What information do buyers look to most, at least implicitly, in deciding whether to purchase yearlings at all and how much to pay?   The health of the overall national economy and personal finances are obvious answers, but data particular to the horse racing industry from the past decade provide more specific insights.

Between 2004 and 2013, average yearling prices in the United States, in inflation-adjusted terms, declined by 7.1%, whereas median prices soared by 41.3%.  Though prices were buoyed to some extent by smaller annual foal crops, the results are still surprisingly robust in a 10-year period in which there was a global financial crisis, a deep recession with high unemployment, intensified casino competition, and precipitous declines in both inflation-adjusted pari-mutuel wagering and aggregate purses.

While average yearling prices have tracked the downward path of pari-mutuel wagering and aggregate purses, median prices have trended in the opposite direction.   Median yearling prices have moved in concert with average purses, which grew in real terms by nearly 4% between 2004 and 2013.

The maintenance and growth of average purses has been made possible by a significant reduction in the number of races carded (almost 20% fewer races were held in 2013 than in 2004) and slots subsidies in casino states.  These are uncertain underpinnings for average purses, and, by extension, yearling prices.  Boosting average purse levels by cutting the number of races eventually becomes a self-liquidating tactic; and slots revenues are subject to the will of elected officials, who can give and take away.

The least risky catalyst for yearling prices is continually improving average purse levels via a turnaround in pari-mutuel wagering.

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