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Keeneland

Do US breeders need to broaden the global appeal of their produce?

  PICTURE: Racing Post  

Why US breeders need to broaden their horizons

NOBODY was expecting great results at this year's Keeneland September yearling sale. When even the vendors make downbeat comments before the sale opens you know that the trend is going to be negative.

After Book 4 of the seven catalogue sale the aggregate was running down by about 40 per cent and the average price was down by 35 per cent. If these trends continue through the final three catalogues, the sale will end with an aggregate in the region of $200 million and an average price of $60,000.

These are very poor figures for Keeneland and, of course, for the breeders and vendors selling at what is, despite the success of this year's Saratoga August sale, by far and away the most important indicator of the state of the American breeding business.

The last time the yearling sales at Keeneland grossed less than $200 million was in 1996, when the average price was also around $65,000. If you think it is bad enough that the value of the US yearling crop has returned to where it was 13 years ago, the reality is even more gloomy.

The American bloodstock business is in decline and if you start putting past results into figures at today's prices you soon realise that the overalltrend in the US market has been negative for 25 years.

The American bloodstock market reached its peak in the 1980s, the era of Northern Dancer and the first phase of the Maktoum/Coolmore rivalry. In 1984 the aggregate of Keeneland's yearling sales in July and September was $260 million with an average price of $98,000.

Put those figures into today's prices and they become a turnover of $540 million and an average price of $203,000; so in real terms the decline is something like 65 per cent over 25 years.

Looking at long-term trends in the real value of the US yearling crop gives some hope for the future. The year 1984 was an exceptional one  and afterwards the market dropped back, staying around the $200 million mark up to the end of the 1980s.

The fall from this level to the bottom of the cycle in 1992 was around 50 per cent and in real terms the market did not fall for more than three consecutive years.

The optimist would say that the Keeneland September sale has now fallen for three consecutive years from its peak in 2006 by a total of around 50 per cent in real terms and so this year is likely to prove to be the bottom.

If2010 and 2011 are likely to be at a similar level to this year, by 2012 the market should return to strong growth,  once the almost certainly fewer horses conceived at lower stud fees in 2010 reach the market.

However, the trends in the market are not just a normal business cycle reflecting broader economic trends. Over the last 25 years something has changed in the American breeding world.

I am not talking about the internal problems of American racing, but the way the major farms and stallion owners regard the outside world. You only have to look at a yearling catalogue from a July sale in the 1980s to see that, at the time, many of the best sires in Kentucky had raced in Europe.

American breeders, both commerical and non commercial, raced in Europe and followed racing and sales in Europe. Over the last 25 years circumstances have changed, but, above all, there has a been a change of generation and many of those running the major Kentucky farms have little knowledge, experience or interest in racing outside the US.

There are of course exceptions; Will Farish raced the Oaks winner Casual Look and bred and sold her brother Mubtassim, wholooks so promising this year, and then Runnymede Farm has consistently bought, sold and boarded mares in Europe with great success.

There are, however, very few European-raced sires in Kentucky now that El Prado is dead and Kingmambo close to retirement. The days when Kentucky farms regularly competed to buy Derby or Arc winners has long since gone and the only recent example was Frank Stronach's purchase of North Light for Adena Springs.

Taken as a whole the US breeding business has turned in on itself and as a result it is no longer in the pre-eminent position it was 25 years ago.

In the 1980s if you wanted to buy the best yearlings or mares, whether to race in the US, in Europe or Japan or anywhere else, you had to go to Kentucky as that was where the best were on offer. This is no longer the case, which is why the value of the US yearling crop is in steady decline, and why many of those who are looking for the best did not even go to Keeneland last week.

If Kentucky's breeders want to turn things around they will have to work to sort out their own iternal problems. But it is also time to take a look at the outside world and at being involved wherever there are high class thoroughbreds.

The bloodstock market thrives on trade and those countries who have cut themselves off from this trade have taken years to re-establish a prominent position.

Kentucky remains a major trading centre but for 20 years or more too much of this trade has been exporting, and not nearly enough has been imported to maintain the standard and international appeal of the best American-bred yearlings.

 

 

 

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