Trying To Make Sense Of All The Sales.............

What is the state of the horse breeding nation?

Looking solely at the statistics of the just completed National Yearling Sales it is difficult to work out. The cold facts are :

The 2011 average was R220,419 as opposed to R 324,557 in 2010. This is a massive decline of 25% and not 'slightly' down as referred to eslewhere on this site. Furthermore it follows after steady declines for each year since the highs of 2008 and reduces the average to just above the level attained in 2005. But before breeders put guns to their heads it must be remembered that this year we had the new Cape Premier Yearling Sale where a substantial number of elite horses were sold at an average of R 404,205. So, as an undoubted consequence of the Cape sale, it is unrealistic to simply compare the 2011 NYS with the 2010 edition as the earlier Cape sale has to have had an influence.

Nevertheless - there are a number of areas where an element of smug crowing is going on and should not be. Let's take the example of Jet Master as he is being waved in front of our faces as representative of what can be achieved.

His yearlings offered in 2011 numbered 44. Although a handful of them fetched very impressive prices only 25 of the 44 sold for R400k or greater which I estimate to be about the minimum price required to show a profit given the price of a service from this stallion and subsequent 'production costs'. ( Here I am also assuming that you do not hold shares in the stallion and have to pay the asking price for a service ). So it would appear that 19 Jet Masters may well have sold for less than they cost to produce!

Then we have the so called 'middle market'. To be frank - this is where horses of moderate pedigree and conformation were traditionally offloaded to people who had 'interests' in racing varying from tenuous to hard core. Nature being what it is this sector often threw up champions which is why it remained attractive to participate at this level over the years. Unfortunately this ( predominantly white ) buying sector has become largely extinct for reasons ranging from a massive change in the economic order to the subsequent rise in their debt levels. Feeding slow horses has taken a back seat so breeders hoping to tap this market have had to accept prices way below their production costs.

All of the above are market forces at work - as unpalatable as they may seem.

So we have to accept the following :

Breeders adopting a 'have mare, will travel' approach are being absolutely punished. Conversely propsective owners wishing to 'get into' a horse with a royal pedigree and matching conformation probably only have shared ownership as an option as the prices being fetched for this select band are astronomical. Furthermore - it goes without saying that most or all of these elite individuals are being bought in the hope of campaigning overseas which immediately conjures up a slightly different cost/keep scenario. Hey - there is no shame in admitting that most of us simply cannot afford it.

The really disturbing aspect of this whole exercise is that there has been absolutely no change in the peripheral issues regarding horse ownership. Trainers are still raising their keep costs ( no criticism intended ) on a regular basis against a background where affordability is tight AND stakes have been reduced. To say nothing of the inflation adjusted value of stakes for the owner and selling prices for the breeder. So in this area 'market forces' do not appear to have taken hold.....or have they?

Once again statistics tell us that there has been a massive ( no exaggeration ) exodus of owners out of the sport. This becomes very apparent when trainers planning trips to the sales find themselves with few ( or no ) buyers to represent. Add to this the continual politicking within the sport and it becomes very attractive to simply cry 'Enough!' and go and do something else. When you then reflect on the reality that horse ownership is made up of 90% disappointment punctuated by 10% of triumph it becomes an easy thing to do.

I think it was Barry Irwin who recently stated that this industry is all about MONEY. Indeed it is. Because despite the claptrap bandied around about 'fun' it really is no fun at all to watch a massive outflow of funds on a regular basis only to receive the odd email or sms promising 'blinkers next time' or 'we'll try more ground'. To say nothing of the fact that certain trainers treat their horses as if they were their private property and the owner/s merely an irritating impediment. I, for one, found notations on my account reading 'Cheaper than a night at Teazers' ( was he expecting to see me there?) and a snarled 'There's my favourite owner' a tad disrespectful to a paid-up-to-date patron. But no matter - I took it from whence it comes.

