First Word

from ITB_November2020

Skydiving for Classic success

Hopes and dreams

This year proves more than ever that buying a yearling (or several) offers owners a dream to focus on through the winter months

HOPES, DREAMS, the need to trade, and the influence of the big players.

More than ever these factors have dictated the results of this autumn’s yearling sales and have clearly indicated just what drives the market.

A graph of the trade experienced this autumn would show an as-expected line underneath last year’s results through the Goffs UK Premier Sale and Arqana Sale, a dramatic fall for the Goffs Orby and the Sportsmans Sale, a return to a below-2019 for the October Sale Book 1, before a very surprising and unexpected upward turn to merge with last year due to the astonishing results and trade seen through the Book 2 and 3.

By the end of Tattersalls October Book 4 the figures were between 12 per cent and 16 per cent below 2019 - incidentally revealing just how strong that record year 14 experienced in 2019 actually was, but also just how strongly a sale needs to perform year on year just to keep pace.

Bizarrely, as the momentum was maintained at Tattersalls, the outside pandemic-affected world was mirrored in the negative – the newspaper headlines screamed of increased cases, threats of hospitalisations and calls for circuit-breakers, regional lock-downs and COVID-related economic disaster.

Sitting at the Tattersalls press desk reading newspaper reports speculating on the likely government response to the expected onward development of the pandemic, arguing how to balance economic survival against required health measures, I was typing up Angus Gold’s quote that he felt that middle day of Book 2 was the strongest day’s trade he has seen in ten years, and was watching the 19th horse in Book 2 sell for over 300,000gns.

“The world is upside down, prize-money is rubbish, no one can go racing, and yet prices are so strong.”

The juxtaposition of events was bizarre.

Gold went on to say, possibly after signing for Shadwell Stud’s 46th lot bought through Book 1 and Book 2: “The world is upside down, prize-money is rubbish, no one can go racing, and yet prices are so strong.”

Although he was stating the facts, Gold and his boss were obviously a very important part of the reasons for the strong trade – the Makotum brothers Sheikh Mohammed and Sheikh Hamdan deciding after a summer of uncertainty to buy horses... and buy horses in the usual big numbers (71 as compared to 2019’s 89).

Jocelyn de Moubray will crunch the figures in our December issue once the yearling sales have concluded, but the Arabian participation at Tattersalls, alongside the lack of involvement by the big purchasing entities at the Orby Sale, gave stark reality, if really needed, just how dependent the market and the figures are on those big houses of Shadwell, Godolphin and Coolmore.

IN SPITE Of this demand from the main power houses of European racing, business in Book 1 and Book 2 was backed by a broad band of investors such as Peter Brant and Amo Racing, alongside strong number of US purchasers, revealing just how global this bloodstock market is, and that is its first saviour.

Not every country has a racing industry dealing with prize-money issues, in fact betting handles have been maintained strongly in many of those countries with an in-house betting system.

So, through this viral age and this period of poor prize-money in the UK, it is vital to maintain this open, accessible and broad global market with participation from international investors who are possibly experiencing differing economic and personal experiences.

Second, it is the long-term nature of bloodstock investment which is proving to be its godsend.

The time taken for a horse to develop and the funds required to support that period of maturity is often touted as the most negative aspect of racehorse ownership, hence the reason for the growth in demand for the fast performing, precocious twoyear-old.

However, in times that are unsettling and emotionally precarious, with little to do on the leisure front and with international travel difficult, even though racecourse participation is limited, ownership of a yearling or a strong of racehorses for the economically stable does offer a winter of planning, plotting, hopes and dreams.

**Socially distanced bidding at Tattersalls, Richard Botterill taking a turn on spotting duties in the podium**

And that goes across the whole board of ownership... from those who can afford to buy an interest in a leg or a syndicate share, to the uber rich princes, kings and rulers in the Middle East.

By the time Book 3 rolled round, then the word “trade” was oft repeated and the breeze up guys had found their niche.

Someone in the social distanced green room at Tattersalls described those involved in investing in the spring’s speedsters as “brave or stupid”... the response from one involved was, “What else can we do?”

If you don’t buy, you can’t sell.

Trading transactions are now such a big part of the middle market, and while investment spend might have been tempered by the small matter of a global pandemic, those equine businesses rely on the buying and selling of racehorses.

THE SAME GOES for the professional syndicate builders – they are not essentially owners, they are equine traders and should be bracketed as such – as well as a number of trainers – they aim to sell after the horse has run in a maiden and shown potential.

As we went to press the French October Sale was underway; the strength of the Arqana Sale over the past few years and broadly seen as the strongest breeze-up sale in Europe, will surely be tempt many of those speed kings and queens to invest in français cheval de course.

Now that an October pay cheque will arrive it means many breeders will be in a position to pay their 2020 nomination fees. Now looming large in all breeders’ minds, and a massive conundrum for the stallion farms, where should 2021’s stallion fees sit??

For many breeders the strength of the Book 2 market has helped ensure they can make something of a financial plan for next year rather than be left on the pandemic cliff that developed last spring – many by then had committed to nominations that may have reviewed if the depth of the global issues had started to emerge last December and January.

It will give many of the stallion farms some peace of mind that the credit they have, as usual, offered through to October will be honoured. However, the question is now what to do about 2021?

For the stallion deciders, the Tattersalls sale may have muddied the waters – parts of the bloodstock industry seemingly on a trajectory of their own despite the economic strife and recession being experienced by the real world 16 outside of the bloodstock bubble.

But was not plain sailing for all since August and differing stallions, as ever, are on differing planes of commerciality.

And who can even predict what is likely to be in store for the world next year, let alone in 2023 when next year’s conceived crop will be offered?

Will businesses and so racehorse owners be under ever more economic pressure? Will COVID-19 be under control? Will there be a workable vaccine? Will mask-wearing, local lock-downs and social distancing be the norm, with the arguments for crowds to return to sporting events still ignored by government?

No one has that answer and the questions are too big for most of us to even begin to contemplate. (Maybe that is reasoning, too, for the strength of some sectors of the yearling sales... in these uncertain times, with many things out of individual control, stick with what you know and that you can, to some extent, control)

Whatever, it seems more than ever that those vital yearling sales are a long way off into the future.

The stallion farms must, of course, attempt to realise their own commercial needs, and there will be stallions who have retired to stud in the last three years for whom business projections were made on a very different basis.

Farms will be mindful of the uncertain situation of the world at present and the requirement to make fees affordable, and it must be ensured that breeding commercial racehorses remains an attractive economic option.

What must not happen is that too many breeders are priced out of the market resulting in too-farreduced crops and a depressed numerical commercial market.

As written earlier, the European bloodstock industry is a hugely attractive market for international purchasers, it must remain so by offering quality, diverse and vibrant bloodstock options via a market of enough size, for investors at all levels to be attracted to purchasing in Europe.

There is also the continuing need to ensure that there are racehorses bred at an economic level to attract “domestic” owners and that those horses are of the high enough quality that they be competitive in the strongest racing environment in the world.

In order to give some sort of guidance for stallion fee decisions we have reproduced a mid-term stallion review of averages this year compared with 2019 and 2018 (see overleaf, pages 18-19).

We will print the final list at the end of the yearling sales in the December Stallion Review edition.