Despite one of the most challenging macroeconomic environments since the 2008 financial crisis, horse racing‘s breeding industry may prove to be impervious to the growing threat of recession.
At this week’s 2022 Saratoga Sale, buyers completed 14 seven-figure yearling purchases, a more than four-fold spike from last year’s event, when only four million-dollar purchases were made. During the two-day sale at the Humphrey S. Finney Pavilion in Saratoga Springs, New York, 143 yearlings sold for a Saratoga sales record of $66.9 million.
Gross purchases, average purchases, and median sales all climbed on a year-over-year basis, underscoring the quality and depth of the current crop.
“Rarely do you find me speechless,” said Fasig-Tipton President Boyd Browning. “We are blown away by the results. The energy, the excitement — it just feels so good from an industry perspective.”
A purchase of a Gun Runner colt out of Heavenly Love topped the sale on Tuesday night when it went for $2.3 million. The dark bay colt, Hip No. 202, was purchased by White Birch Farm and Coolmore Stud’s M.V. Magnier.
“We felt that this was the best quality we’ve had at a Saratoga sale” Fasig-Tipton Chief Financial Officer Joe Smith told US Bets. “At the end of the day, it just depends which buyers are interested and how far they’re willing to go. We had a lot of indications that the breadth of the market would be really, really good.”
Immune to inflation?
A sampling of the top purchases at the sale demonstrated the importance of pedigree. Seven of the leading sires from the two-day auction – Gun Runner, Curlin, Into Mischief, Quality Road, Justify, Uncle Mo, and Speightstown – combined for more than $35 million in career earnings, along with more than a dozen Grade I victories.
Gun Runner, the 2017 Breeders’ Cup Classic winner, sired Preakness winner Early Voting, Haskell winner Cyberknife, and reigning Breeders’ Cup Juvenile Fillies champion Echo Zulu in his first crop of foals. Not to be outdone, Into Mischief has been named leading sire of the year three times, producing 2020 Kentucky Derby winner Authentic, Breeders’ Cup Filly & Mare Sprint winner Gamine, and multiple Breeders’ Cup winner Goldencents, among others.
“If people really liked the quality, they were willing to spend more this year,” Smith added.
14 Million-Dollar Yearlings, New Records Across the Board at The 101st Saratoga Sale
— Fasig-Tipton (@FasigTiptonCo) August 10, 2022
One prominent sports talk show host made a bid to purchase Hip No. 56, a dark bay Speightstown colt out of Rainier, the daughter of Medaglia d’Oro. Former WFAN 660 AM host Mike Francesa pulled out of the bidding when the price became too exorbitant at nearly $1 million.
Francesa, an avid stock picker, returned to the airwaves this spring with the eponymous Mike Francesa Podcast on the BetRivers network. The host attended the sale against the backdrop of persistently high inflation. The consumer price index (CPI) rose 8.5% annually in July amid declining energy prices. The CPI eclipsed 9% in June, reaching its highest level in more than 40 years.
Inflation at its current rate remains troubling for some, Francesa emphasized.
“As far as it impacting what happens here, it doesn’t make any difference,” he noted. “Most of the people who can buy a horse here are not impacted whether the inflation rate is two or 10.”
The "sale"like you've never seen it, behind the scenes and more @michaelsrwilson @JimGazzale @FasigTiptonCo What dreams are made of
Unfiltered: Behind the scenes at "The Sale" Fasig-Tipton Saratoga Yearling Sale https://t.co/60joofF4wE
— PastTheWire.com (@PastTheWire) August 10, 2022
When asked about the effect of macroeconomic forces on the breeding industry, Smith concurred somewhat. If the economy experiences a slowdown, the impact could be felt more in the middle market than the high end, he indicated. The average yearling purchase at the sale hovered around $468,200, up approximately 15% from last year.
“I think it would take a little time to work through,” Smith said of a potential economic slowdown. “We might be in a little more of a lag if we have a deep recession.”
Citing the cyclical nature of the stock market, Smith was quick to point out that a number of buyers have accumulated savings from investment gains in the past.
“I think some people are still sitting on some funds,” Smith added. “It’s like a friend of mine said, ‘You can hold stocks and watch them go up and down — that’s not a lot of fun. But owning a horse and watching it win a race, there’s a lot of excitement with that.'”
