Imminent Coddection Addives a Mixed
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INFORMATION AND ANALYSIS FOR THE THOROUGHBRED INVESTOR T h e B l o o d - H o r s e JANUARY 23, 2009 2009 European Stud Fees By Michael Youngs 4. EUROPEAN IMMINENT CORRECTION ARRIVES ENTERING SIRES 2009 ith 15 years of continuous growth in the European high compared to prizemoney and also because Europe AND 2008 Wbreeding industry and particularly strong expan- has always had a culture of more flexible negotiation sion in Ireland, the spectre of overproduction had been between breeders and stallion owners irrespective of 5. eUROPEAN looming large for years. The warnings were clear, but, published fees. There is no better example of this than ENTERING as in any bubble economy, plenty of investors were still the four highest-value stallions listed with fees as “pri- SIRES 2008 willing to join in or reinvest while the going appeared vate” for 2009. Three of those sires are the Coolmore- AND 2007 good, despite escalating production costs and lagging based Galileo, Montjeu, and Danehill Dancer. The prizemoney. Now the recession has hit the European fourth is the now blind and aging German-based 6. 2009 EUROPEAN breeding industry hard. Monsun, whose book is being significantly reduced. STALLIONS The Irish economy had already begun weakening The Coolmore group was acutely aware of the dam- Two or more before the credit crunch went global, and the combined aging effect of the credit crunch on its business model. crops to race impact was particularly harsh for consignors at the Goffs With no Maktoum support, almost all Coolmore’s cus- and Tattersalls Ireland sales where withdrawal numbers tomers would be affected by the economic changes. 12. JUVENILe were high and clearance rates desperately low. The Coolmore hoped to mitigate the impact on its stud fees, AUCTIONS impact was less severe in France where prospects of particularly for the high-priced Galileo, by contacting PREVIEw - N. AM. Breeders Premiums offered some security. its clients very early and encouraging them to get their The need for stallion farms to reduce fees was very mares booked. In addition, Coolmore was noticibly less 14. CONSIGNOR & clear. However, there was a greater reluctance to admit active at Keeneland in September, and it appears that its BUYER STATS 2YO to the severity of the decline than was the case in North business priorities are focused on buttressing the farm’s SALES, 2001-2005 America. Partly this could be because European produc- stallions that currently hold a pre-eminent position at the tion and racing costs have always been disproportionally European sales. (Continued on page 2) 22. CLOSe ENCOUNTERS 2008 European Auction Review By Rachel Pagones by Alan Porter 24. LEADING A MIXED BAG INDICATORS he 2008 European yearling sales suffered the same paint the big picture may be to draw the smaller pictures 2008 Gross Revenue Tbattering that rocked markets worldwide from Target first. No. American Auctions to Christie’s, and sales dropped as the year wore on. Two of these sales took place before the Chapter That was the overall picture. Individually, however, the 11 filing of Lehman Brothers bank, which occurred at European yearling sales put up widely differing perfor- the start of the second week of Keeneland’s September mances. In some cases this was due to timing — pre- or yearling sale and was the first of a string of failures or post-Lehman Brothers collapse — and in other cases near-failures of major financial institutions in the U.S. it was due to the dynamics involving Coolmore and and Britain. Happily, the Deauville auction was held a Darley, the global breeding empires. full month before that fateful Monday and escaped the The Blood-Horse MarketWatch is Because of these differences, it would probably be financial tsunami. misleading to put a figure on the overall decline in sales Arqana’s was remarkably the only one of the four published by Blood-Horse Publications, at the four major European yearling auctions — Arqana’s sales to post gains in gross, average, or median. From August Yearling Sale in Deauville; the Doncaster a catalog unchanged in size since 2007, the auction 3101 Beaumont Centre Circle, Bloodstock Sales St Leger Yearling Sale, in Doncaster, enjoyed a 6.7% increase in gross, a 13.2% rise in aver- England, also in August; the Goffs Million Sale in County age, and a 16.7% jump in median. Furthermore, the P.O. Box 919003, Kildare, Ireland, from the end of September to the begin- buyback rate rose by less than 2 percentage points, and ning of October; and the Tattersalls October Sales, Books was the lowest of any of these sales at 23.2%. Lexington, KY 40591-9003. 