Keeneland January Better Than the Bare Numbers Suggest

It's a familiar litany that we analysts preach: Mixed sales results are vulnerable to what's in the catalogs.

This year's Keeneland January Horses of All Ages Sale was expanded from four days to five, with 17% more cataloged and 16% more listed as sold than last year, but the metrics suggest pretty convincingly that the additional horses came more from the bottom end of the market than from the top.

The most revealing comparison is a look at this year's first four days versus last year's four-day sale. Last year, 951 horses sold for $48,280,100—an average of $50,768 in a sparkling four-day sale featuring Abel Tasman, who sold for $5 million. This year, after four days, 952 horses sold for a total of $41,118,900, an average of $43,192. If we subtract Abel Tasman from the 2019 sale (and let 2020 keep its $640,000 sale-topper), the four-day gross and average were each down 5%; that's probably the fairest reflection of "the market."

When we leave Abel Tasman in and add this year's fifth day, the metrics look a lot worse. This year's totals were: 1,827 cataloged (+17%), of which 1,106 sold (+16%) for a total of $42,480,500 (-12%), an average of $38,409 (-24%), and a median of $14,000 (-30%). But, as noted above, those comparisons are probably not an accurate comparison of the overall market—though they do show a marked lack of interest in the market's bottom ranges. 

However, it's also instructive to look at this year's sale not just in comparison to last year but also in the context of previous years, and when doing that we discover that 2020 is, in fact, only the second year since 2014 that Keeneland January grossed over $40 million. The gross in the four years between 2015-18 was more around $35 million, with the averages in the high 30s.

In fact, in 2018 there were 1,581 cataloged, and 939 sold for a total of $35,819,200 at an average of $38,146. This year's average was $38,409, so, really, when compared to the 2018 sale, 18% more horses sold this year for an 18% higher gross and virtually the same average. An 18% gross increase over 2018 while maintaining the same average doesn't read so badly.

Updated statistics for all sires that had short yearlings or in-foal mares sold at the January sale—in other words, updated cumulative averages since Oct. 1, 2019—have been published. The five top sires with their first foals of 2019 (all represented at Keeneland January) have now averaged over $100,000 with their first weanlings/short yearlings: Gun Runner  (13 for an average of $275,923), Arrogate  (6/$251,667), Mastery  (21/$157,476), Classic Empire  (27/$108,926), and Practical Joke  (34/$103,467).

Of the 20 sires represented in January that have now averaged over $100,000 for their 2019 foal crops, the sire with the biggest improvement in January was, perhaps not surprisingly, Constitution , who had 10 short yearlings average $144,700 and has now had 31 weanlings/short yearlings from his 2019 crop average $100,065.

Records at Australia's Magic Millions Sale

Australasia's yearling sale season begins in January with the Magic Millions Yearling Sale on Queensland's Gold Coast. While the accompanying sire statistics include a small Jan. 12 Book 2, the market is made by the four-session Book 1 that ran Jan. 8-11 with 888 yearlings cataloged.

In an era when North American sales often see 60% of those cataloged sold, and Europe 70%, an astonishing 81.4% of the Book 1 Magic Millions cataloged were listed as sold: 723 yearlings grossed a record AU$178 million, up 5% from the previous year, and averaged a record AU$247,402 (up 4%), with a median of AU$180,000 (up 6%). 

There are three major factors that contributed to the strength of the sale, even with no fewer than four of last year's major buyers sitting it out. The first is prize money, which is massive.

Every Sunday, the U.K. and Ireland's daily racing paper, the Racing Post, runs a feature where they ask someone currently in the industry a series of questions, and one of the questions they always ask is something along the lines of "Other than prize money, what do you think is the most pressing issue facing racing?" Every Sunday I cringe, because there is no more pressing issue than prize money, and Australia proves it. They have the world's best clearance rate and a vibrant middle market precisely because of prize money.

Second is Asian investment. In Australian and New Zealand breeding as well as racing industries, Asian interests own farms and buy horses to race in Australasia. Australia and New Zealand are the main suppliers of racehorses throughout Asia: Hong Kong, Singapore, Macau, and now mainland China. Asian investment domestically, plus a major secondary market, is another huge boost.

Also, Arrowfield Farm in particular has been investing heavily in Japanese bloodlines, most notably Deep Impact, who sired the $1.9 million Magic Millions sale-topper from the Arrowfield draft.

All this contributes to the third factor, which is that Australasia is now starting to consistently produce world-class horses—still mostly sprinters, but one sprinting filly by Exceed And Excel was the dam of Investec Derby (G1) winner Anthony Van Dyck. All this also makes it a lot of fun to go to the races.

The leading sire by average, with five or more sold in Magic Millions Books 1-2, was Yarraman Park Stud's I Am Invincible, who had 42 yearlings sell for an average of AU$482,024. Arrowfield's great Redoute's Choice, who died last year and was arguably Danehill's greatest Southern Hemisphere son, had seven average $451,429, while Darley's best son of Danehill, Exceed And Excel, was third with 24 sold for an average of $398,542.

Redoute's Choice's two best sons at Arrowfield, Not A Single Doubt (32/$344,531) and three-time champion sire Snitzel (42/$312,381), were fourth and sixth by average (with five or more sold), respectively. Coolmore's American Pharoah  (22/$322,273), the leading first-crop sire, split the two for fifth. Coolmore's best son of Danehill, Fastnet Rock (26/$297,115), was seventh by average.

