Yearling sale analyses have traditionally been confined to the figures that matter most to the sale company. They are paid by commission, so gross sales, the average and median prices, and the clearance rate are often considered sufficient measures of an auction's success or failure.
This year's Sales Series has been particularly lucrative for New Zealand Bloodstock which raised its gross commission rate from 9.75% to 10% before the 2007 sales. (The NZTBA receives 0.5% of that commision, and forwards all of it to New Zealand Thoroughbred Marketing.) Of much more significance than aggregate figures for breeders and vendors is the profitability of each lot, and the percentage of yearlings that are profitable, because that's what determines the ongoing investment in broodmares, stallions, service fees, people, land, buildings, equipment, marketing and so on. Statistical analyst and owner-breeder Renee Geelen (check out her website here: www.dekabat.com)has completed an early summary of the 2007 Premier Sale, with 2006 Sale comparisons, which shows a substantial lift in profitability.
She cautions that the 2006 and 2007 Premier Sales are not directly comparable because of the reduced size and increased quality of the 2007 catalogue. "Part of the improvement in this year's Premier Sale has occurred simply because the bottom 10-15% of the catalogue has been cut out. This alone will increase the sale median and average."
However, the magnitude of the Premier Sale increases and the results from the Select Sale indicate that demand and competition for horses is genuinely stronger this year. Reasons for that include last year's taxation and bloodstock depreciation changes, the belated recognition of what New Zealand's falling foal and racehorse numbers mean for stables, clubs and betting turnover, and resurgent demand from Australian and Asian markets.
Particularly notable are the big increases in average profit (+56%) and median profit (+141%). Please note:
Information used to compile this analysis has been taken from the NZTBA's summary of baseline production & selling costs, last updated in February 2004. Horses sold in 2006 and 2007 were born in 2004 and 2005, so these figures remain broadly applicable; however, some production costs have increased in the past three years.
Service fees used are advertised fees only; and no allowance has been made for pin-hook sales ie horses purchased as weanlings and re-sold as yearlings.
- Susan Archer & Renee Geelen
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| New Zealand Bloodstock's Karaka Sales Centre, Auckland PHOTO: Susan Archer |
She cautions that the 2006 and 2007 Premier Sales are not directly comparable because of the reduced size and increased quality of the 2007 catalogue. "Part of the improvement in this year's Premier Sale has occurred simply because the bottom 10-15% of the catalogue has been cut out. This alone will increase the sale median and average."
However, the magnitude of the Premier Sale increases and the results from the Select Sale indicate that demand and competition for horses is genuinely stronger this year. Reasons for that include last year's taxation and bloodstock depreciation changes, the belated recognition of what New Zealand's falling foal and racehorse numbers mean for stables, clubs and betting turnover, and resurgent demand from Australian and Asian markets.
Particularly notable are the big increases in average profit (+56%) and median profit (+141%). Please note:
Information used to compile this analysis has been taken from the NZTBA's summary of baseline production & selling costs, last updated in February 2004. Horses sold in 2006 and 2007 were born in 2004 and 2005, so these figures remain broadly applicable; however, some production costs have increased in the past three years.
Service fees used are advertised fees only; and no allowance has been made for pin-hook sales ie horses purchased as weanlings and re-sold as yearlings.
| 2007 NZ Premier Sale Profitability Analysis 2006 figures in italics | ||
| Average Price | Median Price | |
| $156,581 $127,072 | $110,000 $ 80,000 | |
| Average Service Fee | Median Service Fee | |
| $ 32,119 $ 28,036 | $ 15,000 $ 18,000 | |
| Average Profit | Median Profit | |
| $ 58,208 $ 37,271 | $ 34,659 $ 14,359 | |
| Average Cost | Median Cost | |
| $ 65,624 $ 58,771 | $ 50,765 $ 46,041 | |
| Average Return on Investment | Median Return on Investment | |
| 37% 29% | 32% 18% | |
| Profitable Lots | 327 318 | 71% 62% |
| Non-profitable Lots | 36 72 | 8% 14% |
| Not Sold (Passed or Withdrawn) | 96 126 | 21% 24% |
- Susan Archer & Renee Geelen
