Keeneland sales likely to continue struggling

Arthur Hancock could hardly remember a time when his Stone Farm consignment was flooded with so much activity.

"We've been busier than we've probably ever been, even more than last year," the owner and breeder said during a brief pause in the action Saturday morning.

Sure enough, there were plenty of potential buyers whisking their way through the barns in the days leading up to the Keene land September yearling sale.

But as has been the case for most businesses dealing with the ongoing economic downturn, those trying to sell their product the next couple weeks aren't sure how many customers will actually commit to making a purchase.

The world's largest Thoroughbred auction begins its 14-session run Monday amid a familiar but daunting economic landscape that has taken its toll on the global marketplace.

A year ago, just before the full impact of the financial struggles hit, the September yearling auction suffered double-digit declines as its gross receipts fell off by 14.8 percent.

With the exception of boutique sales such as the Fasig-Tipton Saratoga Select yearling sale in August, the Thoroughbred auction arena has continued to see its numbers drop as the juvenile and yearling sales have been off around 25-30 percent.

This year's Keeneland September sale offers a slightly smaller catalog of 5,189 horses, down from 2008's record total of 5,555. But with the ills of overproduction still rampant and buyers holding strong to their discriminating ways, many are bracing for another set of declines over the next two weeks.

"Uncertainty is uncertainty and when you've got a market that is falling — and most people have got every reason to believe it will fall further — you've got uncertainty about that because everybody wants to know where the bottom is," said Lincoln Collins, a bloodstock agent based in Kentucky. "While I think the consensus is the sale will be down again this year, it's very difficult for anyone to predict how far down. Therefore, that piece of unpredictability makes it no less worrisome going into this sale than it was last year."

The sale runs through Sept. 28, with an off day Sept. 18. Sessions begin at 10 a.m. daily.

If there is any momentum that can carry over from the Fasig-Tipton Saratoga select sale, which saw its gross rise by more than 45 percent, it will be seen at the top end of the market, where brilliant pedigrees and great physical specimens can still command seven-figure prices.

But once the sale moves past its select sessions and into its blue-collar second week, the process of trying to sell horses — much less sell them for profit — will become daunting.

"I think we'll start off quite well, but the question in some people's minds is how much depth to the market is there and what the clearance rate will be like," said Michael Hernon of Gainesway, which consigned the sale-topping A.P. Indy filly for $3.1 million in 2008. "If one doesn't have a very good horse with a good vet report, it's certainly going to be difficult. But having said that, there will be great value here this year."

For all the anxiety, there are a couple of key factors that could aid the September sale with its overall results.

Overbrook Farm, formerly one of the most renowned breeding and racing operations in the industry, is beginning its dispersal of stock by offering 47 yearlings throughout the catalog. The sale will also include more than 30 yearlings from the last full crop from Overbrook's legendary stallion Storm Cat, who was pensioned from stud duty last May and still reigns as one of the most successful commercial stallions in history.

"You can't talk about Overbrook without talking about Storm Cat and the legacy of both of them could have tremendous appeal," said Geoffrey Russell, Keeneland's director of sales.

Those who are seeking to buy right now also have the benefit of the 2009 Economic Stimulus Bill and the new depreciation schedule for racehorses that became effective this year.

"We still have the magic of the horse and the magic of great race days and in that respect, we're seeing a lot of interest," said Terry Finley of West Point Thoroughbreds. "Market conditions are giving the end users a better shot at making a return on their investments and that's not a bad thing."

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