Distance=perspective

Distance is supposed to give one perspective.....and I suppose it does. But my conclusions about the Fasig-Tipton July sale are no different today from the banks of the Caney Fork in Tennessee than they were yesterday from the banks of Elkhorn Creek in Kentucky.

The market for Thoroughbred racing prospects still appears to be bouncing along at the bottom of a deep valley. There does not appear to be any significant prospect of climbing out of that valley anytime soon. At the moment, on the other hand, there does not appear to be any likelihood of it dropping off another cliff either. Cliffs, however, have a disturbing propensity to appear out of nowhere in the cartoon universe in which we now live, courtesy of....well, don't get me started.

As a result of the economic uncertainty with which we all live, buyers appear to have finally figured out that it is really stupid to pay a premium for the progeny of first-year stallions. Ironically, this burst of intelligence arrived in a year graced by perhaps the most promising group of first-year stallions of the last five years, most of them owned by Darley.

One or more of Darley's stellar group of firsters--Any Given Saturday, Discreet Cat, Hard Spun, and Street Sense--is virtually certain to develop into a first-rate stallion. Opinions vary on which is the most likely to light the lights, but Hard Spun was the horse to whom breeders were most eager to send a mare two years ago, and he led first-year sires at the sale with three or more sold. All four of the Darley horses had their moments, though, and it will be interesting to see how it plays out when some real numbers are added to the statistics in September.

This is likely to be the toughest year for commercial breeders in this cycle. Stud fees were at their highest in 2008 when these yearlings were conceived and prices are (hopefully) at their lowest point in the cycle. That is like buying at retail and selling at wholesale--not a formula for making money.

The underlying question, though, is have stud fees come down enough even now? At the end of the sales season it will be interesting to compare the stud fee ratios based on stud fee at conception versus current year stud fee. It may not be pretty.

The object of the game

Like most horse sales these days--and for the foreseeable future--the first session of the Fasig-Tipton July sale was a mixed bag. Yes, average and median both increased, but, with a significantly smaller catalog, total proceeds to breeders declined by $1.2-million compared to the same session in 2009.

The killing statistic for commercial breeders, though, is the actual clearance rate. 107 of the 170 horses through the ring were listed as sold, which leaves a 37.1% buy back rate, which is bad enough, but not disastrous on the surface. When you consider the fact, however, that 203 horses were cataloged for the first session, that means that only 52.7% of the horses breeders planned to sell at the first session found apparent buyers--and there are always a percentage of reported sales that remain the property of their owners.

The only reason that the final buy back rate was not over 40%--where it hovered throughout the day--was that Fasig-Tipton now (correctly) includes after market private sales that are reported to them in their statistics. A dozen yearlings were listed in the final results with "PS" for private sale beside the price.

Everybody in the business knows that this crop of yearlings was bred on stud fees that reflected the inflated market that existed before the economic crash of October 2008, and that it is going to be very difficult to make money overall this year. That's why it was so disappointing--shocking really--to see so many yearlings listed as not sold for substantial multiples of their stud fees.

Consignors and breeders always have excuses (they're called "reasons" in their minds), but it is difficult for a disinterested observer to understand why anyone would not accept $70,000 for a yearling by Sun King, $75,000 for a Bob and John, $74,000 for a Flashy Bull, or $100,000 for a Rockport Harbor. All of those hammer prices represent more than four times the stud fee presumably invested, and, regardless of how promising the yearling is or how much the breeder paid for the mare, that should be an acceptable return on investment in a severely depressed market.

I don't mean to pick on any breeder or any consignor by mentioning those particular failed transactions, but it should be clear to everyone by now that we live in a changed environment. If the object of the exercise is to sell the horse, then sell the damned horse when offered a reasonable profit.

Fasig-Tipton removed the second-year horses from their young sire showcase (the first 144 hips) since they'd been getting killed on those horses the last couple of years. That is, in fact the main reason the average was up slightly. Take a big chunk of the least desirable horses out of the sale, if your average doesn't go up then you're really in trouble.

But buyers clearly are no longer paying the same kind of premium they once did for first-year sires. If they were, the average would have been substantially higher. This is a good thing. Paying more for progeny of first year sires just because they were by first year sires never made any sense. It was a fantasy cleverly exploited by breeders and pinhookers that has severely distorted the stallion market.

The reversal of that 15-year trend is the best thing that happened today.

