With Books 1 and 2 of the Keeneland September yearling sale concluded, the sale has so far shown solid gains over last year's edition. For stallion managers and breeders playing at the top of the market, that's certainly good news. Nonetheless, the real test of the health of the domestic market is now starting, and it remains to be seen whether the picture is nearly so rosy in the middle and lower strata of the marketplace as it appears from the top.
Keeneland is really two sales in one: a glittering showcase of select yearlings that appeal to the tastes and purses of moneyed international buyers and the high-end players of the American turf, and everything else. The difference is as striking as going from Madison Avenue and Rodeo Drive to the Mall of America, and just as the businesses in the latter are much more sensitive to the ups and downs of the overall economy than are the shops catering to the top one percent among "the one percent," the later stages of the Keeneland sale more accurately reflect what's going on at the levels of the American breeding industry where the majority of yearlings are produced. This level doesn't usually get the headlines, but it's the level on which the bulk of day-to-day racing depends, as well as many businesses that cater to the horse industry---think feed stores, tack shops, farriers and so forth. The middle market is especially crucial, as in good years, this is the segment that has extra money to put into expanding and upgrading their own businesses and into buying goods and services from others; it's also the segment most likely to attract new money and new players. When times are harder and the middle market contracts, it creates an undertow that, left unchecked, can collapse a bubble at the top end of the horse market---a lesson that investors learned to their cost in the late 1980s.
Thus, before getting overly optimistic over the early good results from the Keeneland sale, it may be wise for stallion owners and other players to pay attention to how the rest of the sale plays out. If it follows the lead of its opening week, well and good. If, on the other hand, it parallels the results from other yearling sales catering to the domestic market, it may be wise to avoid speculative moves and stick to more conservative courses aimed at staying alive and healthy in troubled times.
Keeneland is really two sales in one: a glittering showcase of select yearlings that appeal to the tastes and purses of moneyed international buyers and the high-end players of the American turf, and everything else. The difference is as striking as going from Madison Avenue and Rodeo Drive to the Mall of America, and just as the businesses in the latter are much more sensitive to the ups and downs of the overall economy than are the shops catering to the top one percent among "the one percent," the later stages of the Keeneland sale more accurately reflect what's going on at the levels of the American breeding industry where the majority of yearlings are produced. This level doesn't usually get the headlines, but it's the level on which the bulk of day-to-day racing depends, as well as many businesses that cater to the horse industry---think feed stores, tack shops, farriers and so forth. The middle market is especially crucial, as in good years, this is the segment that has extra money to put into expanding and upgrading their own businesses and into buying goods and services from others; it's also the segment most likely to attract new money and new players. When times are harder and the middle market contracts, it creates an undertow that, left unchecked, can collapse a bubble at the top end of the horse market---a lesson that investors learned to their cost in the late 1980s.
Thus, before getting overly optimistic over the early good results from the Keeneland sale, it may be wise for stallion owners and other players to pay attention to how the rest of the sale plays out. If it follows the lead of its opening week, well and good. If, on the other hand, it parallels the results from other yearling sales catering to the domestic market, it may be wise to avoid speculative moves and stick to more conservative courses aimed at staying alive and healthy in troubled times.
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