Yesterday’s Fasig-Tipton select sale offer’s an excellent lesson on the economics of the thoroughbred industry.

An article from The Blood-Horse is quite revealing. In the interests of brevity, we’ve taken out some of the lengthy self-congratulatory quotes and highlighted what we feel are the key points worth noting in bold. I don’t think it changes the essence of the article at all but you can read the entire unedited version at http://www.bloodhorse.com/horse-racing/articles/83984/two-bring-seven-figures-at-f-t-florida-sale and judge for yourself.

What can statistics from a select two year old sale offering some of the highest priced, best pedigreed two year olds of the year tell us?  The top priced horses mentioned in the article had great pedigrees and worked in exceptionally fast times. They were purchased for $700,000 – $1,200,000, mostly by Sheikhs and owners of British Bookmakers (Michael Tabor, one of the richest people in Great Briton). When one or two of this tiny handful of multi-billionaires didn’t compete for a horse, it usually brought drastically less or in many cases, didn’t sell at all (witness the 44.7% of horses that failed to sell according to the article below).  Remember, this is annually one of, if not the most elite two year sale of the year in terms of sales averages. These are supposedly the best of the best, yet almost half went unsold.

In every two year old sale, a few horses with flashy pedigrees and exceptional workout times bring grossly inflated prices, while the vast majority of horses offered bring a lot less. That would make sense, if the best pedigrees and the fastest workout times offered a consistently superior racehorse down the road. However, every year, a significant number of classic grade I winning horses end up being purchased for modest prices, many at non-select sales, one perfect example being 2012 Kentucky Derby and Preakness winner I’ll Have Another, sold for $35,000 at the OBS (Ocala Breeder’s Sales) non-select April 2011 two year sale (the same sale where Kenwood purchases most of our horses).

Looking at several decades of statistics, all horses sold for $500,000 – $2,000,000+ at two year old sales (the cream of the crop) won somewhere between two and three times as many stakes, graded stakes, and grade I stakes as all horses sold for between $50,000 and $100,000 at the same sales. In other words, paying 10 to 20 times as much buys you 2 or 3 times the chance of success at the highest levels. Would seem to be a no-brainer, even if you are looking only to compete and win at the highest level, to purchase 10 really nice $100,000 horses, rather than putting all your eggs in one basket with a single million dollar baby. But multi-billionaires with egos to match their wallets competing against each other to have their pictures in the trade papers as the buyer of the sales topper serve to make the thoroughbred market exceptionally inefficient. Personally, I’d rather have my picture in the paper as the buyer of a bargain priced $35,000 horse from a non-select sale winning the Derby, than as the buyer of 5 year old maiden Mr. Besilu (by classic sire A.P. Indy out of Grade I winner Balance), purchased for $4,200,000 at the Keeneland 2010 yearling sale. Mr. Besilu ran in the 6^th race at Gulfstream Park on March 20^th, coming into the race the earner of $7,353 from 5 lifetime starts. He finished 3^rd, picking up another $4,290 in purse money, ahead of 6^th and last place finisher Argyle, a 4 year old maiden purchased for a mere $650,000 from the Keeneland September 2011 yearling sale, who was making his lifetime debut in the same race.

If horses like these were rare anomalies and most of the classic winners were horses purchased for $500,000 - $5,000,000+, then paying these premiums might make sense on some level, but the numbers mentioned in the previous paragraph speak for themselves. Open the Daily Racing Form any day and look at maiden races from Gulfstream, Santa Anita, Belmont Park and Saratoga and you’ll find many other horses like Mr. Besilu and Argyle. Look at the horses competing in the featured stakes races on the same card, and you’ll see plenty of non-select bargains like I’ll Have Another. The fact is, fancy pedigrees for yearlings who have never seen a saddle, or fast workout times at 1/8^th of a mile for two year olds who have never seen a starting gate do not get you into the winners circle in the big races, at least not nearly enough to justify their sales prices. In fact, a staggering number of horses at the two year old sales with the fastest workout times end up unraced or non-winners, most likely and logically because they are being pushed beyond their limits to show a “bullet work” on sale day, where the goal is attracting a billionaire buyer rather than getting to the winners circle.

It would be far healthier for our industry and better for our horses if sale prices were more rational and horses were prepared to be good racehorses down the road rather than good sales horses at elite auctions. Then again, if prices were more rational the richest people would win all the big races and savvy horsemen working with a budget wouldn’t end up in the winner’s circle in Grade I races every year.

Two Bring Seven Figures at F-T Florida Sale

• By Michael Compton
• March 24, 2014 10:11 PM
• Photo: Fasig-Tipton Photo

Hip 126, a colt by Malibu Moon, sold for $1.2 million.

