The marketplace continued to take a pounding from negative economic forces outside the Thoroughbred industry during the third day of the Keeneland November breeding stock sale in Lexington. Compared to 2007, the Nov. 5 session was down 42.1% in gross revenue, 33.3% in average price, and 36.5% in median price. The buy-back rate soared from 20.9% last year to 28.2% this year.

“Yes, it’s alarming but everybody saw a correction going into this year’s sales,” said Geoffrey Russell, Keeneland’s director of sales. “The events of September (when the current economic meltdown became apparent) have exacerbated it; that’s all. I don’t think this is any great surprise to many people. But the amount of correction has been larger than we thought it would be as of July 1. This is a global problem; this is a many industry problem; it’s a worldwide economic crisis. To still be trading the amount of horses we are at this level is a positive situation. I think the Thoroughbred market has done a very good job so far.”

The 224 horses that were sold grossed $24,698,000 and averaged $110,259. The median was $82,500. Last year, 258 horses were sold during the same session for a gross of $42,638,000, an average of $165,264, and a median of $130,000.

Brent Fernung of Florida-based Journeyman Stud is in Central Kentucky to do some stallion-related work and, in his words, “to keep my finger on the pulse” of the industry. His assessment of the November market was similar to Russell’s. While the Thoroughbred auction business has a problem with an oversupply of horses, it’s being impacted more by other factors that breeders can’t control.

“This is more than a correction; I would call this a reaction to outside forces,” Fernung said. “It’s a reflection of the general economic outlook of the whole country. How long it’s going to remain like this, you can just about tie it to how long the sluggishness of the entire economy lasts.

“Normally, the November sale is tied strictly to what happened in the Keeneland September yearling sale, which is partially influenced by the 2-year-old market. The 2-year-old market this year was good; the September sale was just OK; now, this is horrible. That’s telling me that it’s not entirely horse-related. And it’s also reinforcing what I was already thinking after the OBS (Ocala Breeders’ Sales Co.) mixed sale in October. I need to be 20% less on my stud fees than I would have been a year ago.”

But even though recent auction results have been discouraging, Fernung’s outlook wasn’t all doom and gloom.

“I’m cautiously optimistic,” he said. “There’s a good shot that people who are buying mares here today are going to be real happy they did it. I bet there are a whole lot of mares that go through this sale ring whose babies will sell here in September of 2010 that will bring as much or more than what the people gave for their mommas.”

The cumulative figures for the Keeneland November auction’s first three sessions included a gross of $114,725,000 for the 523 horses sold. The average was $219,359 and the median was $125,000. Compared to 2007, the number sold was down 18.0% from 638 and the gross declined 48.1% from $221,137,000. The average plunged 36.7% from $346,610, while the median dropped 34.2% from $190,000.

The buy-back rate rose from 20.1% last year to 33.1% this year.

“I think everybody just has to take a common sense look at it and adjust accordingly,” said Neil Howard of Gainesway Farm. “We’ve been riding the wave for some time. It was bound to come back down sooner or later, and the whole economy has made it do that. If everybody doesn’t get carried away with stud fees and doesn’t continue to breed a bunch of bad mares, it will be all right. When you go in there (the Keeneland sale pavilion) and try to buy a good horse, it’s still hard to buy them.”

(Originally published at BloodHorse.com