Resiliency, Quality Horses Drive November Market

As the curtain closed on its 10-day November Breeding Stock Sale, Keeneland officials were expressing gratitude for the resiliency within the industry that allowed the racing and sales company not only to hold its events as scheduled despite COVID-19, but also with results that belied the circumstances.

"If I had a takeaway from this whole fall, it's a word we usually use this time of the year, which is 'gratitude,'" said Shannon Arvin, Keeneland president-elect and interim head of sales, referring to the September Yearling Sale, the fall race meet held without spectators, the Breeders' Cup World Championships, and the November sale that were conducted on their pre-pandemic schedules. "This year we're all feeling gratitude to consignors, breeders, sellers, buyers, media—our whole industry—for being so resilient through tough times."

Not unlike the yearling sale that had declines of 19.7% in average and 15.9% in median, the breeding stock sale also produced a decline in average price while the median remained unchanged when compared with a non-pandemic 2019 sale.

From a catalog totaling 3,804 entries—a 16.8% decrease from the 4,572 in last year's auction—Keeneland reported 2,286 horses grossed $157,815,300, compared with the $200,135,200 total paid for 2,671 head in 2019. This year's average price of $69,036 represented a decline of 7.9% from the $74,929 figure a year ago, and the median held steady at $25,000. This year's cumulative RNA rate was 15.9%, compared with 20% in 2019.

As the second major sale since Keeneland incorporated internet bidding into the live bidding format, November had 279 horses sold via the internet for $16,274,300, with 3,269 internet bids. Leading the online purchases was grade 1 winner Ollie's Candy, who competed in the Longines Breeders' Cup Distaff (G1) at Keeneland two days before the sale and sold as a racing or broodmare prospect to K I Farm of Japan for $1.65 million.

Topping the sale were a pair of mares purchased by Larry Best's OXO Equine for $1.95 million and $1.9 million, respectively.

Most expensive of the two was Concrete Rose, a grade 1-winning, $1.2 million earner offered as a broodmare prospect. Best's other market-leading purchase was the 11-year-old mare Indian Miss, the dam of champion sprinter Mitole  sold in foal to leading sire Into Mischief .

Colts by Triple Crown winners Justify  and American Pharoah  sold for $600,000 each to tie as the most expensive weanlings. Donato Lanni, agent, purchased the son of Justify who was consigned by Hunter Valley Farm, agent. M.V. Magnier acquired the son of 2015 Triple Crown winner American Pharoah who is a half brother to Jackie's Warrior. 

Despite concerns about the current state of affairs resulting from the global pandemic, November buyers were making investments in their future breeding or racing entities, the Keeneland sale officials said.

"Resiliency, optimism, and hope for a blue sky in the future," Arvin said of the factors driving the market.

"The market in both September and November was a lot deeper than we, and many others, thought it would be," Keeneland director of sales development Mark Maronde said. "But horsemen are optimistic. They see the end of this pandemic coming, and they wanted to continue to participate. They still bought bloodstock because of blue sky ahead."

"There were buyers both in September and in November that looked to this market and thought there was good opportunity to purchase," said Geoffrey Russell, Keeneland's director of sales operations. "The enthusiasm for quality horses and the participation of major domestic and foreign buyers, many of whom remained active well into the second week of the sale, is a testament to the resiliency of this industry. There was a healthy mix of U.S. and international interests representing Europe, Japan, Korea, Turkey, and Saudi Arabia, among others, as well as several new buyers emerging on the scene."  

Best said factors that motivated buyers at the top end of the market were the quality of stock on offer plus favorable tax laws under the Coronavirus Aid, Relief, and Economic Security Act that provide accelerated depreciation for some investments such as mares.

"A lot of this heavy buying at the top, not only are they interested in the quality of the horses available, it's an advantage driven into the tax law under the CARES Act for just this reason," Best said. "With COVID and the difficult markets we're facing, the government wants to have a healthy Thoroughbred market. So this is working just like the government wanted. I think the quality of the horses that have been offered this year is quite good. There was enough quality that with the advantages of the tax law, it's a perfect storm that benefits the industry."

The auction was conducted under COVID-19 protocols that limited attendance to those directly involved with the sale and then requiring a negative COVID-19 test for many participants, with temperature checks and other health screening measures. Also, there was strict adherence to masking and social distancing requirements, both inside and outside.

"We firmly believe the protocols are the way we've gotten through this fall," Arvin said, adding that similar protocols would be in place for the January Horses of All Ages Sale scheduled for Jan. 11-14, 2021. "We just have to take the circumstances as they exist and make the best decisions we can. We have every intention of conducting our January sale as scheduled, and certainly we'll have the same protocols in January that we have now—mandating mask wearing and distancing both inside and outside. We're doing weather dances so it's seasonable enough that we can be outside."

The January sale will also be lighter in the number of entries from a year ago, according to Russell, who noted that with the surprising strength of the weanling market in November, there will be stiff demand for short yearlings in January, especially from pinhookers.

"We will have a four-day (January) sale with just under 1,600 horses," Russell said. "Last year we had a five-day sale with about 1,800 horses. It is kind of mirroring what happened in November. Everybody is now looking forward to 2021, and (we) hope everything is going to be better then. The strength of the foal market has surprised a lot of consignors who didn't enter their foals in November, and with several major end-users participating in the foal market, it pushed the pinhookers back a little bit. They haven't probably fulfilled all their needs, so we hope they will come in January and fulfill their requirements."

Maronde said there has been heightened interest in the January sale as a result of the November sale's numbers.

"After the strength of the market in November, we've had lots of calls from people who want to sell in January," Maronde said. "People are looking forward to the opportunity to sell and to buy."

Even in adversity there are often silver linings, and for Keeneland, the travel restrictions and unwillingness to risk being on-site by many buyers pushed the sales company to fully implement internet bidding into the live sale process and to expand its telephone bidding option.

"People have found creative ways to participate in the sale and see the horses when they can't be right here in the way in which we are accustomed," Arvin said.

"Just the fact we've been able to have our race meet, the Breeders' Cup, and the November sale at the times they were scheduled to be held is a huge accomplishment," Russell said, summing up the Keeneland fall picture.