Nobody knows more about the breeding and sales side of the business than the auction companies, sales consignors, and bloodstock agents (true), so when Tattersalls Chairman Edmond Mahony noted the scepter of overproduction hanging over the European yearling markets last month—comments echoed by Goffs/DBS CEO Henry Beeby after last week’s Goffs November Mixed sale—it’s worth paying attention to. Though the inevitably upbeat post-sale propaganda refers to the ‘second-highest’ this and ‘near-record’ that, the cracks in the ice were evident at Goffs last week, and again at Tattersalls’ opening yearling session of their 10-session December sale (which actually does take place mostly in December this year) Monday.
Just look at the numbers. As the accompanying Weekly Sales Ticker table shows, the number sold for the entire eight days at Goffs was down by 5 percent from 1,154 last year to 1,099 this year. The gross was off by EUR3.3 million (9 percent), and the average was down 4 percent. But what is really telling is that last year the 1,154 listed sales constituted 78 percent of the 1,475 horses sent through the ring. This year, there were 1,765 horses offered—20 percent more than in 2006—yet the 1,099 listed sales represented just 62 percent of those sent through the ring. The clearance rate declined by 20 percent, and even with 20 percent more horses offered, the gross was down almost 10 percent.
Clearly, a lot of horses were offered that people just didn’t want, and, from the reports, a big reason for that was the absence of a lot of the Irish domestic property development and construction industry money, which has especially fueled the Goffs sales the last couple of years. Not entirely surprising considering plenty of evidence that house prices are down by as much as 20 percent in the U.S., Britain and Ireland. The dose was repeated at Tattersalls Monday for the end-of-season yearlings. This year, 5 percent fewer were offered than in 2006 (217 this year, 229 in 2006). Yet again, there was a big drop in the clearance rate from 80 percent last year—when 183 yearlings grossed 5,533,500gns- to 66 percent Monday when just 143 yearlings sold, grossing 4,086,300 down 26 percent from 2006.
This illustrates what happens when there are contractions in the horse market. It’s not that the top horses are getting cheaper (yet)—no, not at all. What happens first is that the bar (the standard of individual for which the buyers are prepared to pay top dollar) gets higher as there are more to choose from—especially because so many are by top sires now. Plus, as we’re seeing there is no demand for the bottom 20 percent.
As we saw last week, that was even the case at Keeneland—though the far broader marketplace in North America (which produces twice as many foals as Britain, Ireland, and France combined, so there had better be a lot more buyers) either delays or mitigates such dramatic evidence of a downturn as we are now seeing in Europe.
Extract from TDN 28.11.07