The inability of the industry to adapt is worrying as there seems to be a slow, ongoing slide into what, at best, might survive as a very marginal sport. The sporadic efforts made to promote the sport are almost always directed at those already active in it. Add that to the perception that there is still plenty of unethical behaviour in the sport and we end up with what we have.

I recently read a detailed report on why it has become difficult if not impossible for dictators to close up shop and do what they do. Technology such as the internet, sms, twitter etc., was cited as the main reason that the truth ( and sometimes a selective truth ) will out. Racing would be well advised to take note because - whether it is an alleged R4 million buy back or a horse not ridden to its merits - each of these acts merely adds another brick to a wall which inevitably distances racing from its potential market.

Thanks again for the contribution Garrick, would it be fair to say and trying to have a positive "spin" on the sales to take the Cape Sale and the NYS together for this year and say the average for 2011 was R312,312 and only "slightly" down from the 2010 of R324,557

scotia Wrote:

---

> Thanks again for the contribution Garrick, would
> it be fair to say and trying to have a positive
> "spin" on the sales to take the Cape Sale and the
> NYS together for this year and say the average for
> 2011 was R312,312 and only "slightly" down from
> the 2010 of R324,557
>
>


Not an unrealistic assumption imo - still it's a declining trend - I woud term the prices in 2008 'utter madness' and these in 2011 'madness' - still having not seen one horse at the NYS in order to judge conformation, it does seem from the catalogue and price list that there were a few (56, 58, 81, 105, 179, 195, 271, 389, 418, 507, 547, 582) who were indeed 'well bought'

I think that the way that Cape sale went,it will only be a matter of time before it passes the NYS sales.Everything from coverage to marketing was brilliant,and it also had some very popular overseas clients that were well looked after.Thats my opinion.

Nice article there Garrick, yes it's certainly getting harder & harder to get NEW BLOOD / OWNERS into this game. Only us diehards who have been in the game for some time now know the pitfalls, & how it is a constant battle to keep ones winning stakes ABOVE the training & purchasing stakes.

The breeders & TBA expect / would like sales figures to go up every year - yet traing fees keep rising & STAKES OF LATE KEEP COMING DOWN.

It's a battle deluxe.

A winner in Joburg will cover how many months training fees ? It used to cover about 9 months if I'm not mistaken.

zoro Wrote:

---

> I think that the way that Cape sale went,it will
> only be a matter of time before it passes the NYS
> sales.Everything from coverage to marketing was
> brilliant,and it also had some very popular
> overseas clients that were well looked after.Thats
> my opinion.

I think the Cape sale should be the National sale, in the sense that it surely makes much more sense to hold the NYS in the region from which the bulk of the horses originate. Practically every horse on the NYS has to travel a substsantial distance to reach the sale, with all the additional risk which that entails, and Johannesburg is the one place which from a horse breeding perspective is basically the arse end of nowhere.

The idea that the horses should go to where the money is is outdated. The buyers will go to where the horses are if the horses are worth the effort, which the Cape Premier sale showed in no uncertain terms but which the other more traditional Cape sales have also shown. Many people thought Lionel Cohen was mad to take on the TBA when he formed his rival Equimark company in the 1990s and launched the Cape Vintage sale, but that sale very quickly built up a reputation as a "must be there" source of good horses. As one American gentleman (I don't remember his name) said many years ago, if you have the right horse you can sell it in a cornfield at midnight because the buyers will come.

I'm not convinced, though, that late January is quite the right time for a sale of the NYS' magnitude. It is very early in the year for yearlings, and while it may be the time when visitors abound in Cape Town it is perhaps a tad too soon from a purely horse perspective. That said, Australia has its massive Magic Millions Gold Coast yearling sale in January and New Zealand hold their premier sale soon thereafter, so I guess any horse person worth their salt can judge a yearling in January just as well as in April.

To me, the notion of holding the NYS in Gauteng is starting to look about as logical as staging the winter Olympics in Cairo.

