What's Going On Here : fasig-tipton

Crop Chop - By Dan Liebman

Blood-Horse Staff — Tue, 18 Aug 2009 18:19:00 GMT

The question was not whether fewer mares were bred this year, but exactly how many? With a struggling economy, stallion owners were talking about a reduction in mares for all but the hottest stallions. Now, The Jockey Club has answered the question: roughly 12% fewer.

Though the complete Report of Mares Bred will not be released for a few months, officials of The Jockey Club announced Aug. 14 that it is projecting the 2010 North American foal crop at 30,000, the lowest level in more than 30 years. It also dropped the earlier estimate of the 2009 crop from 35,400 to 34,000.

Ever since the rapid growth in the commercial market caused the foal crop to top 50,000 in 1985-87—the top being 51,296 in 1986—it has been steadily declining, dropping
under 40,000 in 1992 and now down to 30,000, a number not seen since the 30,036 of 1977.

For further historical reference, the size of the foal crop first topped 5,000 in 1935; 10,000 in 1956; and 20,000 in 1966. But a rise or drop from one year to the next of 12% has never happened before.
There are many ramifications from a smaller foal crop, some positive and some negative.

What happens to the nearly 3,500 mares that were not bred this year? Will their owners return them to the breeding shed in a year or two, or do we now have more “unwanted” horses, a problem becoming more visible after years of overbreeding?
When the full report is issued, we will see which stallions had trouble attracting mares this year. Some will surely be sold, while others will be pensioned from active duty.
The need for fewer stallions may cause some horses not to be even tried at stud, a possible negative. Some of those same horses may remain in training longer, a possible positive.
A reduction in stud fees lightens the load on breeders but means less income for breeding farms. Those that paid hefty prices for stallion prospects in recent years will have a longer period
to “get out” on their investment.
Fewer foals means fewer sale horses and fewer racehorses. Less supply could translate to more demand in auction rings, but fewer racehorses could bring hard times on some trainers.

It is not farfetched that a drop of this magnitude could ripple down to mean fewer farms, stallions, mares, owners, breeders, trainers, and racetracks. Whether that is a positive or negative depends on your point of view.

WAIT 'TIL NEXT MONTH

Even in a down market, a blip of positive news is possible, as evidenced by the upswing in business at the Aug. 10-11 Fasig-Tipton Saratoga yearling sale. The auction was up in gross, average,
and median.

However, though any good news right now is sorely needed—psychologically as much as anything—to make too big a deal of the Saratoga sale results, with just 160 horses sold, would be foolish.

After Fasig-Tipton was purchased last year by an associate of Sheikh Mohammed, sale company officials said one of the goals was to make the Saratoga auction the elite place to sell summer yearlings, much as it was in the first half of the 20th century and the Keeneland July sale was thereafter. They worked hard to increase the catalog and presented quality individuals that impressed prospective buyers.

For the first time in 20 years, sale company officials persuaded Sheikh Mohammed to attend the sale personally, and though his agents have purchased horses there every year, his sheer presence
made an important statement.

The Maktoum family and associates spent $18,345,000, nearly 35% of the gross. That certainly is not unprecedented; the Maktoums spent more than $76 million at the 2006 Keeneland September
sale, more than $63 million at that venue in 2005, and as far back as 1984, bought horses for $51 million at Keeneland July (more than 50% of the gross).

We will get a truer read on the overall market next month at Keeneland.

Going Public - By Dan Liebman

Blood-Horse Staff — Tue, 28 Jul 2009 16:58:00 GMT

Having been unveiled at the Fasig-Tipton Florida sale of juveniles earlier this year, new video kiosks were used for the first time at a yearling sale July 20-21 at Fasig-Tipton Kentucky. And they were hugely popular.
It is vitally important for prospective buyers to gain information while a sale is underway, and the video kiosks make that much easier.

After the bidding stopped on a Distorted Humor colt at $290,000, a few minutes later the screen showed—in high definition, by the way—the horse as not sold. Later, the RNA price was removed and instead the colt showed as a $225,000PS, meaning he had been privately sold (PS) back at the barn for that amount.

Kudos to Fasig-Tipton for not only using the video kiosks—which at the 2-year-old sale were able to show the under-tack works—but also for quickly displaying that a horse bought back by its owner had later been sold privately, and for how much.