It's not often that the connections of a one-horse consignment lead over a sale topper at public auction, but that's exactly what happened to Hoby and Layna Kight at Fasig-Tipton's Florida sale of selected 2-year-olds in training March 24 at Adena Springs South near Williston, Fla.

Veteran pinhookers, the Kights brought a single horse to the Florida sale and were rewarded handsomely when their Malibu Moon colt fetched $1.2 million from Coolmore with Demi O'Byrne, in attendance with Michael Tabor, signing the ticket.

Sold as Hip No. 126, the colt, a half brother to 3-year-old Please Explain, winner of the Suncoast Stakes in February atTampa Bay Downs and most recently third in the Honeybee Stakes (gr. III) at Oaklawn Park, glided over the track at the March 21 under-tack preview where he breezed an eighth of a mile in :10.

"He's a lovely horse," said O'Byrne. "He breezed very well."

Acquired by the Kights for $200,000 at last year's Keeneland September sale, the Kentucky-bred colt is out of the unraced Pine Bluff mare Lizzy's Bluff and is from the family of two-time grade I winner Borrego. He was sold as a yearling by Brookdale Sales, agent for the colt's breeders, Donald H. Niall and Michael L. Niall.

Hal Hatch of Halcyon Hammock breaks and trains horses for the Kights and he started the colt.

"Hal did a great job with him and loved him from the start," Hoby said. "This horse has done everything right."

Hip No. 83, a Distorted Humor colt and half brother to multiple champion Royal Delta, attracted plenty of pre-sale attention and was the second-highest priced horse of the day, selling to Sheikh Joann bin Hamad Al Thani's Al Shaqab Racing for $1 million.

The flashy colt, bred in Kentucky by Frank Stronach's Adena Springs, also came out of barn two from the Hartley/De Renzo Thoroughbreds consignment. He sped a co-bullet eighth of a mile in :09 4/5 at the preview.

"He is a good colt, obviously a special horse," said Bradley Weisbord, racing adviser for Al Shaqab Racing's United States racing operations. "He was one of the superstars. He breezed fast, galloped out well in :22 and change and came out of it well. For me, the racetrack was hard on some horses, and this horse took it all in stride."

Alex Solis II of Solis Bloodstock and Jason Litt went to $750,000 to secure the bid for an undisclosed client on Hip No. 130, a colt from the first crop of 2010 Kentucky Derby Presented by Yum! Brands winner Super Saver .

Consigned by Niall Brennan Stables, agent, the colt is out of the stakes-placed Cape Town mare Magdalena's Chase and was bred in Kentucky by WinStar Farm. He breezed an eighth in :10 at the under tack preview.

The top-priced filly of the sale at $700,000 was Hip No.75, a daughter of Smart Strike —Clay's Rocket, by American Chance, consigned by Wavertree Stables (Ciaran Dunne), agent. Purchased by JSM Equine in partnership with John Greathouse, the filly worked a co-bullet eighth of a mile in :09 4/5 at the preview.

While demand for the top tier horses that jumped through the proverbial hoops proved solid, buyers were selective.

Unable to replicate the success of the first two select sales of the season at Barretts and Ocala Breeders' Sales Co., both of which showed sharp across-the-board increases, the Fasig-Tipton Florida sale experienced declines in gross, average and median price.

All told, 47 horses sold for $13,370,000, down 24.6% from last year's total sales of $17,725,000 on 46 horses sold. Average price dropped 26.2% to $284,468 from the 2013 average of $385,326. The median price was $180,000, marking a 40% decline from $300,000 a year ago.

"The select sales market has been very selective," said Boyd Browning, president of Fasig-Tipton. "It rewards horses perceived to be the best in a sale and often times leaves the other ones. That trend continued today.

"You're always a little disappointed when you have a step back statistically," Browning added, "and we had a step back this year. We'll grin and bear it and look forward to our next 2-year-old sale at Timonium in May."

Thirty-eight horses were reported as not sold, representing a 44.7% buy-back rate on 85 juveniles offered, compared with 32 juveniles who failed to meet their reserves last year.

"Buy-backs were higher than we would have liked," Browning said.

"I think that there is still a great need for select sales," Browning added. "In the 2-year-old arena there is so much information that is put out there for buyers, and it's good for the ones who jump through all the hoops. They get rewarded significantly. You have breeze times, they all get gallop out times, there's video scrutiny and veterinary scrutiny.

"There are a number of hurdles to jump through at the upper end of the 2-year-old sale market. When you tick all the boxes you get rewarded. When you miss a box they go on to the next horse. It continues to be difficult to get all the requirements met, but when you do meet all the requirements you get rewarded."

Read more on BloodHorse.com:http://www.bloodhorse.com/horse-racing/articles/83984/two-bring-seven-figures-at-f-t-florida-sale#ixzz2wytk2I9g