Keeneland Yearling Sale a Huge Success

Not bad.

If I were to travel back in time to 2009 in the depths of the Great Crash and tell an agent that the 2013 Yearling Sale could be tepidly described as "not bad" they would have taken it in a second. Many commenters, journalists, and bloodstock agents/people/enthusiasts are overflowing with positivity over the massive gains the sale saw this year. But let's try to frame the discussion in a slightly different context.

In 2006, at the height of the yearling market, the prices were completely mind blowing. In fact, you see a steady rise in both total yearling sales and maximum prices from 2001 to 2006 (all sales facts, figures, and charts are courtesy of Keeneland. Their website has a remarkable amount of historical data.):

This is followed by a leveling off of sorts from 2006 to 2008 and then a drastic fall in 2009. I think the sales numbers applying brakes to their rocketing prices was probably an indication of overbreeding and a weakening economy as foal crops steadily grew and the bubbles in the economy started to erode. We all know what happened in the summer and fall of 2008 that led to the precipitous collapse of the markets on both Wall Street and Versailles Road. But when you look at the highest prices, you can see the craziness that abounded in the sales ring:

Three points:

1.       Breeders loved Storm Cat, eh?

2.       I hope John Ferguson works on commission

3.       Not a single horse has sold for anywhere near this much money since 2006; we're talking a difference of a $1 million plus

So, after coming off of the incredible highs of the 2006 sales and suffering through the dismal lows of the 2008 and 2009 sales, an assessment of "not bad" for 2013 would most likely have been taken in a heartbeat by anyone in the know.

But this sale far surpassed the not bad moniker. I already talked about my enthusiasm for the Book 1 results, and while I do not particularly have any concrete examples to go over from the rest of the sale there are some specific trends that are noteworthy.

- Coming into the sale, it was assumed that buyers would be as steadfastly picky as they had been over the past few years. Picky in the sense that the best of the best still demanded premium prices, albeit premium in the sense of the current market conditions, while anything less than perfect fell far short of price expectations. While this still held true to an extent, as evidenced in some of the heated bidding wars at the top end of the market in Book 1, there was still an extremely strong market for sellers through Book 2 and into the back end of the sale.

- While the strength of each day tended to wax and wane, there seemingly was always a return to a stronger than expected day. Some days were slower than others, but for the most part buyers stuck around. That's a trend that is extremely important to maintain.

- RNAs increased slightly, but this is to be expected. As the market has improved, seller expectations have as well. Some will see the increase in percentages rising as a negative, but sellers see all of the same market conditions as buyers and will not settle for anything less than what the connections perceive as fair value and economic profit.

So, averages plunged by nearly 50% from 2006 to 2009. That hurts. Median prices were much the same. But now you see that median has climbed back to where it was in 2006, averages are still lower while nearly 1,000 fewer head sold. The industry literati oftentimes bemoan the downsizing of the foal crop, and yes, there are a plethora of negative side effects that stem from the relative lack of horses. However, supply and demand will always rule the day and the lesser numbers in no way equal lesser quality. We didn't randomly remove 25% of the foals, we mostly lost the bottom 25%, so overall quality probably increased.

As an illustration, look at the Jockey Club breeding numbers for 2012.

"The Jockey Club today reported that 2,392 stallions covered 37,908 mares in North America during 2012"

Great. Now if we roughly equate the number of Kentucky stallions and mares to those of the highest quality (I emphasize roughly, I know there are low quality stallions and mares in KY too, but not in nearly the same percentages as other states) you see the disparity: 243 stallions and 15,228 mares were bred in KY in 2012. My question is and always has been where and who are these other THOUSAND stallions!?? Obviously there are both good mares and stallions in California, New York, and Florida, so that KY number isn't the end all be all. But still, it wasn't Zenyatta that they stopped breeding, it would be Hansen's dam (zing!).

While the sale has clearly lost in quantity, it definitely has not lost in quality. The return of solid median and average prices so quickly is an indication, to my uneducated mind, is a clear indication that the quality of bloodstock is as strong as it ever has been. The number of foreign buyers is another indication of that.

But prices took 5ish years to begin to return to pre-Crash levels, why is that considered quickly, you ask? Well, breeding is a multi-year cycle. From flash to bang (cover to sale) it is really two years for yearlings. So the 2013 yearlings were bred in 2011, when prospects were far more dismal and breeders had the 2010 sales to consider when plotting breeding plans. That's pretty good.

So, like I said, not bad would be a great success; the tremendous results are just a bonus.