The joke to me is that if this was a normal year - and CTS had a good strong sale with numbers up , we would not hear the end of it.
Besides one or two articles - It seems to be hush hush and move on. Tell that to the breeder that was getting good prices the last 5 years - bought a bout and a huge house and now could not get a bid.
It is the same story with the cows - We have all seen the slide on tv - Dave Scott opend a thread on it - Up to this day now two weeks later - not one slide about the prizes shown on social media, yet for a few weeks everyday we were remindered how great they were giving out free water.
Here is a different perspection by David Allen from yeaterdays Turf Talk - If Day 1 - Lots 1 to 170 are going to have a reserve or minimum of R 100K well then they to will be done .
It shouldn’t have been in April…
but what next?
VENDORS had a tough time at the CTS April Sale. Buyers had a ball.
DON’T blame the current CTS executive and management who played no part in deciding the
date of last week’s sale. They arrived after it was determined and inherited a situation that
was the only element of failure in our long mediation process last year conducted of course
well before the Mayfair situation arose.
Just as the logistical management of Cape Premier
was extremely good in spite of the Mayfair impact,
so did CTS make as good a fist of CTS April as
possible under the predicted circumstances.
In the end game of our mediation in August last
year, CTS had by then cancelled three sales for one
reason or another, vacating Johannesburg
completely in the process. BSA’s Ready to Run had
gone before we started and the remaining target
was to “sort out” a single sale in the Cape placed
between CPYS and NYS.
It wasn’t sorted out. Mistico was not withdrawn
although withdrawal was debated. CTS’s sale would
replace Emperors as an enhanced version of CTS
March. Diplomacy aimed at keeping it in March, not
door-stepping the Nationals on dates, was
ultimately unsuccessful (with Mistico remaining).
Our blueprint for a joint sale, to achieve one single
sale only, was perhaps ahead of its time and
remains on the table.
Aside from the programme, cooperative protocols
were tabled and both sides acted materially up to a
point with regard to the high costs of selling in
South Africa.
Having never embraced sales races compulsorily
funded by vendors and buyers, it was with pleasure that we noted the R160,000 sale of a
horse in “Session 3” at CTS April last week which
had a median of R25,000 and qualified for nothing.
Other session medians were R42,500 and
R105,000.
Much of the breeding industry cannot continue for
long producing racehorses for sale at current
levels. Breeders are already dropping out.
An expert buyer told me that he was steamed up
about Bloodstock South Africa’s R100,000 minimum
bid for their Session 1 at NYS. “Don’t they know
that it is the market that will determine how much
a horse is worth?” he asked.
In pure economic terms, he is absolutely right,
interpreting the situation as potentially preventing
him from buying a nice horse out of Session 1 for
less than R100,000.
But one would hope that Session 1
entries were not made for yearlings
unlikely to make R100,000? And that the
sales company has not approved
anything that might make less? So do we
think that all 231 Session 1 lots will
make at least R100,000? Or is my buyer
friend right that R100,000 is too high
(because there won’t be enough bids to
go round)?
Of course sales companies need to act strategically
to improve their figures, and to dress up a “select”
part of a sale as something different.
BSA’s elimination of Not Solds and Vendor
Buybacks from their stats is right and proper. It
follows that if the minimum bid is increased, either
everything will actually make more than the
minimum or those that fail to do so will not count
negatively in the calculation of averages and
medians.
The median for the whole NYS last year was
R175,000, and for CPYS this year R300,000. Will
BSA’s first sector achieve that? Here’s hoping…
Buyers can get used to buying nice horses for small
money but ultimately it is a self-defeating exercise.
Most breeders have a ball-park figure of R130-
160,000 for the production of a yearling on the
basis of non-farm owning breeders paying keep
etc. Farms will vary as to their figures but will be in
the same general area. This excludes stallion fees,
as well as any amortisation of the original cost of
the mare and may exclude optional insurance.
Therefore selling a yearling by a 6-figure sire for
(say) R300,000 might be a case of getting a chunk
of money back, not of turning a useful profit.
Regionally, BSA Mistico’s median of R50,000 was
less distressed by levies than CTS April Session 2’s
R42,500 therefore worth even more to the vendor.
But half the lots at each sale will have fallen below
the median. Unless bailed out by the
occasional “big one” – and it would have to be big -
the equation is impossible.
Last week around 80 out of 288 offered were “Not
Sold” which mostly meant No Bid. About another 30
were declared vendor buybacks which may have
meant No Bid or being bid up to a level. As
anywhere, there would also have been undeclared
buybacks.
The list of sires of yearlings receiving no bid or
otherwise having a poor time of it is very long.
All bad sires? Of course not. All bad individuals?
Absolutely not – some weren’t great but they had
been inspected. Mostly fillies? Not a major factor.
It was a matter of the fundamental demand for
racehorses and the number and power of the buyers
who actually attended or were represented.
An experienced friend said to me the other day “I
can syndicate a R400,000 horse in minutes, but I
can’t get people into a R50,000 horse”. This would
apply mostly to racing regulars: people of means
who are comfortable having several minority shares,
spreading their involvement in that way and
believing that a somewhat higher price is more
likely to define a somewhat better horse. (Not
necessarily true but it’s how many people think).
In contrast, in any economy it is the smaller
spenders who tighten their belts first thus making
lower cost syndications difficult.
Perhaps the drive – such as it is – to make racing
affordable is actually self-defeating. It is an elite
activity. It is a no jeans or shorts in the parade ring
occasion. Betting for some, yes of course, but for
many it is the social day out or the thrill of watching
from afar with or without a flutter.
A marketing guru would surely
say “Target people who can
afford it. There are fewer of
them – thus more easily a
identifiable - but still thousands
if only they knew how much
they would enjoy racing”.
In the absence of a raft of bloodstock agents
combing for clients, and of any socially driven
outreach by the industry to those “who can afford
it” – also with limited governing body intervention -
it is only the sales companies that are equipped to
bring more buyers in numbers. Their relative
positioning will be clearer next year when perhaps
we can see improved sustainability.—
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