Francesa was not the only celebrity to attend Tuesday night’s sale. Chef Bobby Flay bred Hip No. 126, a Curlin filly. The chestnut filly out of America, an A.P. Indy mare, was sold to a partnership of West Point Thoroughbreds, Woodford Racing, and 3C Stable for $2 million.
In an economic downturn, the horse business often emulates other businesses in that the high end is the last in the industry to get disrupted, Flay explained.
“To me, it’s almost like the stock market — I try to buy blue-chip stocks and I try to buy blue-chip breeding stock,” Flay said. “No investment is safe, but you want to take the most risk off the table as you can.”
Breeder Bobby Flay delves into the strategy behind his program and Bill Farish of @woodfordracing discusses buying @bflay's $2 million Curlin sister to GSW First Captain on Day Two of @fasigtiptonco's The Saratoga Sale.
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— BloodHorse (@BloodHorse) August 10, 2022
Possible Flightline-Life Is Good showdown ahead
Breeders’ Cup CEO Drew Fleming remained in Saratoga several days after Life Is Good’s triumph in the Grade I Whitney Stakes. With the victory, Life Is Good earned a spot in the $6 million Breeders’ Cup Classic, the showcase event of the two-day 2022 Breeders’ Cup World Championships in November.
The victory over Olympiad and Hot Rod Charlie sets up a potential November matchup with Flightline, a resounding winner of June’s Grade I Metropolitan Handicap at Belmont Park. Undefeated in four career starts, Flightline has been compared favorably with Ghostzapper, the 2004 winner of the Classic.
“With Flightline, Life Is Good, and Olympiad, there are so many great horses out there, it’s going to be an amazing race,” Fleming told US Bets.
Flightline closed as the 2/1 betting favorite in the first Breeders’ Cup Classic futures wager pool. Two others warranted single-digit odds, with Life Is Good and Epicenter at 6/1 and 7/1, respectively.
— Breeders' Cup (@BreedersCup) August 8, 2022
The Breeders’ Cup is investing $10 million to enhance its racing experience, according to Fleming. Efforts are already underway to construct temporary seating, as Keeneland seeks to accommodate roughly 45,000 attendees per session. The Breeders’ Cup awarded Keeneland the 2022 World Championships after attendance was limited two years ago due to COVID-19.
“With 2020 being so devastating for so many people, it was a difficult decision to make, but obviously the right one,” Fleming said. “We also said simultaneously that it would be fair to the local businesses, the horse capital of the world, to return there as soon as we could. The central Kentucky breeders have genuinely been supportive since our inception and, without the breeders, we wouldn’t have the Breeders’ Cup.”
Crypto experiment discontinued — for now
Last August, Fasig Tipton allowed buyers to make yearling purchases in cryptocurrency as a way to celebrate the 100th Saratoga sale. Of the 135 yearlings purchased, only one transaction was made in crypto — a $100,000 purchase of Hip No. 172, a dark brown filly out of Violence and Play Ballado.
“This is going to be a big deal because this has never happened before.”
— Fasig-Tipton (@FasigTiptonCo) August 11, 2021
Fasig Tipton didn’t offer the option at this week’s sale.
“We decided not to do anything long term at this moment,” Smith said. “If you see what’s happened in the crypto market in the last few months, I think that was the right decision.”
A bevy of cryptocurrencies have cratered over the last six months, with some top digital currencies down upwards of 50% over that span.
“Every time I get the urge to get more familiar with the crypto market, I still kind of take a wait-and-see approach,” West Point Thoroughbreds CEO Terry Finley told US Bets.
Taylor Made Farm, one of the world’s leading thoroughbred consignors, began accepting payments in crypto last month, as the company considers it a viable alternative for its multinational clients, according to former CEO Duncan Taylor. He founded Taylor Made in 1976 and moved to a senior consultancy role after stepping down as CEO in January.
“People wiring money from one country to another are taken advantage of by the financial institutions,” Taylor told US Bets. “As crypto becomes more mainstream, it will have a lot of advantages. We said there’s no downside to getting ahead of the curve.”
Fasig Tipton, meanwhile, continues to embrace the latest cutting-edge technology. While the company does not allow purchases from its mobile app yet, buyers are allowed to conduct transactions from their laptops and iPads.
Photo: Fasig Tipton