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August 2013

The Sales Process: Buying a race horse from a yearling auction.

The Keeneland September Yearling Sale has evolved into the world's largest yearling sale. In 2006, a record 5,161 Thoroughbreds were cataloged for the September sale.  This year, 3,908 are entered; there are five books; and the sale dates run from September 9 through September 21.  With all of the horses going through the sale ring, what’s it take to select the “right” one? 

At this time of year, the yearling auctions are in full swing.  The main sales start in July with the Fasig-Tipton Kentucky, next up is the Saratoga Select, then New York Bred, the Ocala Breeders Sale, the Texas Sale, and the grand finale is the Keeneland September Yearling Sale.  There are lots of opportunities to buy a one-year-old (yearling) Thoroughbred.  So, where should you shop?


When I think about buying a race horse, the first thought that comes to mind is Keeneland.  As a transplanted Kentuckian, I’ll admit that I’m a bit biased toward the horses sold in the heart of the Bluegrass; but the reputation of Keeneland graduates stands alone on its own merit.  That’s not to say the other sales companies haven’t produced their share of successful graduates—because they have—and, I’ve bought and sold horses from the others as well.

Keeneland grads have won the Kentucky Derby 19 times, the Preakness 20 times, and the Belmont Stakes 17 times.  Horses sold at Keeneland have won numerous races in the Breeders’ Cup World Championships.  

Keeneland is also the world’s largest Thoroughbred auction.  In addition to racing at tracks across the United States, Yearlings purchased at Keeneland go on to win major stakes races in Europe, South America, Russia, and Asia.  Buyers from every country that conduct Thoroughbred racing go to Lexington, Kentucky in September.  

The Keeneland environment is a showcase in and of itself—everything about the grounds, the people, and the horses exude excellence.  It’s easy to be swept away in the glory of the experience and have a temporary lapse of memory about the purpose—to buy and sell some of the best Thoroughbred bloodstock being offered on the planet.

The Prospect

Buying a race horse from a sale is about planning for the future.  Yearlings sold at auction are unproven—they’ve never had a saddle on, they’ve never had a bit in their mouths, and they’ve never stepped foot on a racetrack.  They are just beautiful physical specimens of their bloodlines.

People pay great sums of money based on the hope that the horse they buy will yield even greater financial and historical results.  On the flipside, some of the most successful race horses have been purchased for very modest prices: Seattle Slew, the 1977 Triple Crown Winner, was purchased for $17,500.  Real Quiet, the 1998 Kentucky Derby and Preakness Winner (and runner up in the Belmont by a whisker) was purchased for $17,000.

So, when you’re sitting in the sales pavilion, how do you know which yearling will be successful and which one won’t?  You don’t, really.  At this stage of the game, they’re all on equal footing.  And, that’s the exciting allure of buying yearlings.  They all provide the ever-important element of “potential” that fuels the dream of owning race horses.

Sale Logistics

Understanding the way the sale works is important.
Horses going through the auction are assigned a “hip number”—this is a number the sales company gives to the horse when it is listed in the sale catalogue.  The hip number is the main identifier for a particular horse to be sold (the horse’s name [if registered], the sire [father], the dam [mother], and the page number are secondary ways to locate a horse).  A little oval sticker with the corresponding catalogue number is placed on the horse’s hip on the sale day.

The horses are ranked, assigned a hip number, and listed in the sale catalogue according to the sales company’s pre-sale assessment of the bloodstock quality entered by the consignors (sellers).  The perceived best bloodstock are listed first—this is based on the pedigree, the results of the family, and physical condition of the horse.  The catalogue ranking is not a guarantee of that horse’s future racing performance—buyers mistakenly draw subjective (and, biased) opinions of racing ability according to a horse's location in the catalogues.  For every high-priced winner, there's also been an equal (if not greater) number of high-priced duds.

Based on the number of horses entered, the sales company schedules the hip numbers to be sold each sale day.  If there is a large volume of horses entered, there could be multiple sale dates and multiple catalogues (a.k.a. “books”) for the particular sale dates. Thus, a particular horse (for example) may be assigned Hip #2901 in Book 5 which will be held on Day 9 of the sale.

To be a legitimate buyer, credit has to be established with the sale company prior to the sale, and that credit has to be for the maximum amount that’s intended to be spent.

The buyer is also responsible for removing the horse from the sale grounds in less than 24 hours after the purchase is made.  Thus, making arrangements with a transportation company to ship your horse to its intended destination should also be taken care of in advance.

