There were still 14 days of selling on tap and he had just sold a mare for $2.5 million. But as he stood outside the Keeneland sales pavilion Nov. 3, Three Chimneys president Case Clay didn't like what he was seeing transpire inside the ring.
“We're worried,” Clay said moments after selling Away, the dam of Kentucky Derby runner-up Eight Belles, during the first session of the Keeneland November breeding stock sale. “It's day one and we're worried about the next couple of weeks.”
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It turned out worse than many had expected.
The 15-day Keeneland November sale concluded Monday with brutal across-the-board declines that surpassed even the most pessimistic of outlooks going in.
The overall gross of $185,552,300 generated by 3,019 horses sold was down 45.6 percent from last year's record tally of $340,877,200 while the average and median declined by 39 percent and 42.9 percent, respectively.
The decline in gross is the largest for the November sale since 2001 - which was plagued by the affects of mare reproductive loss syndrome - fell off by 40.55 percent from its 2000 numbers.
With an increasingly shaky global economy as its backdrop and more conservative buyers in the marketplace, declines for the November auction were considered inevitable, although many thought the numbers would likely mirror the September yearling sale, which was down about 15 percent.
But when the gross for the opening select session was down 56 percent compared to 2007, it became apparent the market was headed for one of the most drastic corrections in decades.
“To be honest, I don't think anyone thought it would be down as much as it is,” said Tom Thornbury, associate director of sales for Keeneland. “We thought the election would have maybe given people more optimism but world events have overshadowed that very quickly.
“Last year, the disparity between the U.S. dollar and other currencies helped us through the worst of it but this year we don't have that to count on. At the same time, the world is in an economic crisis and it's a global unsettling. It's a wait and see attitude right now.”
While there was still seven-figure money to be found for young, pretty mares with strong pedigrees, the middle market was nonexistent at times. A total of 1,169 horses failed to meet their reserve price, resulting in an RNA rate of 27.9 percent compared to 22.2 percent last year.
That softening of the market had a two-fold effect as a whopping 1,521 horses were withdrawn from the sale as many buyers opted to try to wait the economy out rather than having to buy back their offerings.
“About a third of my consignment pulled out of the sale basically with the mindset that this is a temporary dip in the marketplace that wouldn't last or wouldn't be as bad when these foals became yearlings,” said Kerry Cauthen of Four Star Sales. “When there is instability in the world, that kind of plays out to those people who will say ‘I'll just sit this one out for a while and wait until things firm up.'”
Although broodmares are generally considered a less risky investment compared to yearlings, due in part to their residual value, the rising costs of maintaining stock has made race-ready prospects more desirable and forced more breeders to try to get rid of non-commercial horses.
“I think the reason (the September sale was stronger) was those horses are closer to the racetrack,” Cauthen added. “The further you get away from the racetrack, there's a lot of production costs and risks and uncertainty down the road that the people who are buying either weanlings or mares have to consider.”
Not everyone in the marketplace sees the current climate as a sign of gloom and doom, however.
For buyers, the current correction is giving them a chance to purchase stock at a much lower price than they likely would have a year ago.
And after years of clamoring for stud fees to come down so breeders large and small could make a profit, many farms have cut their fees across the board for 2009 save for a handful of top sires.
“The fees have come down and I think they can come down more,” said breeder Ross Burdette, who operates Richland Farms near Sallisaw, Oklahoma. “You look at what you're selling babies and mares for and a lot of time they're only bringing 60 percent of what the stud fee was.
“Right now, the market is so soft, my wife and I came up a day early to see what we could do. I told her if we got one mare we'd be lucky, but we got several more. There's great value right now.”