Acquiring Bloodstock in the
Auction Environment
(This article originally appeared in the Fall, 1999 issue of The Louisianna Thoroughbred)
Without any doubt, the most important decisions we make as breeders involve the purchase of breeding stock. Other decisions, such as which trainer or agent to hire become irrelevant once we've purchased poor stock. After all, our efforts and eventual results are a direct function of our ability to select the very best bloodstock we can afford. Even with deep pockets and good management, breeding programs will eventually fail after a series of poor buying decisions. Unfortunately, as in any business venture, there are numerous pitfalls in our marketplace and only those who are keen in avoiding them will survive.
For our purposes, we will look primarily at the auction environment and how successful breeders can avoid catastrophic mistakes when purchasing breeding stock. However, the underlying principles apply to all acquisitions that you may make, including weanlings, yearlings, and two year olds.
Relying solely on the catalog - Catalogs are produced by sales companies for one purpose and one purpose only: to sell the most horses for the most amount of money. Buyers are kidding themselves if they want to believe otherwise. Catalog pages give
barely a skeleton of each horse’s strengths and weaknesses and should be treated as such. Consider the following example:
At a mixed sale in southern California, a young, barren mare passed through the ring. Barely noticed, she sold for a paltry $2,800. Sired by a moderate regional stallion, her race record appeared very ordinary and her two foals of racing age (two and three year olds) were unraced as of sale day. Unbeknownst to everyone at the sale (except perhaps the high bidder), her three year old had posted impressive works and would win a Grade 3 less than two month later. Proper research would have revealed the three year olds’ workouts and a mares’ race record that demonstrated significant talent and quickness in a career that was cut short by injury.
After all, comments such as “winner at 3, $34,786” or “placed in one start at 2, $4,598” are generic and do nothing to describe the actual talent and class of that particular hip number, yet very few of us dig deeper to actually decipher the racing class. Those who do are at a distinct advantage and are less likely to make poor buying decisions.
Lack of discipline – The auction setting can be intoxicating and it takes a certain amount of discipline to avoid buyer’s remorse the next day. All too often, buyers get caught up in the hype and excitement and throw common sense to the wind.
The most astute buyers in our industry do an effective job of devising a plan (based on sound research) prior to a sale, and adhering to it at all costs. Socializing, drinking, and trying to impress your peers always take a back seat in the minds of these buyers. It absolutely cannot be overstated how important discipline becomes when trying to make the right purchase. Different aspects of maintaining discipline will be discussed later.
Looking for a certain broodmare sire - We’ve all seen the ads in the trade journals: “Looking for daughters of the following broodmare sires…”. Bringing that type of thinking to the marketplace is almost always disastrous and certainly limits opportunities. I’m always reminded of a neighbor that became fixated on a particular broodmare sire.
He had recently claimed a young son of His Majesty off the track with plans to stand him at his small farm and breed him to his small broodmare band. One of the nicking experts told him that daughters of Stage Door Johnny would make ideal mates for his new stallion and that he should try to acquire as many of them as possible.
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As luck would have it (or perhaps not), a daughter of Stage Door Johnny appeared in a fall breeding sale, catching my neighbor’s attention. Wearing full-cupped blinders, he traveled to the sale and purchased her after doing little, if any research. Upon delivery, I went over to his farm and had a look. Without question, she was one of the poorest individuals I had ever seen and her race record (unplaced during two years of racing) affirmed that. The resulting foals only added to her legacy as a very poor investment, typical of a situation where a buyer looks only for a particular broodmare sire. Certainly, some good purchases were made at the same sale, but my neighbor had no chance to make those purchases because of his fixation.
Purchasing non-winning stock – My own personal belief is that this is the single largest mistake buyers can make. These horses were obvious liabilities for their owners at the racetrack and odds are, they will be liabilities for their next owner. It is a rarity for unplaced, poor racing individuals to reproduce anything outside of their own mold and most breeders know this in the back of their mind, which leads to such a high percentage of young, non-winning mares in the fall sales.
The most alluring and dangerous horses in this category are unplaced mares in foal to a higher-end, fashionable stallions. Consignors are looking for buyers to look past the mares inadequacies and over-pay for a poor individual. Regardless of the covering sire, and with the rising costs of boarding and training, it makes very little sense to put so much time and money into a foal out of a mare who failed to even break her maiden.
Although it doesn’t happen very often, astute researchers can sometimes find a gem among these non-winning mares. Maybe a mare that was unplaced in just a few starts had a legitimate physical problem or she just had some very bad racing luck in a very brief career that was ended by a stable accident. The possible scenarios are endless, and only the serious buyer will be able to find such a mare.
Buying based on conformation alone- This ties in heavily with the discipline discussed above, but certainly deserves individual attention, since it is only natural for those of us in the business to occasionally become mesmerized by a horse’s looks.
We’ve all been there before. A mare is being led adjacent to a horse we are looking at and we can’t help but notice how beautiful and eye-catching she is. In doing our pre-sale research, we had excluded her from our wish list because her foals simply had not shown significant class. Somehow though, we negotiate with ourselves and put her back on the list. In other words, we lower our standards to please our aesthetic needs.
Bias towards a sire or female family that you’re familiar with - Regional buyers who travel to some of the major venues have a strong tendency to gravitate towards sires and/or families that they’re familiar with or that they’ve had success with. On the surface, it seems like a sound policy, and it can be, provided they don’t let that bias skew other aspects of the decision making process.
A good example of this is when a buyer returns to a sale to buy a sibling of a horse they recently had success with. As long as they maintain high standards of scrutiny in all areas and can refrain from bias, it is possible they will come away with another useful horse. All too often, however, certain aspects of their judgment are set aside for the sake of sentiment. Even worse, they probably overlooked (or outright refused to look at) significantly better individuals at the same sale.
Purchasing at the end of a sale - This is not to say that you should avoid buying quality horses simply because they come towards the end of a sale. What we’re saying is that many people come to a sale excited to take a new horse home and begin to feel anxious when it hasn’t happened as the sale starts winding down. Agents are especially prone to this as they face losing a commission if they don’t fill an order. The good ones, though, remember that their long-term success depends on buying good horses, not just filling orders.
Again, this ties in heavily with the discipline mentioned above, but definitely needs to be mentioned separately. Always be willing to go home with an empty trailer! If one could do a study on the frequency of overpaying for horses at public auctions, we are almost certain it would spike towards the later stages of a sale.
The best way to avoid this pitfall is to come up with a final list of horses that meet all of your standards before the sale starts, thereby knowing which horse will come last in the sale. When that horse passes through the ring, it’s time to go home.
Always keep in mind that sales are formatted to produce the most revenue, not help buyers find the right horses. It is entirely up to us as buyers to sift through all the information and practice enough discipline to make the best decisions possible. In an industry where the odds are virtually always stacked against you, these are just a few of the ways that you can begin pulling some of those odds back in your favor.