More than 20 horses at the July sale later showed up as private sales, and their figures were included in the final totals for gross, average, median, and those not sold.

According to Boyd Browning, president of Fasig-Tipton, any horse reported to the sale company office as sold privately before the end of an auction’s final session will be changed on the result sheets.

The major reason for a consignor to do so, Browning said, is simple: “We then assume the credit risk.” But he was quick to point out nothing in the conditions of sale compels a private sale to be recorded, and many are not. As Browning noted, for example, an owner might sell 25% of a horse, a partner might decide to buy out another after a horse did not find a new buyer, or a person might trade an interest in one horse for an interest in another.

Once upon a time, this writer was against the reporting of private sales because of the belief a public auction should only reflect what happens in the ring. That thinking has changed, however, because the private sale of a horse while on the sale grounds still reflects a transaction between buyer and seller during the current marketplace conditions.

The only thing that would even further promote transparency at an auction is if both the RNA price and private sale price were shown on the hip-by-hip summary.
Recording private sales obviously raises the gross, lowers the average and median, and reduces the number of horses listed as not having been sold. But it gives a more accurate picture of the business of trading horses at a particular sale.

Whether private sales at all Thoroughbred auctions should be similarly reported should be a matter for discussion at the next meeting of the Society of International Thoroughbred Auctioneers. It is hard to imagine a valid argument against doing so.

AT WHAT COST?

While the Fasig-Tipton July sale was happening, a long-time participant in the sport was helping a group develop a business plan for a new partnership. He wondered aloud how much it currently costs to keep a horse in training for a year. “Does $35,000 sound right?” he inquired.

That figure is usable, but in fact is probably low in many instances. This bloodstock agent was figuring a trainer’s day rate at $80, and that alone adds up to $29,200 over the course of a year. A figure of $35,000 may include such things as routine farrier and veterinary care, but it could not include things such as breaking and training, shipping, and insurance.

Of course, it is hard today to define “routine veterinary care.” More than anything else with the day-to-day training of horses, Thoroughbred owners complain loudly about the cost of veterinary care.

Watching yearlings go through an auction ring while contemplating how much it costs to keep a single Thoroughbred in training for a year and how much purses have fallen makes one realize further adjustments are needed on the balance sheet.

Two Market - by Dan Liebman

Blood-Horse Staff — Tue, 20 Jan 2009 14:39:00 GMT

The Keeneland January horses of all ages sale is a barometer of, well, nothing. Most years, that is.

Unless there is a major dispersal or unless the odd high-priced broodmare or two end up in the January sale rather than in the larger and more prestigious November auction, January normally contains a hodgepodge of mostly middle- and lower-end breeding stock, and what the industry refers to as “short yearlings.”

In fact, the 2009 edition, played out Jan. 12-17, contained exactly that. So, with a less than stellar catalog, and by coming just two months after a lackluster November sale, no one expected much.

Still, the numbers speak volumes: gross down 53.4%; average off 48%; and a decrease of 44.1% in the median.

But it is not just the stark reality of the numbers. There is meaning behind them. The figures are not only a reflection of the stock that was offered, but rather an ever-present reminder of the bleak economy and how it is affecting the Thoroughbred industry.

Many people are simply not spending money. Whether it be on shoes, televisions, houses, or horses, consumers are pulling back.

The horses in the January sale that had everything going for them still brought “fair” prices. But more than ever, those that had holes in them had few interested buyers. As in November, many breeders that absolutely didn’t have to sell simply withdrew their horses from the sale, while others, that didn’t have to, did sell, obviously intent on reducing the size of their broodmare band or of dispensing with the cost, and risk, of raising a yearling until the summer or fall.

The stock, and the money paid for it at the January sale, are not usually indicators of how things will go at the winter and spring sales of 2-year-olds in training. But the mood of those in the horse business, clearly on display at Keeneland, was as chilly and dreary as the weather in Central Kentucky during the first major Thoroughbred auction of the new year.

When pinhookers were buying yearlings last year to resell as juveniles this year, the market was still fairly stable. A great deal has happened in the past six months. So, the question is not if the 2-year-old sales will be down, but by how much?

