Optimism precedes yearling sale

No one is so bold as to suggest a full blown recovery has begun to take place within the beleaguered Thoroughbred marketplace.

But as the yearling sales season prepares to get under way Tuesday with the start of the two-day Fasig-Tipton July auction, some of the downtrodden expectations that have been a fixture in the commercial market for the last year and a half have given way to realistic goals and even some tentative hope.

The consistent flow of traffic around the Fasig-Tipton barns this past weekend was just one reason why sellers as a whole boasted some brighter attitudes than they have in recent months.

Whereas last year's July yearling sale suffered double-digit, across-the-board declines coming off what was a brutal juvenile auction season, this year's 2-year-old sales have provided some positive momentum off which to build.

Fasig-Tipton's boutique Florida Select 2-year-olds in training sale in March produced upturns in both average and median over its 2009 numbers. Keeneland's April juvenile exercise posted gains in gross and median compared to a year ago and Fasig's Midlantic 2-year-old sale in May came through with across-the-board increases over its 2009 figures.

"I think there is no question it will carry over (from the juvenile market) because March was good at OBS but April, which everyone was worried about, was extremely good," said Kitty Taylor of Warrendale Sales, which consigned last year's July sale topper, a Medaglia d'Oro filly who sold for $425,000 to agent John Ferguson. "The Fasig-Tipton Maryland sale in May was also way better than expected so I think that gives everybody a good bump going into this.

"To really know where we're at, we need to get to (Keeneland) September but this is a beginning barometer. You can kind of see who is here, who's looking, who has interest, who has money to spend."

One reason some of the bleeding has stopped in the auction area is that sales companies have adjusted their supply to make up for the diminished amount of buyers.

Fasig-Tipton has trimmed its 2010 July catalog, offering 407 yearlings compared to 494 in 2009.

But while some of the less commercial horses have been weeded out, there is still a lack of capital available. Thus buyers are still conservative in both their spending and strategies.

"Cash flow is a very important item here at a horse sale and with the difficulty in gaining credit, one would have to assume ... that certainly has affected the prices and volume of trades made," said Michael Hernon, director of sales for Gainesway, the leading consignor by gross at the 2009 July sale. "I think with the numbers down from last year, that's going to help, but obviously we're operating in a tough economy and buyers may be a little fewer than before."

There is a tendency for buyers to gravitate toward the top specimens, making it difficult for sellers to get some of the lower middle market horses sold.

Considering the current crop of yearlings were bred before stud fees took dramatic drops, buyers will probably be able to snag their share of bargains.

"We still think it will be a good market for buyers," said Dr. Naoya Yoshida, president of Winchester Farm. "The middle and lower market may be a little quiet, but people are still looking for the good looking horses so that should help the market a little bit."

The Fasig-Tipton July yearling sale takes place Tuesday and Wednesday beginning at 11 a.m. each day.