THE BIG PICTURE: THE YEARLING AUCTION DISCONNECT

Back in the late 1980’s I remember looking at weanlings in Ocala just after the completion of the then booming Keeneland July Sale.  Ignoring the fact that just being in Ocala in July was a bad idea, I remember how prices went up in the span of a week after wealthy Arabs, Europeans and Americans spent crazy sums on unproven horses.

The price for a weanling in Ocala with a pedigree suitable for their yearling sale or the Keeneland September Sale (which wasn’t the blockbuster it is today) would go up overnight and when one inquired why, the ever optimistic breeders to a person would say “Look what just happened at Keeneland!”

We contended, then and now, that the two did not share any real economic correlation.

Auctions, like the one just concluded at Fasig-Tipton function is a somewhat isolated environment based on the minority of industry participants who can afford to buy and sell commercial yearlings.  The imact and the mirage is magnified when it comes to “select” yearlings.  As long as buyers are willing pay big sums (which some have been since the advent of the horse auction), this particular segment of the market will function somewhat efficiently.  However, ultimately it is driven by the principles of economics, not the least of which is supply and demand.  This is a tricky proposition for breeders since the production time from mating to auction ring is almost three years. So predicting either supply or demand is no sure bet.

Luckily for horseracing, gambling and speculating seem to be ingrained in the America’s Thoroughbred culture. The question is “how ingrained?” In spite of the chaos in the racing industry and our seeming inexplicable aversion to real answers to the big problems, people keep breeding horses and other people keep buying (some of) them.

Buying yearlings is often about ego and the quest for the golden ring (the Kentucky Derby or Breeders Cup).  Selling horses is about money.  As long as Virginia, which remains a great place to raise a quality horse, has a limited racing program and the smallest breeders fund in the Mid-Atlantic the economic incentive to breed commercial yearlings (or any yearlings for that matter) is to be found in other states.

Solving that puzzle has been difficult the last few years as political solutions aimed at increasing product distribution which would in turn the Breeders Fund,  purses and generate more live racing days have been brought to a standstill by an uncooperative majority in Virginia’s House of Delegates.

The folks that ran a horse  at Colonial these past 8 weeks may like racing in Virginia, the 100% Owner’s bonus and Colonial Downs.  That said, we wager they would all agree that what they do on a daily, weekly, monthly or yearly basis has nothing to do with what happened in Lexington last week and what is about to happen in Saratoga next month when more than 130 yearlings are led into the Humphrey Finney Sales Pavillion.

Yearling sales are fun, but while a rising tide does in fact float all boats, in the very diverse Thoroughbred business, some or more buoyant than others. – Glenn Petty

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