Keeneland November sale splits neatly into two halves, and the second half takes a nose dive

The market for Thoroughbreds has often shown schizoid tendencies over the last three years or so. As the top of the market soared 20% or more at sale after sale, the bottom half of the market frequently moved in the opposite direction.

Over a broad range if not by absolute highest price, top-shelf horseflesh has become more expensive than at any time in history. On the other hand, fewer and fewer buyers seem interested at any price in bloodstock perceived to belong to the bottom half of the breed.

Keeneland November highlights

• $304,549,800 in total receipts, second highest in history
• Record November average of $92,935
• Buy-back rate jumps from 18.1% in 1999 to 25%
• Record total annual sales receipts for Keeneland's five sales of $756.6-million
• Average rises only in top 10% of market

Those tendencies broke out into full-blown schizophrenia at the 2000 Keeneland November sale, which reached a rather ignominious conclusion on November 18 after a 14-day run. As shown in the table of session-by-session results, the sale split roughly in half, with averages for the first five sessions markedly higher than the corresponding sessions last year, and averages for six of the last seven sessions (not counting the last day of this year's sale, which was one day longer than in 1999) significantly lower.

"The higher-quality stock in the first week sold very well. But really, I think foals stayed pretty steady throughout the sale," W. B. Rogers Beasley, Keeneland's director of sales, said on November 18. "The less-expensive mares certainly dropped over previous years.

"It's who the mares are in foal to and just the lower overall quality. It's tougher to sell those kind anymore. You know how many stallions have come into Kentucky in the last three years, and they're all trying to breed 100 mares. It's tough for the market to absorb all of those. I don't know how viable some of them are going to be.

"Overall, though, it's been incredible. We went over $300-million for the second year in a row, and we didn't have Padua this year. (Padua Stables sold 12 horses for $10.8-million on the first Sunday in 1999.) The first Sunday (November 5) was just not as strong this year. Arguably, last year was just an unbelievable sale. But you still have to be pretty satisfied with this sale."

Impressive benchmarks

Indeed, the 2000 edition of Keeneland November, for all its dysfunctional nature, was only the second Thoroughbred auction in history to top $300-million, and it established a series of impressive benchmarks:

• Total receipts of $304,549,800, second-highest total for a Thoroughbred sale in history;
• Record total annual sales receipts for Keeneland's five sales of $756.6-million;
• Record Keeneland November average of $92,935, up 1.3% over the same sale in 1999;
• Record $4.6-million for a maiden broodmare, Myhrr; and
• Record 39 horses sold for $1-million or more.

On the negative side, the buy-back rate jumped from 18.1% in 1999 to 25% this year. Median also declined 18.1% from $32,000 in 1999 to $26,000. Both the buy-back rate and the median indicated lack of interest in anything that buyers did not deem to be of sufficiently high class.

The sale's two personalities are strikingly evident in the accompanying decile chart, which shows that only the highest-priced horses advanced in average price over horses from the same segments last year. Average price for horses in the top 10% of the sale by price increased by 11.4% Average price at every decile below the top 10% level declined, with the bottom 20% of the sale down a disastrous 40% or more.

Similarly, the returns by stud fee for covering sires show that, despite the presumed difficulty of making money at higher stud fees, that is exactly where money was made-as if stallion managers needed any more encouragement to raise stud fees. Ratio of covering-stallion stud fee to average price of in-foal mare at the $100,000-and-up stud-fee level was essentially double the ratio at any other level.

Leaders

Taylor Made Sales Agency led all consignors by sheer force of numbers. With 50% more horses sold than any other consignor, Taylor Made sold 234 horses for almost $33.3-million. Volume ruled the day on the buying side as well, with Lisa Troutt, wife of WinStar Farm co-owner Kenny Troutt, listed as the sale's leading buyer with 20 horses purchased for $14,845,000.

Leading sire Storm Cat dominated three of four sire lists, either directly or indirectly. The 17-year-old son of Storm Bird led both the list of leading covering sires and the list of leading sires of weanlings. His son Forestry was the leading first-year sire of covering sires, with 11 in-foal mares sold for an average of $325,000. Awesome Again (by Deputy Minister), the 1998 Breeders' Cup Classic (G1) winner, was the only interloper on leading-sire lists, topping the list of first-year sires of weanlings with six first foals sold for an average of $221,667. Touch Gold, another Deputy Minister horse who stands at Adena Springs Farm in Kentucky with Awesome Again, ranked second.

Numbers

Ultimately, the 2000 Keeneland November sale was all about the numbers, some good and some not so good. From one point of view, the November sale was the culmination of the biggest and best year of Thoroughbred sales in history. Keeneland's $756.6-million total makes it certain that the total for all North American Thoroughbred auctions this year will exceed $1-billion for the first time in history. Overall average price for a Thoroughbred horse at auction is also bound to be the highest in history. That is the good news.

The cautionary numbers for this huge and growing market are the buy-back rate and the continuing declines in the bottom half of the market. The question within those numbers is: How long can the dedicated folks who breed to $5,000-to-$10,000 stallions and then sell their yearlings for the stud fee or less continue to lose money?

With a record 4,367 horses offered, 3.3% more than in 1999, 2000 Keeneland November was confidently expected to surpass last year's record total receipts. After total receipts for a single day soared past $100-million on November 6, a new record seemed as certain as the indisputable fact that we would know who our new President would be on November 8.

Neither event happened. Keeneland failed to set a total-sales record because of the buy-back rate, which soared from 18.1% last year to 25% in 2000. In fact, the number of horses sold fell 5.5% from a record 3,461 last year to 3,277.

Buy-backs increased so sharply in part because buyers know that they have little chance of making money on anything except the top 20% of the stock in any sale.

How much larger do the Keeneland September and Keeneland November sales have to get before sellers realize that their chances of making money on anything but the most expensive stock are virtually nil? Keeneland has already opted to try to split off part of the September sale into October in 2001. But how interesting will a sale of horses that consignors consider not good enough for September be to buyers?

How many other yearlings by the same sire in the same sale do breeders have to see to realize that 150-mare books are perhaps not in their best interests? All these questions must be answered by the Thoroughbred industry over the next few years before the ultimate direction of the market can be determined.

Complete hip-by-hip results of the November 8-18 sessions begin on page 50. See the November 18 Thoroughbred Times for results of the November 5-7 sessions.