It’s been a banner year for the Keeneland sales. The excitement of the 2004 sale reached a climax when Japanese trainer Hideyuki Mori and Irish agent Demi O’Bryne squared off in a bidding war for a colt by the top sire, Storm Cat. Mori, who acted on behalf of an undisclosed buyer, won the bid, paying a record $8 million for the colt, the second highest price paid for a yearling since a Nanjiski II colt went for 13.1 million in 1985.

Keeneland’s annual September sale kicked off on September 13 with a record 4,891 thoroughbred yearlings going up for sale. So far, the 2004 sale has exceeded expectations, with daily averages surpassing those in 2003— daily totals grossing $231,743,000 at press, up from last year’s $198,223,500 September 17 total. And the numbers will continue to rise through the sale’s conclusion on September 27th.

The Keeneland September yearling sale is the largest marketplace for thoroughbred yearlings in the world (and 4,891 is the largest crop of yearlings in the sale’s history).

These horses have never worn a saddle and are essentially untrained beyond the little experience they have with their handlers. In this game, players essentially gamble millions of dollars on the basis of pedigree, physical build, and medical history, which hardly guarantees a victory at the racetrack, “It is a highly speculative sport, not for the faint of heart,” says Keeneland spokesperson, Julie Balog.

Keeneland’s 61st annual fall sale, is not only a pillar of tradition for those in the horse industry but also for the Lexington community as a whole. Year after year thousands of potential buyers and sellers travel to Lexington for the two-week sale at Keeneland. The stakes are high and adrenaline rushes as agents and trainers bid on potential champions. In the thoroughbred sales business, there are no guarantees (though there is steadily growing concern over unethical business practices many leaders in the industry are taking steps to decrease any fraudulent activity, harmful to the integrity of the business).

Buyers begin their program well before the opening day of the sale, arriving a few days early to scope out the year’s crop. They come with a long list of horses and in the days preceding the sale the list becomes considerably smaller as they walk the grounds carefully inspecting each horse. There is not a prescribed set of rules governing the selection process, and buyers have only a few broad guidelines to go by when making their predictions on which horses will become future champions. It’s not a science, it’s an art. Or as Balog puts it, “It is kind of like scoping out potential NFL players when they are seven years old.”
So why would any sane person risk millions of dollars in an industry that rarely makes big returns? For some it is a passion, or a hobby, and for others it is a livelihood.

Everyone shares the dream of, “being in the winner’s circle on derby day,” says Jamie Nicholson, former employee of Jonabel Farm. Many local business owners report that they reach some of their peak sales during the two week period and a great deal of time and energy goes into preparing for the influx of visitors. Some local hotels and restaurants are booked solid throughout the two-week event (less so, as competition has increased in the market), and many businesses make special arrangements to accommodate their guests. The economic impact of the sales on Lexington’s tourist industry is profound. The influx of visitors has a positive effect for local businesses and the community as a whole.

Bluegrass Airport’s head of public relations, Tom Tyree, reports that unlike airports in other cities, their peak season is not in the weeks around Christmas and Easter but during the last two weeks in September when the sales are held, and in the months of October and April when the races take place. However, Tyree says that the September sales do bring in the heaviest volume of private aircraft.

Coming from all parts of the world, buyers and sellers fly their private jets and horses to Lexington. The proximity of Lexington’s Bluegrass airport to Keeneland is a valuable advantage for those who travel privately notes Tyree, especially for those horses that are brought across seas and must be quarantined for a certain length of time. Owners can fly into Lexington and take their horses directly to Keeneland’s quarantine center within a matter of minutes.

An airline company based in Lexington was established to accommodate the transport needs of horses. The only passengers on Tex Sutton’s aircrafts are horses and the specialized airline is a frequenter of the Lexington Bluegrass Airport making four or five trips to the airport a week during the fall sales.

BLUE LIGHT SPECIAL ANYONE?

The impressive grandeur of the global horse industry is visible during Keeneland’s two-week event, and is just now winding down.

From the stall hands to the handlers on up to bloodstock agents and the buyers that they represent, every individual contributes to the intense energy of the sales environment. The sale is broken down into categories based on the value of the horses, in the first part of the sale, or the “select portion,” the finest horses are sold and the wealthiest individuals n the business are present. As the sale continues the price and quality of the market declines. Denis Lynch, director of sales at Fasig Tipton, describes the sales progression as going from “rich Europeans to Cowboy hats,” According to Lynch, Black Friday, “acts as a kind of easy changing of the guard” serving a transitional purpose. He explains, “when the big 747s pull out of the Lexington airport, it is a very symbolic moment for the industry” (the sheiks departed last Wednesday and Thursday for example) marking the demographic progression in the sale’s attendance. The nature of the business, the large sums of money being exchanged, and the amount of activity taking place provides enormous opportunities for profit (both above-board, and sketchy)

While September has yet to add up to a March Madness (particularly when a Final Four game hits Rupp), with the Yearling Sales, the ideaFestival, National City’s Urban Challenge, and other programming stepping up —it’s on its way. n

Cleanup

Unethical business practices have become a growing concern in the industry, and many fear that such prevalence will damage the integrity and economic health of the horse business. A Sales Integrity Task Force was recently appointed to address the growing unease over practices made possible by the shroud of secrecy that continues to be a major aspect of the industry. Three major issues that the task force will address are 1) that owners are not required to disclose the medical histories of their horses 2) the details of a horse’s ownership are not always made public and that agents and trainers are permitted to engage in dual agency, representing two parties and receiving commissions from both without having to inform the parties involved. These industry standards have led to fraudulent activity in the past with agents, trainers, and sellers profiting from behind the scenes deals.n

BackStory

Since the colonial days, horses have been a symbol of culture and style.

Collecting them was a way for members of the upper class to showcase their wealth. This tradition continued throughout the ages and is still visible (notwithstanding the appearance of folks like Cato Kaelin at the Derby parties).

Many take their investments — however speculative — very seriously. It is common to find groups of buyers that purchase several horses together with the hopes that at least one will go on to become a winner. This category of buyers is not attempting to display its wealth but to attain it. On the other hand, there is also a group of buyers for whom it is a million dollar sport.

Lexington is a major hub for the horse industry, dubbed the horse capitol of the world (forget whatever Florida says). Lexington’s legacy stretches back to the 1830s when Virginians began to migrate to the area. Horses, which had long been a status symbol in Virginian culture beginning in the late 1700s, also came to reside in Kentucky. The limestone and nutrients in the Bluegrass provided rich, fertile lands, which were considered to be perfect for raising and breeding horses. In this environment the fledgling Kentucky horse industry began to grow and flourish. By the 1850s, Kentucky had grown to be one of the largest breeding centers for horses, a tradition that is particularly strong in Lexington. The city boasts some of the finest breeding facilities in the world and nearly every single thoroughbred racehorse in the country passes through this city at some point in their lives. Most of the nation’s horse owners send their prized thoroughbreds to Lexington to be bred by the most experienced and knowledgeable breeders around. Therefore, Lexington was considered to be a breeding center long before it came to host the largest horse sale in the world.

The Keeneland fall sales grew out of Lexington’s reputation as a breeding center for thoroughbred horses. Travel restrictions during World War II prevented many Kentucky horse owners from shipping their horses to the annual sales in Saratoga, NY, which at the time was the largest horse sale in the country. Since they were not able to bring their horses to the New York market, which was the largest in the world at the time, Kentucky horsemen decided to start their own sale at Keeneland. Over the years, the fledgling event eventually grew to become the largest and most prestigious horse sale in the world. n

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