Polarised Breeze-Ups: The Good News

[Wandering Eyes]

As the song doesn’t quite say: “Accentuate the negative, eliminate the positive… and don’t mess with Mr In-Between.”

How often do we hear complaints, nowadays, that that the middle of the bloodstock market is stretched too thin? The big spenders clustering around the same few horses, the bargain hunters busy at the opposite margin–and, in between, vendors say they are clinging to a frayed rope above the abyss.

At least in the European breeze-up sector, however, it appears that polarisation might actually be a rather more wholesome trend than you might suppose.

Hardly the impression received on the sales grounds this spring. From the outset, consignors seemed to share a sense of doom.

The wholesale expansion of catalogues was credited less to some spectacular pinhooks last year–crowned by the mind-boggling transformation of a $15,000 Keeneland yearling into a €1.4 million Arqana 2-year-old–and sooner to oversupply at the yearling sales.

Huge books of mediocre mares corralled by sprinters of borderline Group 3 standard were creating an unsurprising surplus; and commercial breeders, extending their avaricious fantasies, saw the breeze-ups as a chance to get out of jail.

As a result, established consignors feared that all their good work over recent years would be unravelled; that the horsemanship that had earned the trust of elite investors would be betrayed by the dumping of duds on their market. It was as though a provincial tailor had made a reputation that warranted new premises in Jermyn Street or Rue de Rivoli–only to find someone spreading a blanket of fake brands on the pavement outside.

Moreover the breezes, at least in the first sales, were staged in very difficult conditions for adolescent horses. Sure enough, the clearance rate at the Tattersalls Ireland Sale at Ascot in April was just one-in-two.

Proceeding to Doncaster the following week, the top-class consignor Con Marnane topped the sale with a £220,000 son of Kyllachy–but none of his other six into the ring made its reserve. (Three of these appeared on French tracks in Marnane’s own colours the following month, respectively finishing first, second and second on debut.)

The die seemed cast. Many consignors blamed the sales companies for opening the floodgates, but many other horses had been turned away and it hardly serves the interests of an auction house to report plunging clearance rates. All they were doing was trying to strike a balance in client relations, either side of the fence.

Now that the dust has settled, anyhow, we can step back and ask whether assumptions about polarisation–considered an issue, after all, at every kind of sale these days–stand up in the end-of-term report.

Year-on-year comparisons, remember, can be highly tenuous. Measured against 2017, for instance, Doncaster had a tough sale; measured against 2016, it was a cracker. The median at that auction, over 10 years, has averaged £22,975: so £25,500, though down year-on-year from £30,000, still maintained a positive underlying trend.

So let’s have a bit of depth on the angle we’re going to choose, and line up the last four years against 2008: the last breeze-up sales before the banking crisis bit into the market. (The Craven Sale that year, for instance, achieved an aggregate of 11,884,000gns–a figure not matched until stunning turnover of 14,120,000gns in 2017.)

Let’s put together the six principal sales in Europe–Ascot, Doncaster, two at Newmarket, Arqana and Goresbridge–and break down the percentage of the overall market taken by lots making £15,000 or less; £100,000 or more; and, as a sample of the middle market, between £40,000 and £70,000.

Statistically speaking, we’re still only taking a snapshot. After all, selling a horse for £70,000 is no good to anyone if he cost £200,000 the previous autumn. But we should at least get some kind of frame on demand for different levels of stock.

Here, then, are the percentage market shares–from horses offered, and then from horses sold–through these three different holes in the sieve. (You’ll forgive a marginal conflation of guineas and sterling in the two Newmarket auctions. The main thing is that each sale has been treated the same way, year to year; while the fluctuating value of the Euro against Sterling has been adjusted according to the exchange rate each May.)

These figures suggest that the middle market was no worse, this year, than should be expected: almost identical, year-on-year, as a percentage of lots offered; and nicely up, as a percentage of sales. Remember 2017 was unusually strong anyway, and the 2018 middle market was certainly stronger than in 2016; and by percentage of sales, unchanged on 2015.

But now look back to 2008, the last year before the lift slipped down the shaft. As a clip of horses sold, 19.4% is indeed much higher than has been the case of late. But if this is down to polarisation, who’s complaining? For the recent market share of horses selling for £15,000 or less is consistently smaller than in 2008. And any loss of energy in the middle market has instead gone towards the top end.

That was radiantly the case in last year’s boom. Between 2008 and 2017, 3.5% of the market in sold horses was displaced from the £40,000-£70,000 bracket. And where did we find it? Not at the basement–32.5 percent in 2008, down to 24.2 percent–but at the top, with six-figure sales soaring from 10.1% to 16.3%.

This time round, equally, the slippage in middle-market share of horses sold, from 19.4% to 17.5%, again finds a home in the elite tier: up from 10.1% to 14.7%.

This is not to suggest that everything in the garden is rosy. A lot of people went to market this year with a bull’s eye printed on the seat of their pants, and many were duly administered a painful kick.

As is the nature with markets, a self-correction seems inevitable. But the guys who come out the other side will generally prove to be the same ones whose merit created such a vogue for the sector anyway.

People will have their views about tweaks to the format, location and timing of different sales. But this table does suggest that the foundation for a recovery might be a little firmer than felt likely for much of the spring.

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