Gameplan and Homework 

Though the sales process is speculative, there are reliable methods for selecting a yearling to purchase, and it starts with making a gameplan before going to the sale.

First and foremost, decide your racing intentions.  Where do you want to race?  At what competitive level are you trying to achieve?  Do you want a sprinter, a distance runner, a horse that runs well on dirt, grass, or artificial surface?  How much do you want to spend?  And, how patient are you insofar as the amount time you’re willing to wait before your horse starts racing?

The sales companies publish (online) their catalogues in advance, and from those catalogue pages, you can start to identify the pedigrees that you like.  (More about this in the “Horse Evaluation” section below.) 
Once you’ve settled on what you want to purchase and how much you’re willing to pay, then you have to decide what days you plan to attend the sale.  The sales companies also publish the sale results from previous years.  Reviewing this will allow you to determine the average prices of the horses sold on the given sale days, and that will help you determine when you should plan to attend.  If you have an unlimited spending budget, then knowing this doesn’t really matter; but, if you have a cap on what you’re able to spend, then knowing the average prices for the sale days makes a difference insofar as when you’re likely to make a purchase that fits your budget.

Horse Evaluation

With your sale dates in mind, catalogue selections flagged, and budget set, plan to visit the barns the day before the horses go through the sale ring.  The horses are available for inspection/evaluation one day before the date they are to be sold.  

What’s printed on the catalogue page is only part of what each individual horse is all about. In fact, “the look” of the horse—the conformation—is the most important element.  So, you’ll want to be on hand to inspect the horses up close to see their size, straightness of their legs, the condition of their feet, the way they walk, and their overall disposition (keeping in mind that each horse is only a baby and will fill out more and get bigger, leaner, and stronger in the coming months). 

And, after you “size up” the individual, you’ll also want to review the vet records and x-rays to see if there are any internal physical ailments or flaws that might limit the horse’s ability to reach its full racing potential. 

Thus, plan your day around the horses you intend to bid on.  Organize your visits based on the barn numbers.  If the first horse you like is in Barn 1, the second horse is in Barn 24, and the third horse is in Barn 2, then it only make sense to visit the horses in Barns 1 and 2 before hiking over to Barn 24.

When evaluating the horses, make notes on the catalogue page and take a break to assess your thoughts in relation to the other horses you’ve inspected.  If you have a question, go back to the barn and get that answered before the horse enters the sale ring.

Purchase Strategy  

It all comes down to this—being the highest bidder when the gavel hits the block.

I get a nervous energy, an elevated level of internal excitement, when the horse I want to bid on is led into the sale ring.  Butterflies. Increased heart rate. Sweaty palms.  Intense focus.  These are the same feelings I get when one of the Mojo horses enters the starting gate.  These are the same feelings I get when one of the Mojo horses makes “the move” at the top of the stretch.  It’s an awesome tension.

Bidding requires discipline and patience.  And, I recommend two things when making a purchase: Come up with a buying strategy and stick to it.

Keep in mind, the purchase is just part of the cost of owning a race horse.  The other financial obligations are training, vet, shipping, and entertainment costs.  Don’t blow all of your money on the acquisition, and then not have anything left over to cover the remaining 2/3rds of your race horse expenses.

Set a practical price that you’re willing to pay, give yourself some wiggle room, and don’t go above that.  There are plenty of horses out there, and it’s too easy to be sucked into a bidding war that could bust your budget or create a situation that makes it extremely difficult to generate any reasonable return on investment.

As the bidding starts, see if any momentum builds before jumping in.  Be patient and let the market work its Mojo.  If the bid stalls in your price range, then make your move.  The auctioneer will always ask for final offers before dropping the hammer.  So, unless you’re not paying attention, you’ll have an opportunity to get in.

If the bid goes above your cap, then quietly and politely bow out.  Let it go and move on.  Don’t feel rejected—just get ready for the next horse that you would like to buy.

You can read more about the Sales Process on the Mojo website.

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Mojo Background

Mojo Thoroughbred Holdings, LLC (which conducts its racing operations as Mojo Racing Partners) is based in Fort Worth, TX and was formed in 2006.  Since then, Mojo has raced at Arlington Park, Churchill Downs, Indiana Downs, Keeneland, Kentucky Downs, Lone Star Park, Remington Park, and Turfway Park.

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