Insiders see reasons for optimism at Keeneland's September yearling sale

Hall of Fame trainer D. Wayne Lukas inspected a yearling Friday in the barn area at Keeneland Race Course.
Hall of Fame trainer D. Wayne Lukas inspected a yearling Friday in the barn area at Keeneland Race Course.

With its extensive catalog spanning all aspects of the marketplace, the Keeneland September yearling sale annually provides the Thoroughbred sales arena with the best measure of the industry's health.

As the world's largest yearling auction begins its 13-day run Sunday, those who help drive the fickle machine see reasons to think that some of the ailments that have plagued the sales are healing.

Despite the volatility of the national economy, the ample traffic present at the Keeneland barns this weekend is fueling optimism that the 2011 September yearling auction can build on recent encouraging signs in the marketplace.

Yearling sales at Saratoga, N.Y., and Ocala, Fla., yielded positive gains — particularly in the select sessions — as a reduction in the foal crop prompts sales companies to offer smaller catalogs that now match up with the demand side of the equation.

One year after seeing its overall gross rise by 3 percent after three straight years of declines, the Keeneland September sale has further tightened its catalog by offering 4,319 yearlings, compared to 4,857 last season. More importantly, buyers and consignors have adjusted their wallets and expectations to the new reality of the marketplace and are finally seeing the benefits of a reduction in stud fees over the last couple of years.

"I think everybody is much more optimistic now," said John Greely of Wintergreen Farm. "The numbers are down, so the law of supply and demand is in line, and also people have less money invested in stud fees this year.

"I think (the economy) is an enormous part of it, but it doesn't play as big a part in 2011 as it did in 2008, because the general public is seeing the economy can come back. It was pretty scary and all new territory in 2008. I think everybody is not as jittery this year as they were a couple years ago."

The two select sessions of the Keeneland sale take place at 7 p.m. Sunday and 7 p.m. Monday, with the Book 2 portion running Tuesday through Thursday, beginning at 11 a.m.

The sale is off Friday, and Books 3 through 6 will be sold Sept. 17 through Sept. 24, with all remaining sessions beginning at 10 a.m.

Although the strong numbers put up by Fasig-Tipton's boutique Saratoga auction proved that there was demand for high-end stock, the sale was largely driven by spending from Dubai ruler Sheikh Mohammed bin Rashid al Maktoum, whose purchases accounted for more than a quarter of the total gross.

How active Sheikh Mohammed and his brother, Shadwell Farm owner Sheikh Hamdan, are at Keeneland is always crucial to the bottom line. However, the fact that Sheikh Mohammed dominated in Saratoga means that buyers who were shut out there could put their dollars into Keeneland's September offerings.

"I think a lot of people didn't get to spend their money because of the one person who was buying, so I think there are still people who need horses," said Duncan Taylor of Taylor Made Sales, the leading consignor by gross at Keeneland's September sale since 2004.

"To me, if the sale is between 3 or 5 percent up, that would be awesome," Taylor said. "Even if it's flat, it's actually better than it was because there are less stud fees, and people are watching their costs more. I am upbeat."

Sales participants said the impending addition of casinos at New York's Aqueduct Race Course could help the auction market. Buyers will be seeking out New York-bred horses to take advantage of breeders' incentive programs, and they will need good stock to chase an expected surge in purse money.

"I think that is the most positive sign we have right now in the American market, is what New York is doing," Taylor said.

The middle and lower end of the markets are still causes for concern, as players in that segment are most affected by the economy, but an influx of foreign buyers that Keeneland has attracted could help. Also, there is the mind-set among buyers that there is great value to be found, especially now that the days of blockbuster stallion syndication deals are all but over.

"Absolutely, it's the time to buy horses," said Florida-based buyer Hoby Kight. "You can't get for a stallion what you could five years ago, so it puts a cap on what they pay for them now going in. Before, you'd pay $1 million, $5 million for a yearling and if it turned out, you'd sell it for $20 million, but those days are fewer now.

"Now, you get north of $500,000, it gets a little shaky for that amount of risk to make it as a stallion prospect, because there are only going to be a few of them anyway."

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