Click above to watch a NYS interview with Summerhill CEO, Mick Goss
(Footage : Jimmy Lithgow / Inside Racing)
NATIONAL YEARLING SALE 2011
So, the Emperors Palace National Yearling Sale is behind us, and on the bare facts, it was a tough one. There were those who say it was the toughest in 40 years of consigning horses to this venue, yet it has to be seen in its true light. A retreat, on the face of it, of some 25% in average, tells us the relative immunity the South African bloodstock market enjoyed while the rest of the world was crashing around us, has come to an end, and while there is truth in that, there are a few mitigating pointers on the table. These are :
- The new Cape Premier Sale took something of the order of 120-150 candidates out of the National Yearling Sale, and whereas the old Cape Yearling Sale in the past turned in the region of R12-15 million, this year the Premier Sale transacted R90 million (against a National Sale last year of R160 million).
- The organising fathers then took the decision to expand the National Sale to 600 lots, rather than reducing it from its regular 550 - 600, to around 350 - 400, allowing for those that defected to the Cape Sale. This alone was bound to impact on the overall average of the National Yearling sale, and has to be brought to account when analysing the bottom line figures.
- If you allow for a drop of around 12,5% for that reason alone, it means the balance of that impact (between the actual drop and the notional reduction in average inflicted by the interposed Cape Sale,) then the National Sale has supposedly only retreated by 12,5%. Counted with the Cape Premier Sale, the total turn was in excess of R20million, but that was for 900 horses.
- Vendors will tell you this is a fanciful observation, that their horses were making substantially less than they would’ve done in previous years, and they are correct in that. So the impact of the local economy has also to be factored in, and that is difficult to asses, as we don’t know where the line between the Cape Sale and the real economy is drawn.
- What is apparent though, is that by interposing the new Cape Premier Sale on the broader sales programme, the balance overall has been upset, to the point, in a few cases of decimation. In its wake, the old Cape Yearling and the Equimark Sales were virtually obliterated and by holding the National Yearling Sale in mid rather than the end of April, and in expanding it to 600 lots, the impact on the latter was compounded.
- Psychology is an inseparable part of a sale as well, and mindsets are quickly set in reverse. turning them around is a difficult task, so who knows now what impact the old Cape, Equimark and the National Sale will have on the KZN and National Two-Year-Old Sales.
We have a view on these things, and all of us have to remember that there is a bigger picture at play here, involving an imperative to preserve some sort of balance in the overall programme. Our suggestion would be to turn the Cape Premier Sale into an absolute boutique occasion, supported by the excellent publicity and hype that surrounded it this year, by limiting the entry to 120 -150 horses. That way, you will get more satisfaction among your vendors, without the moans of those that didn’t sell their horses as well as some did at the Cape Premier Sale (remember, there was a special levy of R10,000 over and above the normal entry fee, payable by all vendors, irrespective of whether they sold or not), and that way, the old Cape (Regional) Sale will be strengthened with less impact on it.
- The National Yearling Sale should be repositioned at the end of April, to coincide with Champions weekend. That not only gives our customers a bit more of a “breather”, but it comes with some excellent racing and enormous prize money.
- Why it was removed from that time, is difficult to fathom. Again, it should be limited to 350-400 entries, with no dual entry between the Cape Premier and the National Yearling Sale. Those vendors who offered horses in the last 150 lots this past weekend, will tell you how little competition there was on those horses, and this happened because we ran out of buyers, simple as that. Most people had filled their order books by Lot 400, with just a few speculative stragglers after that for some of what was left. Of course, the odd unique horse, such as our own Lot 421, the Giant’s Causeway filly, still made R2 million, but she was a rare gem in the market and was always going to have collectors waiting for her.
- The KZN Yearling and the National Two-Year-Old Sales are correctly positioned date-wise, and the big sales (Cape Premier and National Yearling) will be softened to a degree by the reallocation of resources that follows with this reorganisation (and reduction) of the programme. Failure to limit numbers will result in a fatal reduction in the quality of the offering at regional sales, and that will sound the death knell for many, we’re afraid. We won’t see it this year if our recommendations are noted.
- By the way, we think the Saturday evening format was a success, as there was healthy competition on most lots, but it will be particularly healthy if it coincides with a big meeting like Champions Day.
A sale such as the one we’ve just come out of, often results in knee-jerk reactions from producers. There will be those who will be asking themselves whether they shouldn’t be dumping mares on a wholesale basis, obviously resulting in shrinkage in the broodmare population. Last time this happened, Summerhill and its customers saw it as an opportunity, because in its wake, the supply and demand equation down the line moves quickly in favour of vendors again. Our own prosperity of the past ten years, was a direct consequence of moving against the trend.
The crop we’re offering as yearlings right now, was the most expensive from a cost-of-production perspective, in history. Service fees at the top end were running at R250,000 a pop, and there were even a number of Jet Masters, Western Winters and Fort Woods, making less than the cost of covering (in total 17 lots failed to recover their service fee to these major stallions alone). There will no doubt be a reconsideration of service fees in the wake of this sale, and so, given that the resultant progeny from the 2011 covering season will only get to the market in 2014, in relative terms, progeny conceived this year will be one of the least expensive crops to produce.
We have to assume, of course, that the world economy will be back on its feet by then, rather than on its head, as it has been, and since the impact of the current recession has come rather late in the day for the South African bloodstock market (again, relative to the rest of the world, who took their medicine some years ago), it’s probably fair to assume, that ours will be more in the nature of a “V” than a “U” dip, and that the bounce-back will therefore come relatively quickly.
A pick-up in economic activity in the retail market, not only in consumer goods, retail food and white goods sales, but in the new car market (which is always a good barometer for the horse business) as well, and the sustained strength in the stock and commodity markets etc, suggests that there may be light now at the end of the tunnel. We would therefore already be looking to something of an improvement, come Emperors Palace Ready To Run time. There’s R2 million up for grabs in the big race this year, representing the third highest stake on offer in the land, and limited to a handful of candidates relatively speaking. Anyone with economics in mind when it comes to racehorse ownership, and knowing the remarkable quality of its graduates coming out of the sale (think Igugu and Hollywoodboulevard for 2011,) must surely have his sights on the first Sunday in November.