Lucrative blend of science and art
Expectations are high for flagship Irish sale at Goffs, writes Ian McClean
To some degree the bloodstock auction is like fine art. It is the preserve of the rich, and the subject for sale is both an investment commodity and a source of pleasure. However, unlike Sotheby's or Christie's there will be nothing still about life in the sales ring at Goffs for its prestigious annual Orby Sale this week.
Some of the finest output from the breed's old masters populates the catalogue for Ireland's pre-eminent yearling sale and the cream of the global industry's buyers will circle the Kildare venue hoping to find the equine equivalent of the next Lionel Messi. Given that Goffs supplied three Classic winners in 2013 (Sky Lantern, Just The Judge, Voleuse De Coeurs), expectations can be reasonably set at high.
Joe Osborne, managing director at Kildangan Stud – integral to Sheikh Mohammed's global Darley bloodstock operation – is still, after two decades at the helm, titillated by the uncertainty of it all. "Yearling sales generally are intriguing things because it's a bit like looking for the diamond in the rough," he says. "You've got a sales catalogue with 500 or 600 horses and you know within the catalogue there are future champions and people are all going there trying to buy them, and they aren't necessarily the most expensive ones."
Osborne describes Goffs as the "flagship Irish sale" and compares it favourably on a global scale to other countries. Goffs' advantage over America and Japan (whose yearling sales take place in July) is that horses have more time to evolve and that by early October young progeny – which by definition are developing at an exponential rate – are "closer to the finished article as a racehorse".
Darley's European operation is split between Dalham Hall in Newmarket and Kildangan in Monasterevin. It stands 17 stallions between both locations and the calling card includes the high-profile New Approach (sold at Goffs), Dubawi, Teofilo and Shamardal. Darley interest at Goffs this week is not as consignor, but as buyer.
John Ferguson, Sheikh Mohammed's bloodstock advisor, is responsible for buying yearlings at all public sales worldwide. Osborne, amongst others, assists him in the process.
The sales catalogue, released weeks before, is thoroughly combed. The progeny of Darley stallions – 14 per cent of the entire Orby catalogue – is first under the microscope. Spotters visit and view the yearlings throughout the summer. All will be reviewed a second time from today onwards. Pedigree, physical presentation, rate of development, temperament, value and budget all marry to formulate a buying strategy.
"Science, art and a bit of everything," is how Osborne describes it. "Pedigree is mirror of what family achieved and the key driver is the stallion. We are aware of what breeder of that yearling spent on the stud fee; how hot the stallion is; what siblings have done; production costs of what a vendor needed to spend to raise the yearling, mare costs – these all get factored in. That results in a certain pecking order and if there's a certain stallion we're particularly interested in, or certain consignors we've bought yearlings from in the past that we've had success with, then you'd gravitate towards them."
The colour has returned to the cheeks of the bloodstock industry in 2013. All the yearling sales globally have seen increases in all parameters – averages, medians, the lot. Osborne recalls the impact of the recession.
"Back in early 2000s there was major concern of overproduction. When the economic crisis hit, foal crop dropped from 12,500 to 7,500. Literally, it was like the flick of a switch, so it was a very dramatic correction. That's breeders who've gone out of business, mares taken out of production. There's a downside to all that. On the plus side the reduced number of foals helped the demand. In addition, those that came out of production were the marginal mares so whilst numbers have dropped the foal quality has remained – and with fewer of them it increases demand."
The return to form of the industry has been boosted by new investment coming in from overseas.
"There is a renewal of good trade in racehorses with form getting exported to foreign markets, providing a huge boost to the Irish racing scene," he says. "Traditionally we had markets like Hong Kong but now there is Dubai, Qatar, America, Australia [the first seven horses home in Melbourne Cup last year all Irish-bred]. The trickle-down economics of that all help the sales game. People will buy a yearling and think, 'I know if it goes into training and wins some races the prize-money may not pay my training fees' but they know there's a pot of gold in terms of resale value. That's enabled a lot of participants to keep going."
Ultimately, however, it is the performance of a stallion's progeny on the track that determines everything. Cape Cross is a model example. He retired at a relatively modest stud fee (less than €10,000) but based on the performance of his runners on the track his fee increased gradually up to €35,000 this year. "Sea The Stars and Ouija Board helped but it's more consistent than that. It means that trainers are happy to buy their progeny and owners and breeders want to send their mares to the stallion. It's a complete cycle that self-perpetuates and means that when stallions get successful everybody benefits."
Between Darley and its great rival Coolmore their respective stallions will be responsible for over half of the sales catalogue this week – with Coolmore supplying the lion's share. Asked about that rivalry, Osborne says: "The stallion game is a commercial business. I guess we're like two retail brands competing in the market. We're competitors from a commercial point of view but with some industry initiatives we work alongside each other [the Breeders' Association and Irish Thoroughbred Marketing are just two examples].
"When it comes to what's for the greater good of Irish racing and breeding, we work together; when it comes to marketing our stallions we're both chasing the same market. We're competitive and the customer benefits as a result."
Those with their cheque-books out this week certainly hope so.