Q&A: Keeneland CEO and Thoroughbred Expert
Keeneland was founded in the 1930s as a racetrack and still functions as one—hosting races each April and October at its facility just outside Lexington, Ky. But it has also become the world’s leading Thoroughbred auction house. At the inaugural Keeneland sale in 1943, an attendee by the name of Fred Hooper made his first-ever Thoroughbred purchase, acquiring a horse for just over $10,000 that two years later, under the name Hoop Jr., won the Kentucky Derby. These days, Keeneland conducts three annual auctions. The largest is the September yearling sale, which draws buyers from all over the world. Horses sold here have gone on to win 19 Kentucky Derbies and 88 Breeder’s Cup races. Robb Report spoke with Keeneland’s president and CEO, Bill Thomason, during this year’s yearling sale, at which 11 horses sold for at least $1 million. (keeneland.com)
Robb Report: On the second day of this year’s yearling sale, a colt sold for $1.525 million. How do other buyers respond to this kind of sale?
Bill Thomason: For people who are seeing the horses, this kind of news spreads. It validates what people feel about the market and about the state of racing. These buyers feed off of each other. Their enthusiasm is infectious.
RR: Has American Pharoah’s Triple Crown win this year changed the horse-buying market? Are buyers energized or deflated by it?
BT: It hasn’t changed the market, but it adds to the already exciting environment. People are talking more about racing in general at every level and getting excited about some of the younger horses coming up. There’s new interest in investing. But when you are talking to buyers here, these are people who are racing horses. They fully expect to be in the winner’s circle. They are buying a franchise, and every horse here is the next Triple Crown winner.
RR: Are Thoroughbred buyers motivated by the investment—trying to realize a return on a horse? Or are they motivated by passion, a love of racing and of the horses themselves?
BT: I wouldn’t call it an investment, because you do have to have a passion for the business and for racing. Buyers have a great interest in these horses being successful. They are motivated by a love of the animals and the anticipation of the races they will be in. They are passionate about their horses.
RR: What are the emerging markets for serious buyers of Thoroughbreds?
BT: We’re starting to see more interest in places like Turkey and Korea. Russian buyers are steadily increasing the number and quality of the horses they are buying. We are also seeing new interest in South America from owners who are buying more horses and farms and starting to do some breeding in the United States. The China Horse Club is coming here and buying more horses.
RR: What have you observed about those new to Thoroughbred buying? How are they educating themselves about horses before jumping in?
BT: The business has become more efficient. We have seen new people come in, but they come in with discipline. The bloodstock agents are giving new investors a lot of education before they buy. We have a lot of people at every level of the business creating long-term investors and lifelong participants in the business. In Thoroughbred racing, you have to be involved with the right people, and you have to have good information. Even the Jockey Club is promoting a new OwnerView program, which offers information on everything from finding good advisors to making a business plan. They are telling new people what kind of questions they should be asking, what it’s like to acquire your first horse, and how to find a good trainer. Up and down the market, we are engaged in preserving the integrity of the business.
RR: Does the number of available horses affect the market?
BT: It absolutely does. This is not a manufacturing business; you can’t turn on the faucet and create horses. We’ve got a limited supply of horses available for racing. But the number is stable right now. We’ve had consistently 22,000 horses in our foal crop. At the sales we’ve got a good crop of horses, and yet there is a premium to be paid for a really nice horse. Breeders who have experienced success are seeing more demand.
RR: What are the unique characteristics of those who successfully buy and breed Thoroughbreds?
BT: You have to have a huge tolerance for risk. This is not a place for the fainthearted. Equine athletes are animals, and they face challenges that you don’t see anywhere else, and they change every single day. On top of that, each animal is a franchise, so you have to be comfortable owning a franchise, like a baseball team. Successful owners have tremendous pride in these animals and their successes, and they also have great respect for these animals. Owners are often competing against their friends, but if you see them on race day, they are collegial with other owners. They are very competitive in business and in life, and live to see the results of their efforts, but they have strong friendships with others in the business.