in the $250,000-$350,000 range. Often six or seven buyers would be on these horses, bumping up the final price with three or four more bids. The increase in demand for the middle market drove up the median price to $250,000 from $225,000 last year.

Those two sessions didn’t appear to be aberrations either, as demand apparently rolled right over the following weekend to the Fasig-Tipton New York-bred preferred sale. The RNA rate fell to 25.5% from 38.1% during the two-day sale.

For the past couple of years, everyone has been asking after each sale whether the market has finally turned. Without question, the answer is yes; not only turned but finally growing. And with a smaller foal crop expected again for 2014, supply should be in line with demand for several years to come. 

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