I thought one particular stat quoted on the show last night was interesting; the gross aggregate for horses sold at all the yearling sales this season is UP 14% or R27m (if I'm remembering correctly). Yes, the average is down but more horses were sold. The important bit is that buyers spent R27m more this season than last.

Sabre Wrote:

---

> I thought one particular stat quoted on the show
> last night was interesting; the gross aggregate
> for horses sold at all the yearling sales this
> season is UP 14% or R27m (if I'm remembering
> correctly). Yes, the average is down but more
> horses were sold. The important bit is that buyers
> spent R27m more this season than last.


Yip, that's something to take note of; also if one includes the results from the Cape sale, the average was in fact only 'slightly down'; still there were quite a lot of horses sold at the NYS that went 'cheap'; but all in all I think the situation is not as bad as most thought (certainly no 'bloodbath' imo) I think most suggest that there were too many horses on the sale, but the relatively high clearance rate suggest otherwise?

One of the vendors (I forget his name) mentioned that he thought the 'profit above all else' focus of the operators are a bit flawed; he suggested that one firstly needs to stimulate interest in the 'product' (horses / horse racing in this case) and then the 'gambling' part will follow; currently there is too much emphasis placed on the 'gambling' side to the detriment of the 'product' - food for thought imo

Fortunately, Frodo, the vendor to whom you refer was Ian Robertson, and he's just been elected the new Chairman of the the TBA, which is the ONLY organisation currently doing anything to stimulate interest in the "sport" of racing.

Couple of things:

1) Gross and average: both are meaningless. The only thing that counts is the median. Gross is skewed by numbers. Average is skewed by a big price. Median is the price at which buyers have to pay to get the middle horse of the sale. Very meaningful. That's the one I look at.

2) Garrick: you described horse racing and breeding as it is EVERYWHERE in the world save Japan and Australia. It is a worldwide condition.

3) Magic: I agree with you wholeheartedly that the National Yearling Sale has been killed by the Cape Sale. I see nothing wrong with the sale being in the Cape, either, but totally agree that the timing and the type of animal offered in the Cape in January is off the mark. The proponents of the Cape sale envision a Magic Millions type of vendue. In order to accomplish this, however, South African breeders would have to start breeding an animal different than what is currently being produced. In order for the Cape sale to work well in January, breeders would have to start breeding horses that want to sprint 1000m early at 2.

Right now South Africa is well respected and could soon be well received among worldwide buyers because, by and large, they have done the right thing with their racing and breeding. Two-year-old racing is not emphasized. And Freshman and unproven sires are not overpriced or wildly sought after, which is how it should be.
South Africa is breeding horses that can hold their own on the worldwide stage and when they are raised, they are raised right, without vets fiddling with the legs of 99 percent of the foals.

I think the proponents of the Cape Sale are flirting with disaster if they try to change the face of South African breeding and racing by trying to mirror what they are doing in OZ. South Africa is better off growing steadily and thoughtfully, as opposed to quickly and irrationally. First of all, South Africans lack the wherewithall of people in OZ. Neither the breeders nor the owners can afford to pay crazy prices for young stock, especially if that stock will be unable to compete after their season at 2.

The best path to take is for the Cape sale to be conducted at the same time as the National Yearling Sale, which is in April. This will allow for the following to occur:

a) horses from KZN will have the requisite time to catch up physically with their counterparts in the Western Cape.

b) foreign buyers like me can come to the Cape and see the horses that would have been in both sales.

c) a longer sale with more horses would be very appealing to international buyers. A thousand horses sold over a week's time would be wonderful.

My suggestion to those Cape sale proponents that love OZ so much is for them to either move there as Lionel Cohen did or race there and stop trying to change a product that has gained international acceptance.

I spoke at Summerhill Stud's Stallion Day about 5 or so years ago and I praised the South African breeders and advised them not to change a thing, because they were on the right track. I told them not to let the vets run their operations.

Now things are starting to change and not for the better, if you ask me.

Some great reads on the forum today(tu)