1-3, in Newmarket, England. Moreover, the overall figure The timing of the sale was crucial to its success. Telephone: 859 278-2361 would entail conversions of currencies that fluctuated Arqana did a commendable job of attracting buyers of considerably against each other, as well as against the the international luxury category by improving its cata- E-mail: [email protected] dollar, during the 12-month period, so the best way to log and conducting an aggres- (Continued on page 3) marketwatch.bloodhorse.com / 1 2009 European Stud Fees (Continued from page 1) Dream (£30,000) and Zamindar (£15,000) unchanged from While the Maktoums’ embargo against Coolmore-sired wean- last year, despite the latter’s successes in France with Zarkava. lings, yearlings, and in-foal mares continues, it is a different mat- Another neutral stud is the Irish National Stud, which reduced its ter when it comes to non Coolmore- leading stallion Invincible Spirit owned racehorses. With Galileo now by 33% from €75,000 to €50,000. firmly established as the leading sire The Aga Khan’s operation is not in Europe, Darley purchased his two noted for a large number of stal- best-performed sons, acquiring the lions, but it has a rising star in Jim Bolger-owned and -trained pair Dalakhani, whose fee it had ini- Teofilo and New Approach. The pur- tially considered maintaining at chase of the latter — initially 50% €40,000; however, demand was from his breeder Seamus Burns as such that an increase to €50,000 TUD a juvenile and remaining interest S appears more than reasonable. from his trainer at 3 — looks par- Dalakhani had two group I win- ticularly significant. It took Sadler’s ners in 2008 and that number was Wells many years to produce a matched by another second-crop worthy successor and it may take COURTESY OF COOLMORE sire in Shadwell’s Nayef, but the Galileo equally long for Galileo, but in New farm announced its fees early and Approach Sheikh Mohammed’s Darley operation has an exciting his fee of £15,000 appears the “bargain” for 2009. Shadwell was addition to a stallion operation that has long been overshadowed overrun with applications, but Sheikh Hamdan generously kept by Coolmore. Furthermore, the Breeders’ Cup Classic (gr. I) success the fee unchanged. Shadwell was actually one of the few farms to of the Stonerside Stable-bred Raven’s Pass and the emergence of reduce fees later in the year: both Haafhd’s and Sakhee’s fees were Kentucky-based Street Cry will also help bridge the gap. reduced to £8,000 in December, down from an initially advertised Both Coolmore’s and Darley’s number of stallions have remained fees of £12,000 in October. very similar to 2008 num- Despite the financial bers. However, with the 2009 European Stud Fees uncertainty the book sizes exception of the stallions Stud 2009 Avg. 2008 Avg. 2007 Avg. % Chg % Chg of stallions are hardly likely Fee Fee (No. Sires) Fee (No. Sires) Fee (No. Sires) 08-09 07-09 with a “private” stud fee to decrease for the popular $50,000+ $132,896 (8) $138,155 (8) $117,349 (8) -4% 13% and newcomer Duke of stallions. Sheikh Hamdan’s $25,000-$49,990 $34,667 (20) $41,646 (19) $42,050 (14) -17% -18% Marmalade, all Coolmore $15,000 to $24,990 $24,704 (57) $28,858 (53) $27,911 (48) -14% -11% Shadwell operation has stallion fees have been $10,000 to $14,990 $12,238 (48) $12,930 (47) $12,965 (35) -5% -6% restricted book sizes for its reduced between 20% $7,500 to $9,990 $8,611 (48) $8,856 (43) $8,844 (26) -3% -3% stallions. Other farms have and 40%, with most stal- $5,000 to $7,490 $6,877 (149) $7,116 (138) $7,159 (99) -3% -4% announced book reduc- lions being cut by a third. $1,000 to $4,990 $2,832 (224) $2,939 (220) $3,257 (136) -4% -13% tions but that can be inter- Darley’s stallion roster, All Sires $9,658 (484) $10,367 (465) $11,490 (337) -7% -16% preted as a lack of demand. First Foals of 2010 $9,799 (20) as published on its Web Nonetheless, focusing on First Foals of 2009 $9,474 (49) $11,233 (47) -16% site, has dropped to 29 First Foals of 2008 $7,266 (37) $8,646 (37) $12,397 (17) -16% -41% quality of mares will now be for England, Ireland, and First Foals of 2007 $5,754 (41) $6,950 (40) $6,756 (39) -17% -15% recognized as more impor- France. It relocated stallions * The conversion rates for the numbers above are as follows: 2009 €1= $1.3277 and £1=$1.4672. tant than ever before. Poor but has new entries in New weanling and yearling sales Approach, Ramonti, and Raven’s Pass. Darley raised the fees on will significantly damage a stallion’s commercial appeal, nevermind a two successful first-crop sires (Exceed And Excel and Kheleyf) and lack of racing success.