FASIG-TIPTON SARATOGA SELECT SALE

Reproduced by permission from the Blood-Horse.

The August 2010 Fasig-Tipton Saratoga Selected Sales had the lowest average purchase price since the 2002 edition.  However, in view of the macroeconomic environment in the United States and Europe, that result is not as negative as it appears to be at first glance.  The sale was held in a time of waning GDP in the U. S. (3.7% in the first quarter of 2010 versus a just-revised downward 1.6% in the second quarter), stubbornly high joblessness, record federal and state deficits, a languid housing market, and extraordinarily high uncertainty among investors about future fiscal and monetary policy.

Consider the 2010 sale in comparison to the previous nine sales—but do so within the context of the state of the overall economy in each of these years, as measured by U. S. Real Gross Domestic Product (inflation-adjusted and seasonally-adjusted), and also benchmarked against the annual percentage return for the S & P 500.

Year        Average      % Change   Median     % Change   Real GDP            S&P 500
                                                                                                                                         % Gain/Loss

     2010       $275,551       -16.1   $240,000      -4.0               2.65%*               0 .00**
2009        328,434          11.1       250,000       9.9                -2.6                      23.45
2008         295,738          2.2       227,500       0.0                 0.0                    -38.49
2007         289,310      -10.6       227,500     -7.1                   1.9                        3.53
2006         323,731          0.0        245,000      8.8                  2.7                      13.62
2005         324,417          6.5        225,000       5.9                  3.1                        3.00
2004         304,700       -2.8        212,500    -11.5                  3.6                        8.99
2003         313,357        24.5       240,000    33.3                  2.5                     26.38
2002         251,729      -34.7       180,000   -23.4                  1.8                    -23.37
2001         385,259        26.0       235,000     24.0                  1.1                   -13.04

*Average of the first two quarters of 2010
**Through August 3, 2010

 The 2001 sale had the highest average sales price in the past decade and was held two months prior to the terrorist attacks on the World Trade Center that wounded Americans’ collective psyche and put the economy into a tailspin.  Consequently, the 2002 sales prices were abnormally low, as reflected in the 24.5% rebound in the average purchase price in 2003. 

The 2009 sale was also atypical.  An associate of Sheik Mohammed of Dubai had recently acquired Fasig-Tipton and the Sheik was an active buyer at the high end.   Five yearlings sold for a million dollars or more (and three others received bids over $1 million but did not sell).  Four of these five were purchased by John Ferguson on behalf of Sheik Mohammed, including the sale topper at $2.8 million.  By contrast, in 2010, only one yearling sold for more than $1 million.

Sales metrics for the years 2002 and 2009 are clearly outliers.  When the 2010 results are compared to the other seven years in the past decade, the average and median figures from 2010 are not surprising, given that the U. S. economy began to falter in 2005, turned down in 2006 and 2007, and then tumbled badly in 2008 and 2009. 

For this decade, the Fasig-Tipton returns are consistent with the volatility shown in the performance of the S & P 500.  Further, the S & P 500 index stands today at a lower price than it did at the turn of the 21^st century.

Fasig-Tipton 2010 in Saratoga can be described as having a Goldilocks outcome, not too hot and not too cold.  In this global economy, that equates to high marks for management.

Copyright © 2010 Horse Racing Business