The big dogs are loose

It's got to be a good sign when you walk into the barn area at a horse sale and the first thing you see is John Ferguson of Darley looking at a horse on one side of a show ring and Paul Shanahan of Coolmore looking at another one on the other side of the ring. And it can't be bad when they then switch positions and horses.

Who knows what it really means at the Fasig-Tipton Kentucky July sale, though. Historically neither Darley nor Coolmore buys large numbers of horses on Newtown Pike, but consignors always have a bit more hope when the big dogs are on the loose.

But mostly, FTK July is not that kind of sale. Pinhookers are everywhere, if for no other reason than the sales company caters specifically to them in the horses they select. A horse chosen for a yearling sale in July, by definition, has to be precociously mature, which, historically, is exactly what pinhookers have to have, even among their two-turn horses.

One veteran, highly successful pinhooker told me that he thought this is the best collection of horses he has seen at FTK July. I'm sure if I'd asked around I could have found another pinhooker who thinks it's the most useless collection of manes and tails in history, but, from my own somewhat casual observations, there are plenty of attractive racehorses here.

The one horse that tickled my fancy the most has absolutely no chance of topping the sale. From the late '70s through the 1980s and early '90s, maybe 25% or more of select yearling sales would be small to medium-sized, muscular, typey, elegant, refined horses with tremendously athletic walks, horses that looked like their sire (or grandsire), the immortal Northern Dancer. Although the Northern Dancer male line remains powerfully prominent, that physical type has all but disappeared from yearling sales.

The shift began with the bloodstock crash of the late '80s, when Sheikh Mohammed, Coolmore, Stavros Niarchos, and other big European-based buyers cut back their buying severely at American auctions. American commercial breeders shifted their focus to American dirt sires, away from the European-raced champions who had dominated the sales rings in the '70s and '80s. Yearling sales--or at least American yearling sales--are now dominated by big, powerful horses who are likely to be suited to dirt racing. That may change over the next few years because of synthetics, but that has certainly been the trend for most of the last 20 years.

Four Star Sales's High Cotton colt out of Echo Bluff, by Pine Bluff, is a throwback. He would have fit right in at a mid-1980s yearling sale. He bears the mark of Northern Dancer proudly. High Cotton was a good, honest racehorse, and his sire, Dixie Union also resembles his grandsire Northern Dancer, but High Cotton is not on anyone's list of prospective sires of sale toppers.

His son at FTK July is inbred 4x6x4 to Northern Dancer, but the percentage of horses in the breed inbred to Northern Dancer is rapidly approaching 50%, so that is no real explanation.

The new DNA testing services are useful aids in selecting horses, but they have little to say so far about such genetic mysteries. Some day that may change, but, thankfully, atavistic wonders can still delight us and inspire a stroll into nostalgia-land.

Where are Cuz and Tom when we need them?

Blogging is a very odd--in my case--hobby....or at least that's the best label I can come up with at the moment for what I do here. Certainly not a job, since the only income is psychic.

When you get into a rhythm of posting--once a week, twice a month, every day...whatever--posts flow fairly easily and steadily. When real life intervenes in the form of hernia surgery followed by a series of (welcome) guests, excuses not to post proliferate, as natural as breathing.

But life goes on and yearling sales season is here. July nowadays is not very much like July in Lexington from 1945 through 2002, the year the Keeneland July sale of selected yearlings died a rather ignominious death. For much of that period, Keeneland July was the social event of the Lexington summer, as well as being the most important and expensive horse sale in the world.

My first Keeneland July sale was 1970, when Majestic Prince's brother Crowned Prince sold for a then-record $510,000. Those two sons of Raise a Native (comprising two-thirds of the only set of three brothers to set world record yearling prices) were bred at Spendthrift Farm and sold by the inimitable Leslie Combs II.

Cousin Leslie set the tone at Keeneland July, and motivated other consignors like Tom Gentry to stage ever more lavish parties to lubricate buyers and loosen their grip on their wallets. Sheikh Mohammed's Dubai World Cup parties have nothing on the Tom Gentry parties of the 1980s.

That all came to an end with the bloodstock recession of the late '80s. Spendthrift and Gentry both imploded in different ways, and once Keeneland inaugurated select sessions at the September sale in 1989, the July sale was doomed.

Fasig-Tipton's new, Dubai-based ownership is making an effort to return a hint of glamor to July. That is surely one of the things that Thoroughbred racing in general and the auction scene in particular, needs.

Once one reaches a certain age, the contemporary world never seems as glamorous, as exciting, somehow as real, as the world of our youth. We could use more than a few Cousin Leslies and Tom Gentrys about now.