Decline of the Select Sale - by Eric Mitchell

(Originally published in the August 31, 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 auction landscape is being reshaped by economic conditions and buyers’ habits. One casualty of this metamorphosis is the boutique “select” sale.

At one time select sales were marquee events, radiating a remarkable magnetism because they brought together tremendously wealthy, powerful people to compete for the Thoroughbred breeding industry’s most elite bloodstock. The late Keeneland July yearling sale was the paragon of the select sale model; it was a showcase of future champions, a battleground for industry titans, and everyone felt compelled to be a part of it.

Appropriately, the Keeneland July auction provided the first glimpse of the shifting select market when the Lexington sale company shelved it in 2003 following the devastating aftereffects of mare reproductive loss syndrome, which hit Central Kentucky in the spring of 2001. The widespread malady linked to a population boom of eastern tent caterpillars caused approximately 30% of pregnant mares to abort spontaneously. A significant portion of the mares aborted foals that had been conceived early in the breeding season in hopes of giving them a physical advantage over foals born later in the year. Typically, early foals made up a majority of Keeneland’s July catalog.

No one questioned the need to put off the July sale under these exceptional circumstances. When it came time to revive the sale, however, little support could be found.

“The strong consensus in the room was that Keeneland has one of the premier sales in the world with the September yearling sale that attracts an international group of buyers,” said consignor Craig Bandoroff of Denali Stud, following a meeting with consignors in December 2003. “Based on this year’s results, everybody would like to see that atmosphere continue. Keeneland shouldn’t do anything that is going to detract from the outstanding sale it has. Another general consensus in the room was that our horses do better when we don’tpush them to (get ready for) an early market.”

Keeneland listened and bolstered the select sessions in September rather than bring the July sale back.

The commercial market has continued shifting away from these one or two-day “select” sales.

In 2011 the Ocala Breeders’ Sales Co. eliminated its one-day select 2-year-olds in training sale at Calder Race Course (as it was known at the time) in favor of building up its growing March select sale. The March sale, with its bigger catalog and wider selection, provided more incentive for buyers to attend. A year after the Calder sale disappeared, the average price at the March sale rose 31.8%, then another 13.2% in 2013.

Fasig-Tipton may be facing a similar decision with its Florida select sale held at Palm Meadows Training Center. The number of horses offered has declined 54.6%, from 172 in 2009 to 78 in 2013. Granted, the average price has increased from $235,595 five years ago to $385,326, but buyers have said they want to feel they at least have a chance at purchasing a horse. If everyone is on the same 10 horses, then it is hard to justify the time and expenses of attending only to be continually outbid.

Other adjustments are being made. Fasig-Tipton enhanced its Kentucky July yearling sale with a horses of racing age segment this year to give the sale broader appeal. Keeneland dropped its one or two-day select sessions and created a four-day, select Book One.

It remains to be seen how successful these changes, are but the initial responses have been positive.

A couple of factors will drive further consolidation in the auction market. One is the still-shrinking North American foal crop, which is projected to be 22,000 for 2014, the lowest level since 1967. The other is the now-accepted practice of breeding at least 100 mares to a commercial stallion. With so much product on the market, a premier stallion’s progeny today doesn’t carry the same cachet as did Northern Dancer’s offspring in the 1980s. Back then a stallion would breed about 60 mares, and of the resulting foals only 10-15 might end up in a public auction. Their scarcity made them highly valued commodities.

Select sales won’t disappear entirely. Fasig-Tipton’s Saratoga select yearling sale continues to be a must-attend event. With so many top owners and trainers already present for the East Coast’s premier summer race meet and a solid history of offering successful racehorses, the Saratoga sale should retain its prestige for years to come.

But in an era of partnerships and syndications—where the ownership base is more diverse—creating a less formal, more welcoming format that still provides access to quality horses is a step in the right direction.

 

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