Higher Purses, Stronger Markets - by Eric Mitchell

The strong start to the 2-year-olds in training season bodes well for the commercial markets throughout the rest of the year.

Juvenile racing prospects are at the tail end of the production cycle, where the bloodstock is going to end-users. Strong performances at these sales mean pinhookers will have more money to reinvest, yearling value will be bolstered by increases in their potential worth as racing prospects, and breeders will see the growing markets as reasons to acquire or breed a couple more mares.

Following the Barretts March and Ocala Breeders’ Sales Co.’s 2-year-old auctions, the average price of juveniles sold publicly is tracking more than 68% ahead of last year and the median is up nearly 72%. A jump in the number of seven-figure horses has certainly made the difference. Last year’s Barretts sale had three horses sell for more than $500,000 and the sale-topper, eventual graded stakes winner Corfu, brought $675,000. This year the sale-topper was a Giant’s Causeway—Dixie Dreamer colt that international bloodstock agent Demi O’Byrne bought for $1.15 million. Falling just shy of the seven-figure threshold was a Malibu Moon—In the Ghetto filly that trainer Todd Pletcher bought as agent for $950,000. Two other juveniles sold for more than $500,000. Barretts’ average price was up 23.9% to $177,750 and the median was up 12.5% to $112,500.

In 2013 at OBS the sale-topper was a $1.8 million Stonestreet Stables purchase. One other horse at that OBS auction sold for more than $500,000. This year the OBS March sale had three horses sell for more than $1 million. A Giant’s Causeway—Rebridled Dreams colt and a Tapit—Rhumb Line colt each brought $1.6 million from Stonestreet Stables and Al Shaqab Racing, respectively. O’Byrne also bought a Malibu Moon—Layreebelle colt for $1.3 million. Seven other horses sold for $500,000 or more and helped push the sale average to a record $190,997 (up 22.7% from 2013) and set a record median of $137,500 (up 10% from a year ago).

Business should be brisk at the Fasig-Tipton Florida 2-year-old sale March 24, considering this auction sold two horses for more than $1 million and a total of 12 for more than $500,000 in 2013.

Several factors are helping drive the growth in the juvenile market.

The steady decline in the U.S. foal crop since 2008 has certainly done much to raise the overall quality of the horses still being produced. Improvement in the economy overall and a 12% growth in the Dow Jones Industrial Average over the previous 12 months indicates times are good for most investment accounts as well.

But it is also worth noting two other dynamics—a marked increase in the average purses earned per starter and a steady decline in the number of races run in North America.

Average earnings per starter is up 25% to $20,367 and the median earnings per starter is up 39% to $8,711 since 2010, according to statistics from The Jockey Club. At the same time, the number of races run has fallen 8% to 46,810. In 2010 North American racetracks had run nearly 51,000 races.

Less racing does mean fewer opportunities to make money, but considering the parallel with declining foal crops, the drop in number of races is necessary to preserve field size. Handle still drives the business and bettors wager more on larger fields.

What should be encouraging is that though total North American purses paid in 2013 is up a slight 1.7% when compared with 2010, the average purses paid per race is up 11% to $25,293.

Fuller fields of higher-quality runners chasing bigger purses should be trends we all welcome.





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