The top 10 was completed by Coolmore's So You Think (11/$275,870); Victoria's leading sire, Woodside Park's Written Tycoon (23/$275,870), from his best crop of mares; and Widden Stud's Zoustar (27/$272,222), from his fourth (and probably worst) crop. Yarraman Park's Hinchinbrook, a closely related sibling to Snitzel by Fastnet Rock who died in 2018, had 17 average $258,529, while the leading second-crop sire (first 3-year-olds) by average was Newgate's Deep Field (17/$248,529), like Zoustar a son of the short-lived but influential Northern Meteor (by Encosta de Lago).

After American Pharoah, the second-leading first-crop yearling sire was Arrowfield's Shalaa (25/$243,400), a son of Invincible Spirit who was also leading first-crop yearling sire in Europe in 2019 from his base at France's Haras de Bouquetot. Newgate's Capitalist (34/$232,647), a crack 2-year-old by Written Tycoon, and Aquis Farm's Divine Prophet (11/$205,909) were other first-crop yearling sires to average over AU$200,000.

2020 APEX: Frankel, Galileo, Dubawi Top the List

Annual Progeny Earnings Index sire ratings were originally devised for the newsletter Racing Update in the late 1980s as a variation on the average-earnings index. That calculation was itself an improvement on the standard progeny earnings tables, in that the average-earnings index at least divided a sire's total progeny earnings in a year by his total number of runners, and compared a specific sire's average earnings per runner with the average earnings for all runners by all sires. To cross jurisdictions (U.K./Ireland, for example, or France), the calculation was done for each jurisdiction and the results added together.

There were two weaknesses with the average-earnings index that are addressed with APEX. The first was that one huge earner could skew the index beyond credibility. We addressed this by measuring the frequency with which a sire produced earners in three earnings categories: the top 2% of earners were designated "A Runners"; the next 2% "B Runners"; and the next 4% "C Runners"; we then also combined the three categories to create "ABC Runners," which are the top 8% of earners.

The second weakness with the average-earnings index (and the cumulative average-earnings index, compiled over a sire's career) is, though the calculation is mathematically pure, taking all runners by all sires inflates the ratings for sires that matter to those operating in the Thoroughbred marketplace, or what we have come to call the "commercial market."

A third of sires and a fifth of foals have no relevance to the practical world in which the vast majority of owners and breeders are operating. APEX is therefore less pure, but more practical, by virtue of two limitations on the population we study: We limit the analysis to the last seven years (which exposes once-great sires who have tailed off), and we require sires to have at least 10 named 3-year-olds in the last season covered (in this case 2019, so 10 or more foals of 2016). By making these two adjustments, we have found that a 1.00 index really does mean an average sire, not 1.40 as we sometimes find with the average-earnings index.

Over time, we find 4% of foals by qualifying sires become A Runners at some point in their careers, which is roughly the same percentage as graded, group, and listed black-type winners (we also automatically include any group winner in the qualifying countries whether they achieve the A Runner earnings threshold or not), so that is roughly the level that APEX A Runners identify.

There are actually 17 different APEX indexes, divided by class (A,B,C Runners), region (North America, Europe—U.K./Ireland, France, Germany—Japan, and overall), and age (2yo, 3yo, 4yo, 5yo+ ABC Indexes), but the A Runner Index is our signature tune.

In our 2020 Northern Hemisphere APEX ratings, covering the years 2013-19, a total of 748 sires qualified for ratings, of which 409 are North American or European sires with 200 or more year-starters (in annualized ratings like these, a horse is counted as one "runner" each year it starts) over the seven years. The entire collection of 2020 Northern Hemisphere APEX ratings will be available on our website billoppenheim.com, and we will tweet from @billoppenheim when these are available; the webmaster is working on them as we speak.

The three leading sires by A Runner Index 2013-19 all have A Runner indexes over 5.00, which translates into 10% A Runners/year-starters (2.00% = 1.00 A Index): the new super sire, Frankel (6.20), who has actually had runners since 2016; his sire, Galileo (5.96), who has an average of 290 runners a year and in total four times the number of year-starters as his best son; and Dubawi (5.08), Darley's top sire.

War Front  (4.35) is the top North American sire, though he is half-European at least, followed by Medaglia d'Oro  (3.69), Tapit  (3.45), and Uncle Mo  (3.38). Dansili (3.22, now retired), Sea The Stars (3.20), and Ghostzapper  (3.13) round out the top 10, ahead of Curlin  (2.96) and sire-of-the-moment Shamardal (2.87). 

Three F2015 sires (first 4-year-olds of 2019) feature among the top 50: Camelot (2.66), Intello (2.37), and Declaration of War (2.19), though the top F2015 sire by A Runner Index is Darley's Farhh (4.35), but that is from just 92 year-starters. France's Pedro the Great (2.12, from 118 year-starters) also scores over a 2.00 A Runner Index.

Among the leading F2016 sires (first 3-year-olds 2019), only Kingman (2.08) had over 200 year-starters by the end of 2019. Fellow Europeans Sea The Moon (3.01), No Nay Never (2.94), and Australia (2.38) actually had higher A Runner indexes but had between 100-200 year-starters. Top American F2016 sires with at least 100 year-starters were New York's Central Banker  (2.40) and Kentucky's Mucho Macho Man  (2.36).