Through the best eight days of North American yearling sales there are going to be this year, namely Fasig-Tipton's two-day Selected Yearlings Showcase and Keeneland September Yearling Sale Books 1-3, the effect of 2020 on the North American yearling sales is pretty clear. It's a long way from pretty, but on the other hand, just about everybody in the industry is grateful there was breeding this year, there is racing, and there are sales. However hard we have been hit by declines, we're all aware plenty of people and businesses are in far worse shape. At least we're operating.
The scale of the declines in the Kentucky yearling market are sobering, at the very least. While the Kentucky market continues this week with Keeneland Books 4-6 (which got underway Sept. 20), by the end of Book 3 last year Keeneland had generated 87.5% of the total revenues for the whole sale; if that ratio continues this week, the total for the sale will finish out around $240 million—a very impressive amount even if the gross will be down by $130 million (-35%) from last year's blockbuster sale. The good news is, the Kentucky yearling market (including Fasig-Tipton) is going to generate $300 million in revenue this year; the bad news is, the corresponding sales (again counting half the New York-bred sale in the Fasig totals) last year generated $455 million.
For most of the session in Book 3, Day 2 on Sept. 19, the clearance rate from the catalog was running over 60%, whereas it has barely been over 50% for most of the past two weeks, even with the post-sale "private" sales added in for both sales companies. Ultimately (without post-sale additions, which usually now appear on the Keeneland website a day or two later), the number sold/cataloged finished up at 59.3%, which was better than it has been—although the corresponding session last year also improved over previous sessions to 68%, so the clearance rate in Saturday's session was still 8.7% below last year's. Incidentally, I know that all other publications and analysts use number sold/number through the ring, but I no longer believe that tells us enough of the real story. The number of scratches after the horses arrive on the sales grounds has been climbing since the repositories arrived and is exacerbated when consignors prefer to scratch at the sale if they know they're going to take their horses to the ring and just bring them back due to lack of interest. We all know it's a tough business, and it's a really tough business this year, when breeders aren't able to sell their horses not because they're too greedy, but because the number of buyers is shrinking all the time.
Given we had five months of sales results, beginning with Australia's Inglis Easter Yearling Sale, which suggested the market is off around 25-28% from 2019, plenty of sales company officials have suggested to prospective buyers that circumstances were going to be in their favor for once, and in Kentucky the past two weeks, the heroes have been the SF Bloodstock/Starlight/Madaket team dubbed "The Avengers" by their trainer, Bob Baffert. Represented by Baffert's go-to bloodstock agent, Donato Lanni, the SF group, whose program has won them two of the past three runnings of the Kentucky Derby Presented by Woodford Reserve (G1), had signed for 35 colts between Fasig-Tipton and Keeneland by the end of Book 3, costing a total of $14,235,000, an average of $406,714. Note their average purchase, while high, isn't in the stratosphere; they're concentrating on the top sires, of course, and bought five colts for between $750,000-$800,000, but none of the 17 million-dollar-plus yearlings. They've invested—and in their case, it really is an investment—in colts by 15 stallions, including five by Quality Road ; four each by Uncle Mo , Candy Ride , and his son Twirling Candy (now, that is a tip in itself); three each by Curlin , Into Mischief , and Empire Maker; two by Union Rags ; and one each by Medaglia d'Oro , Gun Runner , Speightstown , Flatter, Street Sense , More Than Ready, and Maclean's Music .
Between the two sales companies, there had been, through Sept. 19, a total of 2,683 yearlings cataloged in eight sales sessions. Including "private" sales listed on the sales company websites as of Sept. 20, there had been 1,446 yearlings listed as sold—53.9% of those cataloged. These had grossed $270,864,700 and averaged $187,195. In the corresponding sales and sessions last year, there had been 2.895 yearlings cataloged; 1,821 sold (62.9% of those cataloged), grossing $409,540,500 and averaging $224,898. The number cataloged was down 7% from last year; the number sold down 21%; the clearance rate from the catalogs was down 9% (from 62.9% to 53.9%); the gross was down 34%, and the average was down 17%. So that's the scale of the decline: the average down 17% for those sold, and 9% fewer sold of those cataloged, from 7% fewer cataloged, adds up to a one-third decline in gross revenues. It's a huge hit to breeders.
I wrote last week about the implications for 2021 stud fees. In the accompanying table, I've listed the top eight sires by yearling average, through Book 3, with 10+ yearlings sold. Their aggregate results actually mirror pretty closely the overall totals: 22% fewer sold, for 33% less revenue, and a decline in average of 14%. Two of the eight did have an increase in average from the corresponding 2019 sales. Into Mischief's average jumped by 26%, even with 71 yearlings sold, grossing $31,932,000 (an incredible 11.8% of the total $270.8 million gross; the next highest gross was Quality Road, with $12,997,000). He stood for $100,000 in 2018, $175,000 in 2020, but if any stallion in America merits another price hike, it's him. Quality Road ($70,000 in 2018; $200,000 in 2020), also gained in average, by 4%, though he had 54 sell by this time last year (2017 stud fee: $35,000), as opposed to 34 this year. The message for stallion farms has to be that the breeders of nearly 2,700 of the best commercial yearlings in North America got only 54% of their horses sold, for an average between 14-17% below 2019 averages, and only realized two-thirds the revenue they did last year. I guess the only good news for breeders in those numbers is there surely won't be very many stud fees going up.
