Sale prices and Fusaichi Pegasus syndication keep marketplace in the headlines

After a seven-year winning streak, it seemed unlikely at the beginning of 2000 that the market for Thoroughbred bloodstock could get much hotter. Well, it did-and, then again, it did not.

In fact, news from the marketplace and expressions on the faces of the major players covered the full gamut of human emotions in 2000. Reactions ranged from the ecstasy of world-record prices and sale-record averages to the despair of yearling and juvenile pinhookers who saw their $194.6-million investment in 1999 turn into a $35.3-million overall loss.

The year began on a high note, with Keeneland's January sale producing a $5-million mare in Mackie, a record median, and the second-highest average in its history.

The sales of selected juveniles in Miami, Los Angeles, and Lexington, however, sent mixed messages to the industry. True, David Shimmon made headlines by paying a record-equaling $2-million for a two-year-old by Saint Ballado at Barretts, but buy-back rates soared over 40% at many juvenile sales. Averages generally rose, but only because of intense competition among buyers for the horses perceived to be the best on offer.

Yearling-to-juvenile pinhookers became increasingly disconsolate as the two-year-old sales season wore on. Although their most attractive horses sold for unprecedented prices, it became increasingly difficult to sell the rest of their horses at any price.

Losses piled upon losses, and it soon became obvious that many pinhookers would go to yearling sales with less money in hand than in 1999. At about the same time, William S. Farish, whose Lane's End had been leading consignor at Keeneland's July selected yearling sale on seven occasions in the 1990s, announced that it would not sell any yearlings at that glamorous venue in 2000.

None of that seemed to matter at the summer sales of selected yearlings, where averages soared well into record territory, easily surpassing benchmarks set at the height of the bloodstock boom of the 1980s. While the world's inflated financial markets formed the firm foundation for the market for boutique Thoroughbreds, another factor also made a huge impact: Fusaichi Pegasus.

Keeneland July came only a few weeks after word leaked out that Coolmore Stud had outbid several American and Japanese contenders for the star three-year-old. As Coolmore's publicist, Richard Henry, pointed out, Fusaichi Pegasus embodied the "Holy Grail" of the commercial breeding industry-the top-priced yearling of his year, winner of the 2000 Kentucky Derby (G1), and a son of sire of sires Mr. Prospector.

The reported $60-million-plus valuation of Fusaichi Pegasus loosened the grip of top-level yearling buyers on their wallets and set visions of six-figure stud fees dancing in the heads of Kentucky stallion managers.

The buzz held through the first two days of Keeneland's gargantuan September yearling sale, where Farish's consignment set a single-day record for a single consignor, selling more than $45-million worth of yearlings. As that 14-day sale wore on, however, buy-backs rose and average prices fell from the same sessions in 1999. The pattern repeated itself at Keeneland's huge November breeding-stock sale two months later.

In the meantime, leading sire Storm Cat's fee was increased 33.3% to $400,000 for 2001, and market value of seasons to other popular commercial sires such as Seeking the Gold and A.P. Indy soared to over $300,000. The astronomical valuation of Fusaichi Pegasus meant his stud fee was bound to be in the $150,000 range, while the $30-million syndication of leading older horse Lemon Drop Kid guaranteed a six-figure stud fee for him as well.

Ahhhh, the good old days were here again. The Thoroughbred marketplace had not seen those kinds of stud fees for newly retired horses for more than a decade.

But there was more.

After multiple Group 1 winner Giant's Causeway ran another brilliant race, beaten only by a head in the Breeders' Cup Classic (G1), his stud fee-albeit to stand at Coolmore's Irish base-was also raised over $100,000. Breeders' Cup Mile (G1) winner War Chant, a well-bred son of Danzig who had raced only seven times and was still sound, was retired at a fee of $75,000.

Not since-well you remember when-had a sound colt like War Chant with tremendous racetrack earning potential been retired to stud simply because he could earn for his owner much more in one year at stud.

By the end of the year, it had become clear that the marketplace had cleaved into two distinct parts: the elite and all the rest. There are now more players in the game with enormous amounts of cash at their disposal than at any time in history. All use essentially the same techniques and a small group of commercial agents to select the most likely horses, whether as racing or breeding prospects.

They have little interest in the rest of the market for racing prospects, breeding stock, or stallions, leaving the owners of those horses with little hope for profit.

Whether the top-end buyers' interest and the two-level market are sustainable will be revealed over the next few years.

In the meantime, due to the tremendous price spike at the top end of the market in 2000, bloodstock prices at all levels of the business will be feeling the effects for years to come.