Dipping sales may force change

It's a bloodbath in Kentucky, where prices have plummeted at the Keeneland September yearling sale and countless breeders and consignors are looking for a bridge from which to jump. It's been a terrible week for the breeding industry, but a good one for the sport of horse racing as a whole.

Horse sales everywhere had been struggling over the last many months, but now one has gone off a cliff. And it's not just any sale -- Keeneland September is far and away the most important yearling sale in North America. What this means is that the economics of the game have suddenly and dramatically shifted, creating a new paradigm where more money can actually be made racing a good horse than breeding a good horse. For a sport that can't get its stars to run after their 3-year-old campaigns or find a trainer willing to race a top horse more than five times a year, this is very good news.

Through the first four days of Keeneland September, the most important sale of its kind in North America, the average price is down 31.6 percent and gross revenue has dropped 42.5 percent. Even horses by the very best sires aren't exactly breaking the bank. Ten horses into the sale, the tone had been set. One A.P. Indy filly sold for $65,000, another went for $90,000. A Storm Cat filly did not reach its reserve, with the bidding only getting up to $140,000.

What happened with the progeny of A.P. Indy more or less sums up entire sale and the new economic paradigm. Last year, 27 sons or daughters of A.P. Indy were sold for an average of $550,555. Through the first four days of this year's September Sale, 13 A.P. Indys were sold for an average of $299,230. That may seem like a nice number, but consider that it costs $250,000 to breed to A.P. Indy. And, after a foal is born, it takes about $50,000 in expenses to raise it and get it to the sales. Anyone breeding to A.P. Indy has had to invest about $300.000.

So why would anybody pay to breed to A.P. Indy when chances are you're going to lose money? The answer is, they won't, at least not when his stud fee is $250,000. The number is going to have to come down. The same is true for virtually all sires. The $250,000 sire is about to become a $175,000 sire. A $175,000 sire is about to become a $125,000 sire. The $50,000 sire is about to become a $30,000 sire.

Anyone getting ready to retire a horse is about to enter the worst down market in decades. There's simply not the kind of money out there that there used to be.

Take Summer Bird. He has a good pedigree and has won the Belmont Stakes and the Travers. In recent years, his career was all but sure to end after the Breeders' Cup Classic, his last race before his owners started cashing in on his potential as a sire. Now, they're looking at a potential sire who might stand for a measly $10,000.

"Summer Bird is a great example of what's going on," Bill Oppenheim, a breeding market analyst, said. "He is now worth more money as a racehorse than he is as a stallion. If not, it's very close. He'd be lucky to be a $10,000 stallion right now and I know a lot of people who would say he's not going to stand for even that. Two or three years ago, he definitely would have been worth double that, if not more."

With the Jockey Club Gold Cup and the Breeders' Cup Classic yet to be run this year, Summer Bird has already made $1.5 million this year in just seven lifetime starts. He could easily earn $5 million on the track before it is over.

A more intriguing case is European sensation Sea The Stars. Widely considered the best male horse in the world, he is being compared to the all-time greats in Europe. He's won seven of eight lifetime starts and earned $3.47 million. Prior to this year, he would have been a cinch to be retired at the end of the year. Now?

"What's he going to go to stud for compared to what he would have gone to stud for two or three years ago?" Oppenheim said. "From everything I've seen and from what everyone has said to me, he's the Secretariat of Europe. They may even keep him in training after this year. When it comes time to set the stud fee, it's going to be half what it could have been, and he's the best horse anyone has seen in Europe in 30 years."

The new economic realities should also dictate how horses are handled. The job of top trainers has been to create sires, not to win races. That's among the reasons they run them so infrequently. The goal has been to win a Grade 1 race, establish a horse's credentials as a sire and run out the clock until the breeding season begins. No more.

They're going to start running more and they're going to start sticking around longer. There may not be a single top male horse retired at the end of the season, at least one that is healthy. The 2009 sales have changed all the old rules.

Bill Finley is an award-winning racing writer whose work has appeared in The New York Times, USA Today and Sports Illustrated. Contact Bill at wnfinley@aol.com.