stable financial newsletter header

Adam's Soapbox – Know your Segment and know your costs

With the selling of yearlings at Major Australasian sales complete for the 2013 season is there a defining trend or important aspect to note?

In my view, the varying results underline the importance of understanding the market place in which you compete. This diverse, global industry has many segments of the market from colt to fillies to early/late types to local or international pedigrees.

The major sales companies try to position a sale by carefully selecting the catalogue and eventually trying to attract the most suitable buying bench for that sale. For instance, it could be argued that New Zealand Bloodstock has shifted slightly in recent years from being classic style of yearlings to more early maturing and speed bred types. Conversely, Melbourne Premier is evolving into a more classic type sale that may attract more international buyers as evidenced by its inaugural "Blue Riband" section of the sale. For breeders it is crucial to be across such trends when breeding and eventually placing yearlings for sale.

When analysing the stats at the major sales, it is important to try to categorise the market to understand how each segment is performing and ultimately know where your horse business fits. If you are in a declining segment you may need to assess the prospect of profitability in that segment and tweak your business plan by abandoning unprofitable methods. This may require a serious cull of stock to be replenished by more marketable horses in your chosen industry segment(s).

Scott Irwin of Rothwell Park was recently quoted in ANZ Bloodstock news after selling a bay filly by Exceed and Excel for $250,000 as a weanling at the recent Magic Millions sale on the Gold Coast.

We believe Scott sums up the current market place extremely well.

"The Magic Millions sales company once again put on a hell of a show, and should be commended for the buying bench they presented to the vendors.

I would have to say like all sales over the last two years it was strong for the beautiful horses. It's worrying for me having to do my matings this year, whether you just have to breed beauty to get results in the sale ring. The working class horse that can win all races, appears to be getting continually overlooked. The excuses the purchasers have come up with can be lack of pedigree, small conformation issues and not a good enough sort.

The last three Group One winners we sold, Gingerbread Man (Magic Million Gold Coat Yearling), Secret Admirer (Inglis Australian Weanling Sale), Willow Magic (Magic Millions National Weanling Sale weanling) you could have bought for $30,000, $38,000 and $28,000 respectively.

I hope for the sake of the industry the FAQ (far, average, quality) comes back into vogue sooner than later. And what perceives to be the middle and lower end horses start to realise the prices they are actually worth.

I think the buying bench needs to understand what it costs to produce a competitive racehorse in this day and age. Even though we have had a very good sales with yearlings and weanlings this year there are a lot of vendors financially hurting because of this continuing trend to buy what is perceived to be the perfect horse."


Before you choose your stallion matings for 2013, ask yourself, who is going to want to purchase my yearlings?

The prices obtained in the sale cannot be controlled. So Breeders need to also concentrate on what they can control- costs.

Often our office sees clients focusing on the stallion and what prices that stallion can achieve in the sale ring. Equally important, and overlooked is the cost of production. Through careful planning costs can be managed. You need to have a good handle on your costs of production and be prepared to change you methods of production without compromising the care and development of the product.

In summary, know your segment and know your costs.

stable financial sign off