Back in 2003, the five major sales of 2-year-olds in training—Ocala Breeders’ Sale Co. February and March, Fasig-Tipton February, Barretts March, and Keeneland April—grossed $93.67 million. Just three years later that figure had jumped 48.4% to nearly $139 million. Of course, $16 million of that $139 million was for one horse, the disappointing The Green Monkey. However, without the highest-priced horse ever sold at public auction in the equation, the gross still increased 31.3%.

Last year the five auctions grossed $111.8 million, producing a hefty average of $194,782 for the 574 horses sold, and more importantly, a record median of $157,500.

The past five years the gross at the five sales has exceeded $100 million, so it would be easy to say those who did well in recent years will not have all their profits erased in the expected down market of 2009. However, pinhooking is a game of constantly refilling the tank, using profits for two purposes—to pay down debt from the past and to invest in stock for the future.

The 2-year-old market should not be a reflection, however, of the breeding stock sales but rather of the yearling sales. The biggest yearling auction, Keeneland September, was down 14.8% in gross. Ask any 2-year-old consignor right now if he would be happy with the gross of these five auctions being down 14.8%, and the answer is he would not be happy, but ecstatic. A drop of 50%, as in November and January, would have long-term effects on the churn of money through the auction houses.

Juveniles purchased at auction are ready to take to the track, and racing, after all, is what this is all about. Their prices should reflect their ability for a quicker return on investment.

Star Power - by Dan Liebman

Blood-Horse Staff — Tue, 19 Aug 2008 13:38:00 GMT

Just three months after it was announced he was being pensioned, Storm Cat was represented by the top price Aug. 5 at the Fasig-Tipton Saratoga yearling sale. How fitting.

The success enjoyed by the 25-year-old son of Storm Bird is obvious. Storm Cat made Overbrook Farm what it is today because he has sired 13% stakes winners, which ranks him among the best stallions of our time. His progeny’s racetrack success allowed his stud fee to rise to the highest in recent memory, $500,000.

But Storm Cat has been a huge commercial success as well, which is important to breeders taking his sons and daughters to market, and buyers hoping not only for top racetrack performance, but significant future residual value as well.

Over the past 32 years, 109 stallions have been represented by at least one offspring sold at a North American yearling sale for $1 million or more. That group of stallions has sired 718 seven-figure yearlings, and of that total, a remarkable 90 are by Storm Cat.

Thus, 12.5% of all yearlings ever sold in North America for $1 million or more are by one stallion.

(For the record, the next highest total is the 52 sired by Storm Bird’s sire, Northern Dancer.)

A group of 34 colts and fillies by Storm Cat are cataloged to the Keeneland fall yearling sale that kicks off Sept. 8. This is a comparable number to last year, when 37 were cataloged and 23 sold for an average of $536,739.

This year’s list is like a “Who’s Who” of pedigrees. Nine of the yearlings are out of grade/group I winners (three champions) and eight are full or half-siblings to grade/group I winners (four champions).

With numerous offspring still to go through an auction ring, it is possible Storm Cat could become the first triple-double stallion—more than 100 stakes winners (he has 166 to date) and more than 100 yearlings sold for $1 million or more.

Stallions like Storm Cat do not come along very often. But they are the dream of everyone who retires a horse to stud, and like a couple of other horses in the news lately—Danzig and Theatrical—prove the best do not necessarily start in the breeding shed with a high stud fee.

Storm Cat may have commanded $500,000 for six years, but his initial fee was just $30,000 (and later $20,000).

Danzig, who first stood for $20,000 and saw his fee rise to $250,000 no guarantee, recently became the first North American stallion to sire 200 stakes winners. Danzig, who died in 2006, is from the same sire line as Storm Cat. Danzig is by Northern Dancer, sire also of Storm Cat’s sire.

The mark of 200 stakes winners is impressive for Danzig considering he stood at Claiborne Farm, which has never bred books as large as many other farms. Danzig’s largest crop was 59 foals. His percentage of stakes winners, 18%, places him among the elite stallions of all time.

At a time when many are questioning the durability of the Thoroughbred and commercialized focus of breeders, there is Theatrical, who will never be thought of as flashy or dazzling, but has consistently rewarded those who bred to him, and whose progeny have an average winning distance of 9.5 furlongs.

