Selling a horse at auction

[jacksontyger]

Could you guys and gals please explain all the expenses ect associated with selling a horse at auction? Looking at the results from the last days of Keeneland and Ocala people lost alot of money. I think most consignors get 5% with a 1K minimum and the sales company takes 5% also? Do most consignors require you to place the horse with them for sales prep or can you do some of it yourself? How much do they charge for sales prep? How about when you RNA or buy the horse back? Do you still owe 10% to buy your horse back? 10K to get your 100K RNA back? If you try to run it up and don't get the horse sold do you owe 10% on that? How about the withdrawn and no bid horses in Ocala? When you look at the stud fees, costs to raise foals, plus the sales expenses, making a profit sure sounds very difficult.

[madelyn]

I only know about the costs at Keeneland, not Ocala.

Keeneland charges $500 to put the horse in the catalog, and then $500 commission after the sale up to $20,000, plus 4.5% of the selling price over $20,000. Consignors charge various fees. A lot have a $500 or $1,000 minimum and then 5% of the selling price. Some absolutely require various nominations (Breeder's Cup is $500 before Oct 16 of the weanling year). Digital x-rays and scope can run $500 or more. Some consignors want the horse for a month or two first so you can pay $20 or so per day prep. Strange question, whether or not the consignor will "let" you prep your own horse.. The consignor gets paid, regardless whether the horse sells or not. There seem to be quite a few consignors out there who think the absolute world of your horse (OH You should Do Quite Well!! $75K..) until after you have put the horse with them.. the opinion falls, and then right before the sale you may be told you will be lucky to get stud fee.

The bare minimum I have seen it cost for a horse at Keeneland with a consignor is $3500.

OUTS, I believe, are only OUT the $500 catalog fee. RNA's are out the full Monty, including Keeneland's commission if the reserve was over $20K, and all the consignor's fees and commission on the reserve.

When you figure the stud fee plus $15K or so to feed the mare and raise the yearling, and then the cost of selling, yes, it can be pretty tough to make money. The Keeneland September sale proved that with the final analysis showing that something like 70% of the horses sold lost money for the seller.

Wouldn't you have just loved to have sold your Awesome Again ($125,000 stud fee) colt for $7K? $8K? $9K? How about letting go of your FuPeg ($125K stud fee) for $3500?

[jacksontyger]

I was afraid it was something like that. I saw the 6 or 7 K Awesome Again colt and knew someone got murdered. I still find it hard to believe I could RNA at 100K and owe 5-10 K or more to take my horse home. I was studying stallions on their 07 stud fee vs 06 yearling figures and it is pretty frightning. Four stallions I have been considering are El Corredor 30K stud fee (40K at the end of last year) vs 47K median, Stormy Atlantic 30K fee vs 20K median, Langfuhr 25K fee vs 32K median, and last but not least Smart Strike 75K fee vs 77.5K median. Not much room for profit. I could only find a few stallions that I thought did well for most breeders (Johannesburg and Officer) and they will be much higher this year. It looks like the mare and luck have to carry you in this business.

[madelyn]

Conversely, some of the lower priced (considered lower or mid market stallions) did pretty well. Consider this... the rule of thumb is that the mare should be bred to a stallion whose stud fee is 1/3 to 1/4 of the mare's VALUE. Now look at the dams of all those yearlings that didn't bring stud fee. In the case of Awesome Again and FuPeg, were these $500K mares? In the rush to fill the book with 200+ mares, sometimes the most expensive stallions have managers with the LOWEST standards for mares, because they couldn't give a darn whether or not the foal is any good, they just want the stud fee.

But on to the next topic. Breeding a Thoroughbred shouldn't necessarily be viewed as winning the lottery. What is a reasonable profit? What if you just got a fair price for a good horse? Let's take a $20K stud fee to use as an example. Stud fee is $20K. Allow $15K for the cost of feeding the mare/foaling/raising the yearling. Mare depreciation (7 year, cost basis) should be $10K based on an average mare value of $70K. Sales prep et al add $5K and you are at $50K. It is a risky business so you throw in the risk factor and hope for a 25-50% profit. So you sell for $62,500-$75K... that is a REASONABLE profit. Notice you are just above three times stud fee at the lower end. In my analyses last year before breeding season, a horse that did just THAT reliably, and not more (no real sales toppers, no over the moon prices, no fake sales to get front page news) was Street Cry. So I bred one of my mares to him, but on a foal share.

So there are other ways to breed mares and sell foals to reduce risk. All foal shares are NOT created equal. Examine the details of each deal. Many times the representative will be all enthusiastic and all over doing a "foal share" when in fact the contract is a "pay from proceeds." This is NOT a foal share. They are NOT sharing the risk. You are actually on the hook for the entire fee and if the foal doesn't bring it, you still owe it.

Regarding El Corredor, I have an interesting tale.. pm me if you are interested.

My stallion/yearling analysis from the Keeneland September sale is nearly finished.. I will give the results to anyone who wants them.

[myheartsezyes]

Could you guys and gals please explain all the expenses ect associated with selling a horse at auction? Looking at the results from the last days of Keeneland and Ocala people lost alot of money. I think most consignors get 5% with a 1K minimum and the sales company takes 5% also? Do most consignors require you to place the horse with them for sales prep or can you do some of it yourself? How much do they charge for sales prep? How about when you RNA or buy the horse back? Do you still owe 10% to buy your horse back? 10K to get your 100K RNA back? If you try to run it up and don't get the horse sold do you owe 10% on that? How about the withdrawn and no bid horses in Ocala? When you look at the stud fees, costs to raise foals, plus the sales expenses, making a profit sure sounds very difficult.

Not sure about all your questions, but we were able to prep our horses I clipped them all even the weanlings, and took them to the consigner the day before. They charged a day rate of 100.00, Their minimum was 500.00 and then 5% I velieve. When we buy back or rna I guess we pay the consigner still his minimum.. Withdrawn witch we did consigner got 500.00 plus whatever obs got I think it was 500.00. to enter could have been a 1,000.00.
No Bid we had one same as Withdrawn.
P.S. 25.00 for the Wall Plaque
50.00 for the sales Halter
5.00 for the Night Watchman

Hope this helps.

[Douglas Brown]

Madelyn,

Have you finished your sales analysis?

Doug

[Crystal]

Madelyn I'd be interested in reading it, if you could pass it along.

[KBEquine]

Madelyn --

Me, too.

[Mood Swings]

Madelyn,

Me three!

[clh]

Hey Madeline; Me four I know you've worked hard on this analysis and I know you've given a brief summary but I'd love to see the final results.

clh