The RNA Conundrum at Public Auctions

Keeneland reported there were 1,006 yearlings that went unsold at the September yearling sale, for an RNA rate of 26.5%. In reality, the RNA rate was considerably lower due to the large number of horses sold after they left the ring.

Consignors at the September sale reported brisk RNA sale activity, with as many as 50% of their buybacks being sold before leaving the grounds. Unlike some sales companies, Keeneland does not include the post-sale transactions in its official results, but does have an "RNA to Sale" section where they post sales reported by consignors after the fact.

Post-sale deals—many times occurring at the barn not long after a horse left the ring unsold—have always been a part of the public auction process. Since a consignor's primary goal is to get the horse sold on behalf of the owner, they usually are receptive to after-sale offers.

But some consignors are frustrated by what they say is a proliferation of such activity in recent years. It is not uncommon for a potential buyer to elicit the reserve price from the seller, and armed with that information, not bid while the animal is in the sales ring. They are then quick to show up at the barn, haggling for a deal.

"What is a little alarming is there is a group of buyers that have no intention of buying the horse in the ring and just meet you back at the barn," said consignor Catherine Parke of Valkyre Stud.

Parke said she and other consignors are open about disclosing reserves because it helps legitimate buyers know whether they can even consider buying the horse or should turn their attention elsewhere.

But the widespread practice of using the reserve price to an advantage in a post-sale deal is getting away from the concept of a true public auction market, Parke said.

Duncan Taylor of Taylor Made Sales Agency said consignors want to be transparent and honest with potential buyers but he does not endorse the practice of disclosing reserve prices, although most of the time the question is asked for legitimate reasons.

Taylor said one way to help buyers in their decision making, but yet not get boxed in, is to offer a range in which the reserve will fall.

Taylor Made, the Keeneland sale's leading consignor, averages from 15-25% RNAs and has tried to capitalize on the post-sale market by holding its own RNA sale. Staged during the second week of the Keeneland sale, the RNA sale includes dining, drinks, and entertainment at the Taylor Made Farm near Nicholasville, Ky., all the while trying to get more horses sold.