Cover image courtesy of First Light Racing
First Light Racing has not only been an active participant at the first three yearling sales of 2023, they have studied the results intently - and what they have unearthed has given them plenty of food for thought.
Tim Wilson, one of two co-directors at First Light Racing, believes the COVID ‘sugar-hit’ is over, with the population in Australia now spoilt for choice regarding how they spend their disposable income; something that wasn't afforded to them during the pandemic-ravaged years (roughly early 2020 until late 2021), when places were closed, travel was impossible and so many Australian residents were cooped up indoors.
Tim Wilson | Image courtesy of First Light Racing
Wilson is well aware of the financial toll of said period, understanding many residents took a pay cut or worse, lost their job, but his point is, that with little to no entertainment, other than racing, in the spotlight, the sport was front and centre and selling horses to clients (both existing and prospective) wasn’t an exhaustive process.
He believes the market has “corrected” itself.
“I suppose, there’s decreasing demand from owners,” Wilson told TDN AusNZ.
“Interest rate hikes are certainly having an impact, they are a real factor, but I think it’s more of a correction, certainly at this stage.”
“Interest rate hikes are certainly having an impact, they are a real factor, but I think it’s more a correction, certainly at this stage.” - Tim Wilson
“We just had such a charmed existence for two years where COVID, it didn’t slow down people's disposable spending, but it did change where they could spend their disposable income.
“Racing kept going, and it was the only sport that kept going, it created an environment where people were buying shares in a horse off an email. I think that created a little bit of a false economy that was never going to last. People had similar levels of disposable income, but less channels to spend it on, so that drove demand up.
Pierro x My Sanctuary (colt) purchased by First Light Racing in 2023 | Image courtesy of First Light Racing
“When we went to the sales, we were probably buying horses and getting them sold quicker and that meant we could be aggressive.
“Lockdowns changed how people went about buying shares in racehorses and sending an email was about the extent of what you had to do, because you didn’t have the opportunity to put people in front of horses or horses in front of people; we weren’t doing yearling parades or open days, it actually became a really easy transaction.
“COVID changed the game; people all of a sudden would have something put in front of them via an email, with good videos and good content, and because they didn’t have that ability to go and experience a product, it really shortened their decision-making process.”
“COVID changed the game; people all of a sudden would have something put in front of them via an email, with good videos and good content, and because they didn’t have that ability to go and experience a product, it really shortened their decision-making process.” - Tim Wilson
Wilson believes spending quality time with friends and family, often interstate or abroad, has become increasingly prevalent since borders re-opened. This, of course, potentially impacts businesses such as First Light Racing, as, again, people have more options regarding how they spend their money.
“Holidays in particular are popular and understandably so,” Wilson said.
“That’s probably our biggest challenge, we’re now competing with that market.
“We probably had two years where we were the only option for people, now we’re competing against a variety of other options, and things you haven’t done, naturally you want to do them.
“We’re going on a trip to Singapore next week, something we haven't been able to do for two years. My wife would rather spend money on that at the moment than other things and that’s typical of a lot of people.”
The year to date
At the 2023 Magic Millions Gold Coast Yearling Sale (Book 1), the clearance rate went from 94 per cent in 2022 to (still a very strong) 90 per cent this year, while the gross improved from $229,807,500 to $230,161,000. The average of $292,748 dipped marginally to $291,343, while the median fell from $230,000 to $210,000.
Then, at the New Zealand Bloodstock Karaka Yearling Sale (Book 1), the clearance rate improved from 77 per cent in 2022 to 79 per cent, with the aggregate skyrocketing from NZ$63,127,500 to NZ$70,063,000. The average also increased, rising from NZ$146,808 to NZ$151,980, while the median was up NZ$30,000 on the 2022 figure of NZ$100,000.
Following the close of play at the Inglis Classic Yearling Sale (Book1), the clearance rate went from 92 per cent last year to 86 in 2023, with the gross going from $67,228,500 in 2022 to $57,063,500. The average of $121,132 fell to $102,817, while the median dipped from $100,000 to $80,000.
