September Market: Steady

There's a lot to be said for market stability, and as others have commented in the last couple of days, the Keeneland September market can only be described as 'steady'. A look at the accompanying Weekly Sales Ticker confirms this: the gross for North America's most important yearling sale finished up at $281,496,100, for 2,745 yearlings sold, an average of $102,549. These figures were slight improvements on 2014, when 2,819 yearlings sold for $279,960,500 and averaged $99,312; but the 2015 figures mirror almost exactly the results from 2013, when 2,744 yearlings sold for $280,491,300, and averaged $102,220. So: 2,745 yearlings sold this year, compared to 2,744 in 2013; the gross was $1.004,800 higher than in 2013, and the average increased by $329, or three-tenths of one percent. That's a steady market; the only real difference is that with 256 more yearlings (6.5%) catalogued this year than in 2013, the clearance rate from the catalogues dropped from 70.2% two years ago to 65.9% this year, a drop of 4.3%.

But three years of market stability at Keeneland September doesn't tell the whole story. Recall that as far back as 2003, the first year after the July sale was 'suspended' (and, of course, it's still on sabbatical), there were 2,969 yearlings sold at Keeneland September, for a gross of $274,125,300, and an average of $92,329–figures roughly comparable to today, except that 8% fewer yearlings sold this year than in 2003, for about 3% more revenue, and an average about $10,000 higher (11%). But in between we experienced a massive rise, and a massive fall.

In 2004, the Keeneland September Sale broke the $300-million barrier for the first time, with a gross of $324.9 million and an average of $96,410. In 2005, the gross was $384.3 million and the average $108,420 for 3,545 yearlings sold. The gross and average peaked in 2006, when 3,566 yearlings sold for $399,791,800 (that was one $210,000 bid short of $400 million) and averaged $112,427. In 2007, the number sold peaked at 3,799–that's 1,054 more (38%) than in this year's sale, which tells us something about the decline in the North American foal crop.

Then, in 2008, the World Financial Crisis hit. The 2008 September Sale declined, but not preciptiously: 3,605 yearlings brought just under $328 million and averaged $90,984. The real crash in the horse market actually started the day after the 2008 September Sale ended, and it lasted for exactly 12 months, until the end of the 2009 September Sale. At that sale, 3,159 yearlings grossed $191,859,400 and averaged $60,734–a drop of about 40% in gross and a third in average from the 2008 sale.

Though the U.S. horse market bottomed out in 2009, it would be four years before it really recovered. If you refer back to the Sales Ticker, you see that the September Sale grossed $198 million in 2010; $223 million in 2011; and $219 million in 2012, when only 2,516 yearlings sold–the lowest number since the suspension of the July sale.

Thus, the September 2013 sale marked the end of this recession in the North American Thoroughbred market: the number sold (2,744) increased by 9% from 2012; the gross jumped by 28%–$60 million–and the average rose 12%, to $102,220, marking the first time the average had edged above $100,000 since 2007. So when we say the market has stabilized the last three years, it's important to think about that in the context of the 12 years going back to 2003, since when the September Sale rose to a gross of almost $400 million, then crashed to a gross under $200 million. The North American foal crop has dropped by about a third since 2008. Correspondingly, a $280 million gross is a 30% drop from a $400 million gross (2006); so, when we say the Keeneland September Sale has stabilized, it really has–but with about a third fewer horses than there were seven years ago.

The recovery in the major European sales came a year earlier, in 2012; in that year, Tattersalls' October 1 Yearling Sale saw a 32% rise in gross, from about $83 million in U.S. money to $109 million. Since then the October 1 gross has risen again, about another 16% through 2014, when the October 1 gross converted to about $127 million and averaged around $377,000, well above the Keeneland September Book 1 average of around $300,000. Goffs has its two-day Orby Sale starting tomorrow, followed by the one-day Sportsmans Sale on Thursday. The Orby section grossed €38,450,000 in 2014, up from €34,745,500 in 2014 and €27,214,500 in 2013. That's a 41% increase in two years. With a total of 21 yearlings by Galileo (14), Dubawi (1) and Frankel (6) at Goffs, and 56 catalogued by the three sires at Tattersalls October 1, it would not be a surprise to see continued sustained growth in the European yearling market over the next few weeks.

There are still plenty of yearling sales to come in North America, but with well over 3,000 yearlings already sold, we can get a pretty fair idea of the rankings–click here to see a list of the top 50 North American sires by yearling average, through the end of the September Sale. Gainesway's Tapit (47, avg $620,297) and Claiborne's War Front (24, avg $574,375) recorded far and away the highest averages. Three other sires have averaged over $300,000: Darley's Medaglia D'Oro (36, avg. $352,500) and deceased Street Cry (16, avg. $321,625); and WinStar's Distorted Humor (32, avg $313,281). Six other sires have averaged over $200,000: Darley's Bernardini ($269,500); Taylor Made's deceased Unbridled's Song ($268,325); Lane's End's deceased Smart Strike ($254,375); WinStar's Speightstown ($241,567); Hill 'n' Dale's new acquisition from Lane's End, Curlin ($226,230); and Spendthrift's Malibu Moon ($216,339). Close up behind them are Ashford's new commercial star, Scat Daddy ($199,020); the leading first-crop yearling sire on average, WinStar's Bodemeister (64, avg $191,125) and another WinStar stallion, Tiznow ($190,064). American Pharoah's sire, Pioneerof The Nile, ranks 15th, with 44 yearlings averaging $182,227; he, too, stands at WinStar.

Five North American stallions with their first crops of yearlings selling have averaged near or over $100,000 at the sales so far (click here to see the top 25 from Instatistics): Bodemeister, as noted, has averaged $191,125 to top North American F2014 sires. Lane's End's The Factor (61, avg $150,475) and Union Rags (52, avg $136,942) come next, followed by Darby Dan's Jersey Town (14, avg $108,250) and Gainesway's Tapizar (46, avg $98,913). Both The Factor and Tapizar are $15,000 stallions with $100,000 medians, 6.7 times their stud fees; that invariably suggests a high standard of individual. Another 10 F2014 stallions have averaged over $50,000 so far, headed by: Darby Dan's Shackleford (46, avg $83,108); Gainesway's To Honor And Serve (43, avg $80,034); and Airdrie's Creative Cause (28, avg $78,678). But now, for the next three weeks, we'll be talking mostly about European first-crop yearling sires: Juddmonte's Frankel; his immediate victims on the racetrack, Newsells Park's Nathaniel and Coolmore's Excelebration; and their contemporaries. Goffs kicks off tomorrow (Orby 2014 average: €79,274), and this column will be back on Saturday to cover the midweek sales for the next two weeks.