Based on results so far at Keeneland September through Thursday, numbers are better versus last year, with total gross of $192,884,100 already more than the total gross from the sale last year. This is okay for breeders, who paid the highest aggregate stud fees of the decade in 2008 to produce the yearling crop at the sales now. I should qualify that it’s okay only because prices didn’t drop vs 2009, so by extrapolation the 2011 and 2012 sales should be more profitable for breeders if prices remain the same as this year because those foals will have been produced by significantly lower stud fees of 2009 and 2010. And there will be significantly less of them to sell, correcting a supply/demand ratio out of whack over the last decade.
Breeders paid the price in 2008, so to speak, because 2007 was a banner year for selling horses, and aggregate prices at Keeneland aptly verify this. In 2007, the four Keeneland sales—January (mixed), April (2-year-old), September (yearling) and November (mixed)—grossed in total $815,401,000; in 2006, the total gross was $804,404,700. By 2008, the year the bubble broke, the gross for the four sales was $600,296,400, and last year it had declined to $396,216,000.
So, with sales gross at a historical high for Keeneland in 2007, stud fees were pushed up for the spring of 2008 without an inkling of what was to come in the fall of 2008. As the market collapsed with the economy, the prospects for the foals born in 2009 were never good and that day of reckoning is now here. The raw annual numbers of 2007 vs 2009 at Keeneland foretold the story: a 50 percent decline in gross, or more than $400,000,000 less in dollars for Keeneland—a microcosm for the commercial breeding industry.
Markets operate in cycles, and the last two upward-trending cycles at Keeneland had multi-year periods of sustained growth: in 1992, Keeneland’s total gross was $224,999,500, but it increased eight consecutive years to $754,006,400, in 2000; and between 2002, when gross was $494,469,100, to the aforementioned gross of $815,401,000 in 2007, there were five consecutive years of sustained growth.
Depending on what the numbers are at Keeneland November, the final aggregate figures for the four Keeneland sales in 2010 could surpass the total gross of 2009, which would be the indicator that growth is once again on the horizon.
Click here for the yearly sales recap figures for Keeneland.