A product of the highly successful breeding program of Bert and Diana Firestone, Theatrical, by Northern Dancer’s son, Nureyev, recently sired his 22nd grade/group I winner, Winchester, a Firestone homebred.

The Firestones raced Theatrical and later took on Allen Paulson as a partner in the horse. He first stood at Paulson’s Brookside Farms and now stands at Hill ‘n’ Dale Farms near Lexington.

Theatrical has sired 77 stakes winners (8%), but consider that 28.5% have won a grade/group I race.

Percentage of stakes winners should still be the most important measure of a stallion’s success.

Sales Sold - by Dan Liebman

Blood-Horse Staff — Tue, 15 Apr 2008 15:47:00 GMT

Few have the resources to do anything they want in the Thoroughbred industry. Sheikh Mohammed would be one of the exceptions.

The news of the last few weeks only further validates how much the ruler of Dubai not only loves the Thoroughbred industry, but desires to be its most dominant global player.

On March 24, news arrived that Sheikh Mohammed had closed a blockbuster deal in Australia, purchasing the Ingham brothers’ entire Woodlands Stud operation for approximately $425 million. The deal includes stud farms, training centers, stallions, and more than 500 horses of various ages.

Sheikh Mohammed’s Darley already owned farms and stood stallions in Australia, and Bob Ingham, head of his family’s Thoroughbred interests, said they were not looking to sell. “Once approached by Darley, I decided it was an opportunity I should accept,” Ingham said.

The Hettinger family, majority shareholders in Fasig-Tipton Co., were not actively looking to sell, either. But sell they did when a company controlled by “an associate” of Sheikh Mohammed came calling with an offer to buy the oldest Thoroughbred sale company in the United States.

The April 10 announcement said Synergy Investments, headed by Sheikh Mohammed’s friend Abdulla al Habbai, will purchase the assets in Fasig-Tipton, which conducts auctions in Kentucky, New York, Maryland, Florida, and Texas.

Last year, Sheikh Mohammed made headlines when he purchased Street Sense, Hard Spun, and Any Given Saturday to join the stallion ranks at his Darley near Lexington. Already this year, a deal was announced on Pyro, who will run in the Kentucky Derby Presented by Yum! Brands (gr. I) despite a disappointing run in the Toyota Blue Grass Stakes (gr. I). He will become the farm’s 16th stallion.

When the breeding season begins in Australia this summer, Darley will control more than 30 stallions. Considering there are roughly 21,000 mares in Australia, it is conceivable Darley stallions could cover more than 20% of the mare population.

There are those who feel Sheikh Mohammed’s new determination to stand stallions is part of a rivalry with John Magnier and partners’ Coolmore Stud. And there are those who feel they are wasting their time, and stretching their frustration level, when bidding on a stallion Darley is interested in.

They may be right on both accounts. But this is a game where big deals are made all the time, and Sheikh Mohammed has the funds to make more of them than anyone else.

More interesting than spending freely on stallion prospects, however, is the move by Sheikh Mohammed’s associate to purchase Fasig-Tipton.

Fasig-Tipton grosses more annually than any sale company in the U.S. except for Keeneland, the same Keeneland where Sheikh Mohammed has spent hundreds of millions over the years in pursuit of top racehorses.

There is no reason to think Sheikh Mohammed will stop shopping at Keeneland, or any other sale company for that matter, but the landscape could certainly be different in the future. Coolmore avoiding Fasig-Tipton sales or a price war on commissions would be unsettling.

The announcement of the pending sale of Fasig-Tipton stated that the management team will be kept intact, which is good news. Anyone who has dealt with Boyd Browning, Walt Robertson, Bill Graves, Terence Collier, and the rest of the staff is aware this is a team that not only knows how to put on auctions, but is good to deal with on a personal level.

Also, competition is healthy. Keeneland pushes Fasig-Tipton, which pushes the Ocala Breeders’ Sale Co., which pushes Barretts, etc.

An infusion of new capital into Fasig-Tipton is good for the entire industry: breeders, owners, consignors, and buyers.

And if, as the release stated, the goal of recruiting new buyers is accomplished, the whole industry will benefit.