2018 NORTH AMERICAN & EUROPEAN YEARLING MARKET OUTPERFORMS OTHER SECTORS
Date: January 2nd, 2019
According to figures compiled by Brianne Stanley of our team, and covering a big majority of North American and European auction sales, in 2018 a total of 36,867 ‘hips’ were catalogued among the sales we covered. Of these, 22,782 were listed as sales (61.8% of the number catalogued). They grossed $1,762,938,399 (that’s $1.76-billion), and averaged a record $77,383, all converted to US$ from local currencies. The number catalogued was 2.5% higher than in 2017, when 35,961 hips were catalogued. The number sold declined by two-tenths of a percent, as 22,824 were listed sales in 2017. The percentage sold/catalogued was 63.5% in 2017, meaning that metric declined by 1.7% in 2018. Both gross and average were 5% higher than in 2017, when the gross totalled $1,684,788,603 ($1.68-billion) and the average was $73,817.
The auction market was in deep recession from 2010-2012, when annual totals dropped below $1.2-billion. But after recovering in 2013 with over a $250-million (20%) jump from 2012 the market essentially stalled through 2016. The market gained almost $120-million in 2017, and tacked on another $80-million in 2018. However, there is a convincing bit of evidence that the 2018 NA-EU auction market was essentially level with 2017, with one important exception: 6-figure ($100,000)- plus yearlings. If you’re going to have one exception to an otherwise stagnant market, that’s the best exception to have, because yearlings are the biggest sector (52%) of the auction market, and 6-figure yearlings are the most important sector of the yearling market. The market for $70,000+ yearlings at Keeneland September Week 2 was also strong.
The yearling market got off to a good start at Fasig-Tipton July, when the gross was up 22% (+$3.6-million) to nearly $20-million, and the average breached the $100,000 mark ($100,829). Then Saratoga, which all right only had 170 sold (+9% from 156 in 2017) but the gross jumped almost $10-million, from $52,995,000 to $62,974,000, a gain of 19%, while the average also gained 9%.
Keeneland September is essentially a two-tier sale, Week 1 and Week 2. In 2018 the first week went back to a 4-day Book 1, compared to Books 1-2 in 2017. There were 18% fewer yearlings catalogued in the first week, 12% fewer sold – meaning the clearance rate from the catalogue improved by 3.6% - but even so the gross was up $20-million (+10%), and the average leapt by 26%, to $363,780. Saratoga’s average had been $370,435, so between Saratoga and Keeneland September Book 1, no fewer than 766 yearlings had sold for $279,787,000, and averaged $365,237. That’s a big marketplace: 766 yearlings gross almost $280-million and average $365,000.
But equally if not more impressive was Keeneland Week 2, which in 2018 was Books 2-6. With the reconfiguration of the books and the drop in number in Week 1, there was an even bigger rise in the number catalogued for the second week: 3,549 in 2018 versus 2,937 in 2017 – a rise of over 600 yearlings, or 21%. Yet the clearance rate rose, as the number sold in Week 2 increased by 24%, from 1,874 in 2017 to 2,320 in 2018. But what was really impressive was a $49-million spike in the Week 2 gross, a 44% rise from $111,200,900 in 2017 to $160,327,400 in 2018; and a concomitant 16% rise in average – nearly $10,000 – from $59,339 in 2017 to $69,107 in 2018. Even with significantly higher numbers – 600 more catalogued – Week 2 was up probably at least as much as the Week 1 horses.
It all added up to the Keeneland September gross being up almost $70-million, by 22%, from $307,845,400 in 2017 to $377,140,400 in 2018. With Saratoga having been up $9.8-million in gross, it’s pretty striking that the entire North American and European auction marketplace was up by $78,150,000 in 2018, yet just Saratoga and Keeneland September combined were up by $79,274,000. That’s why we say it is very striking that virtually the rest of the NA-EU auction market was level with 2017 but the North American market for $70,000+ yearlings was very strong, arguably up in the region of 20%.
Having said that, it might not have been just the North American yearling market. In Ireland, Goffs Orby sale got a 10% cut in the number catalogued (468 to 419) and had a 12% drop in the number sold (373 to 328) yet the gross still increased by almost €2.8-million (+7%), and the Orby average jumped 21%, from €109,122 in 2017 to €132,613 in 2018. And Tattersalls October Book 1, the top yearling sale in Europe, had jumped 16% in gross and a whopping 28% in average from 2016 to 2017. With another 12% sold in 2018 than in 2017 (an increase of 43, from 349 sold to 392 sold), the 2018 gross still rose a little (about 4%), though the average did fall back by 7% in 2018, to 271,691 guineas – which, interestingly, converts to about US$362,300 – very close to the average of Saratoga plus Keeneland Week 1 combined. If we then add in October Book 1 to that same group, we are now talking about a tier of the yearling market consisting in 2018 of 1,158 yearlings which averaged $365,000 and grossed, in 2018, approximately US$422,670,000 in revenue. I think that’s a pretty strong – and broad - top tier of the North American and European yearling market.
What this means: of the 22,782 horses sold in the NA-EU auction market in 2018, 1,158 top-tier yearlings which sold for an average of $365,000 generated about $422,670,000 in revenue. Top-tier yearlings constitute 5% of the number sold, for 24% of the total revenue. But it wasn’t just top-tier yearlings; Fasig July and Keeneland Week 2 yearlings, and Goffs Orby yearlings, were all up over 20% in average and/or gross.
Then the question is: if the yearling market was that strong – and it was – what happened to the rest of the auction market? – flat as a pancake, if not down.
One other interesting comparison is to look at the current NA-EU auction marketplace compared to the market peak in 2007. In that year, 44,129 horses were catalogued, of which 27,444 sold (62.2% of those catalogued), grossing $1,863,387,638, and averaging $67,898. Since then, remember, the North American foal crop is down by 40%, the European foal crops down but by less. In 2018, there were 36,867 horses catalogued (down 16%), and 22,782 sold (down 17%), which was 61.8% of those catalogued (virtually identical). The 2018 gross was $1,762,938,399 (down 5% from 2007), and the average was a record $77,383, which is 14% higher than the 2007 average. As the combined foal crops are down by at least 30% the fact that the number catalogued and sold are down by 16% and 17% respectively tells us that a significantly higher percentage of the combined foal crop is being offered at auction. No real surprises there.
The 2019 Northern sales season gets underway with Keeneland January starting next Monday (Jan 7), while, in the Southern Hemisphere, the Australasian sales season kicks off with the Magic Millions sale in Queensland next Wednesday, January 9. That sale’s Book 1 grossed almost A$157-million last year and averaged A$225,879.
For summary details of the 2018 Northern sales year, overall and by sector, please see the last five Weekly Sales Tickers (dated Dec 27-31) on our website.