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Keeneland Yearly Sales Recap and USA Foal Crop Statistics
KEENELAND SEPTEMBER YEARLING SALE 2009
The dust has settled on Keeneland September, the biggest annual sale of thoroughbred yearlings in the world, and if you are an American breeder, it doesn’t make pretty reading. Psychologically, Americans as a nation have turned their backs on the luxury world, certainly for the time being, and with credit in tight supply, the impact of horse players having to shell out their hard-earned cash to fund their purchases, is clear in the results.
However, the rather dramatic falls of the last two seasons, were not only as a result of the global financial fall-out. It’s apparent from the graphs at the top of this column, that the American racehorse breeding industry has grappled with structural difficulties for some time, brought about by a gluttonous surge in production in anticipation of a no-end-in-sight upward spiral in prices, and the illness American breeders face right now in the form of bloated production costs, starting with stallion service fees which could never be sustained by anything other than a runaway market.
Besides the supply-side issues of the breeding community, the American racing scene is beset with its own problems, arising mainly out of fundamentals connected with the way their racing industry is structured. Too many of the best tracks, which are mainly privately owned or operated, have outdated business models, and in some cases inept management who’ve failed to appreciate the need to reinvent themselves as other businesses have, while some jurisdictions have to cope with unco-operative government legislators within their own states. Even Kentucky, heartland of the American thoroughbred, faces daunting challenges in its horsemen’s attempts to maintain it as the centre of world thoroughbred excellence.
As we’ve already noted, the downward trend in foal production and yearling averages had already kicked in before the global turmoil, and all the current circumstances have done, has been to accelerate the process. The 33% drop in average and the 42% reduction in gross turnover at Keenland September, on the bald facts, is a daunting thought, yet as our good friend, Bill Oppenheim, the foremost commentator on these things worldwide, noted last week, if American breeders were to wake up tomorrow and the industry was kicking off for the first time, they’d have to believe a $61 000 average ($91 000 last year), was not a bad result. But then you’d have to assume the production costs and stud fees had a sensible base to them in the first instance.
His comments at this time are telling; “Aside from Medaglia D’Oro, Birdstone and Candy Ride, its hard to imagine there’ll be any stud fees rising in North America next year. In fact the definition of a “hot” sire might be one whose stud fee drops by a third rather than a half. Of course, there will be lots of hedging among stallion masters “he stands for x, but you can have him for y”, lots of “I know the market is way down, but this horse is an exception” etc.
It’s up to the breeders if they fall for that or not. At the end of the day, they’re the ones who sign the contracts. There is, really, one overwhelming reason why stud fees really need to be cut in half, and now; because there’s no reason to believe the horseracing industry in North America will recover in the same way as the general economy”.
What about South Africa?
Our own domestic market has been substantially healthier than any of those in the northern hemisphere, and to be fair to South Africa, we’ve fared relatively better than our southern hemisphere counterparts, Australia and New Zealand. Not unlike our general economy, South African thoroughbred breeders have other fundamentals which have rested their business, and they arise in the first instance from the fact that for least the past decade, we’ve been undersupplied in terms of the foals we’ve produced. It is so, that with the burgeoning markets of the last few years and the development of our export markets, more foals have been produced, but in relative terms they represent a substantially smaller increment than that which other markets, north and south, have witnessed.
The result is, fuelled by both the balance in our supply and demand equation and the value our horses represent internationally, the South African racehorse market probably stands as the most stable in the world at the moment, and unless there is another major “intervener” in the foreseeable future, we expect this stability to carry itself through to the next uptick. Make no mistake, it’s not easy in our game right now, but it’s certainly bearable.