Interestingly, it was noted that, at this year’s Classic Sale, some traditional buyers were quieter than in 2022. Darby Racing bought three yearlings for a total of $210,000 this year, after spending $1,360,000 (second only by aggregate to Kavanagh Racing) on 10 babies 12 months ago. Star Thoroughbreds, alongside Randwick Bloodstock Agency (FBAA), bought two yearlings for a total of $270,000 in 2023, while last year, they spent $1 million on four yearlings.
Lot 63 - Toronado (Ire) x She's Furline (colt) purchased by First Light Racing | Image courtesy of Inglis
Furthermore, just one of the top 10 buyers by aggregate from 2022 were back on that list this year, that being Bon Ho’s Legend Racing.
“The stat that hit me the most that I think really tells the tale is the top 10 buyers of 2022 compared to 2023. Legend Racing is a sole owner and is somewhat immune to the trends of the market,” Wilson commented.
“For nine of them not to be in the top 10 buyers of 2023 - and they’re syndicators and trainers and the like - to me, that was the most compelling stat.”
“From a sale that was actually down 20 per cent, so there was great value, there was opportunity, nine of the top 10 buyers weren’t in a position to take advantage of the opportunity; I think that’s a that’s a compelling message that the underlying demand domestically is not where it’s been for the past few years and we’re probably on the beginning of the trend of a correction.”
“We’re just having to be really cautious about the level of risk we take.”
“We’re just having to be really cautious about the level of risk we take.” - Tim Wilson
First Light Racing’s year-on-year numbers for the Classic Sale were quite consistent. In 2022, they bought five yearlings at a gross of $415,000 and an average of $83,000. This year, they went home with four yearlings, after spending $422,5000 at an average of $105,625.
“That’s about our mark for Classic; our owner-base is predominantly Victorians,” Wilson explained.
“We went there with an open mind; if we got one, great, if we got none, great, if we got six, great; we just wanted to try and find value.”
“Our biggest Sales are normally Magics and Premier.”
First Light Racing bought six yearlings on the Gold Coast in 2022 compared to three this year. Their spend was down from $1,165,000 to $510,000, with their average decreasing from $194,170 to $170,000.
Changing tack
Wilson admitted First Light Racing’s buying strategy is different to years gone by, thanks largely to the number of sales, both domestically and internationally, that are now accessible.
The growth and popularity of the digital platform, as well as breeze-ups and 2-year-olds in training sales, have been significant factors in this regard.
“We changed our approach prior to Magics. There’s a lot of sales and a lot of opportunities,” he explained.
“In previous years, we would have got to the end of Premier with 20-25 yearlings and that would have been around upwards of 75 per cent of the yearlings we would buy for the year. What we’re trying to do this year, and international opportunities have certainly helped this, is we’re trying to stagger our purchases better over a 12-month period. We’re just not in a position to go and buy 20, 25, 30 yearlings in a two-month period at the start of the year, we’ve got to try and stagger that out over the 12 months.”
“The opportunity to own international racehorses is another significant factor.”
“Australians were really strong at the Tattersalls Horses In Training Sale, just before Cup Week.”
“The market is shifting, there’s so many more opportunities for owners to get involved in horses, not just via yearling sales; Inglis Digital has had a massive impact, there’s 50-60 shares up every fortnight in horses that are going to be racing almost straight away.”
“The market is shifting, there’s so many more opportunities for owners to get involved in horses, not just via yearling sales.” - Tim Wilson
Wilson admitted that each of the sales in 2023 has impacted the next, and their shopping list and budget for Inglis Premier will be determined by what happens between now and March 5 (Day 1).
“We bought three at Magics, we bought three at Karaka, we bought four at Classic… the three we bought at Magics, if we didn’t get them away we weren’t buying at Karaka, the same deal at Karaka, the same deal at Classic,” said Wilson.
“What we do at Premier will be completely dictated by what the next three weeks holds. The way we’ve behaved there historically is irrelevant now, I reckon, you just can’t be loading up the shelves with yearlings and expecting they’re just going to race off the shelves like previous years, because people have got so much choice and there’s economic factors to be mindful of.”
