For years American consignors and breeders have talked about the retreating participation of European buyers, particularly at yearling sales. Mostly the observations have been anecdotal without any hard numbers defining the trends.
The staff at The Blood-Horse decided to compile those numbers in order to define more clearly not only what is happening among European buyers but how the yearling sales are being shaped by horsemen in other parts of the world (see related feature, page 18). We started by compiling the records of every yearling sold through a U.S. auction between 1980 and 2012. Because agents buy for clients worldwide, we defined a yearling as an overseas purchase based on where it made its first start. Recognizing some crossover between countries and racing stables among the major racing countries, we then assigned the yearlings to regions or to specific countries, if they were not part of an easily defined region.
The overall trends we saw in the numbers verified the observations and illustrated how much the shift has been taking out of the American market. The peak in gross expenditures by European buyers occurred in 1986 when more than $102.3 million was spent on yearlings that would eventually make their first starts in England, Ireland, France, Germany, or Italy. The peak in average European spending actually occurred two years earlier when an average of $547,481 was spent.
In 2012 gross expenditures among European buyers fell to nearly $16.7 million and the average spent was $126,264.
Currency is a little deceiving because of the declines wrought by the Great Recession and the influences of inflation or declining foal crops. So another way we looked at buying habits was by percentage of total yearlings sold.
Europeans bought their greatest share of American yearlings (looking only at those that would make at least one start) in 1986 when they snapped up nearly 14% of these “yearling-starters” sold. They bought at least 10% of this share of the market between 1985 and 1991. Interestingly, European buying spiked to this level one time since then, in 2007, but it wasn’t due to the usual suspects.
Sheikh Mohammed’s agent John Ferguson and Coolmore’s buyer Demi O’Byrne were particularly active during Keeneland September in 2007, with O’Byrne edging out Ferguson as the leading buyer with $17.92 million in purchases to Ferguson’s $17.78 million. Shadwell added another $9.54 million to the European buyers’ column. Most of O’Byrne’s purchases that year, however, made their first starts in the U.S. Only four made their first starts in Europe compared with seven the year before. Ferguson bought a total of 23 yearlings in 2007, but only eight of those purchases made their first starts in Europe compared with 17 the year before.
What appeared to drive European buying was simply greater participation by a number of already active buyers. Blandford Bloodstock bought 17 in 2007 versus seven in 2006; agent Con Marnane bought 18 versus seven; James Delahooke bought 16 versus seven; and American agent Tom Gentry bought 12 in 2007 mostly for owner/trainer James Bolger, when he had not bought any in 2006 that raced in Europe.
The percentage of American yearling-starters that went to Europe rose from 6.2% in 2005 to 9.6% in 2006 and again to 10.5% in 2007. Total spending, however, didn’t keep pace with the increase in yearlings purchased. European purchases passed the $100 million mark for only the third time in 33 years in 2006 ($100,756,300). Ferguson was responsible for a bulk of the spending that year, when he bought 28 yearling-starters for $45,390,000—45% of the total spent on American yearlings that would start in Europe. The total spent in 2007 on Europe-bound yearlings would fall to around $73.2 million then continue to fall dramatically in subsequent years in total dollars spent and by percentage of yearlings sold. Only 4.7% of American auction yearling-starters sold in 2012 would make their first starts in a major European racing country—equal to 2010 and the lowest percentage since 1982.
Clearly American horses have talent and demand has been increasing among buyers in other countries, but those buyers are not making up for the decreases in European spending. Japan spent the most of any other region or country in 2012 on yearling-starters at $8.5 million followed by South America at $1.4 million. No other country or region outside North America spent more than $1 million that year.
The shift in stallion talent to Europe is undeniable, but in the midst of this market shift, we also continue clinging to our right to medicate on race day, providing one more reason for overseas buyers to approach with caution. Changing the perception of the American horse from a sire power perspective will take years, but medication use is something Americans can address now.