Clearing the decks: the importance of clearance rates

Cover image courtesy of Magic Millions

Give or take, there’s been a yearling sale in Australia almost every week since the middle of February. It’s a tight squeeze, and this year more than most.

The Inglis Classic Yearling Sale kicked off a furious bounce between Sydney, Tasmania, Perth, Melbourne and Adelaide, wrapping up this week with the Magic Millions Gold Coast March Yearling Sale. Next stop will be Sydney for the Inglis Australian Easter Yearling Sale.

So far, majority feedback is that the market has corrected, most notably across the latest sales in Melbourne and Adelaide. There’s a bit of hysteria to that given the overall bloodstock picture is still healthy, and the key metrics, while variably down, are still floating somewhere around 2021 levels.

One of those key metrics is clearance rate, which gets a lot of attention for a lot of reasons.

A sale’s clearance rate represents horses sold, but it doesn’t just include horses sold through the auction ring. It includes horses sold afterwards too, and, as such, a clearance rate can change and improve in the hours, days and even weeks after an auction.

A healthy clearance rate is an important figure because it can quickly summarise the success or perceived failure of a sale. Magic Millions, for example, strives for a company-wide 85 per cent clearance across its sales year round, and this year, its Gold Coast Yearling Sale in January hit 90.08 per cent for Book 1.

“Book 1 in January is important to us because it’s our premier sale,” Bowditch said, speaking to TDN AusNZ. “It’s when we go to the market with the most amount of yearlings and where we make the most amount of money, so a 90 per cent clearance at that sale is very important.

“Across the rest of the sales, we work on the overalls, the overalls being Perth, Tassie, Adelaide and March. And right now, that overall figure is around 14.7 per cent of horses not sold that were offered.”

Bowditch is happy with that figure. As of Tuesday, with the completion of the Gold Coast March Yearling Sale, Magic Millions had offered 2333 yearlings since January 1 in public auctions. Of those, 2026 had sold, accounting for an overall, sales-wide figure of 13.1 per cent of horses offered not sold.

“I think that’s pretty strong,” Bowditch said. “It’s aligned with last year’s figure, so while it might not be better than last year, there’s certainly not a lot in it and it would be better than the average year.”

Sebastian Hutch, the CEO of Inglis Bloodstock, said while clearance rate is a critical feature of every yearling sale, it’s not necessarily the most important figure always.

“Realistically, the most important figure is the aggregate,” he said. “People look at things in different ways, but you could say that some of the other numbers are manipulatable, or malleable. You can have a fantastic average, for example, but a poor clearance rate and it doesn’t mean you’ve run a good sale.

“The gross and clearance rate are two figures that ultimately reflect how a sale is going, and that’s looking at things from the context of the number of horses catalogued.”

More than just the auction ring

Every sale company kicks off every sale with the intention of selling all horses in a catalogue. It’s a pipe dream and it’s safe to say that no sale clears 100 per cent of its catalogue.

However, individual clearance is very important to vendors. For example, Dorrington Farm’s Robert Crabtree hit a satisfying target at the recent Inglis Premier Yearling Sale of a 100 per cent clearance for his yearlings offered. It was the fourth straight year he hasn’t brought a horse home from that sale, and he was proud of it.

“The reality is that we go into every sale with the objective of selling 100 per cent of the horses,” Hutch said. “It’s unrealistic, but that’s what we’re working toward. We are very conscious that every vendor brings a horse to the sale to sell that horse, and we want to be able to say that we’ve made every reasonable effort, be that on complex or during the days and weeks after, to facilitate the sale of as many horses as we can.”

A huge amount of work by sale companies is done pre-sale, as should be the case. That generates interest in the catalogue and, all being well, as many horses as possible will therefore sell in the ring.

The buying bench is spread between people present ringside, people online and on the phone, and people buying as proxies, and in this digital era, it’s a vast spread of presence that the auction houses need to be across.

“The post-sale process doesn’t just begin when the last horse goes through the ring,” Hutch said. “Post-sale begins as soon as a horse is passed-in and walks out of that ring, and the post-sale process is when we want to be confident that we’ve done everything we can to help sell that horse for someone.”

Ultimately, the post-sale process brings the bloodstock teams back to the vendor and any potential buyers. The sale company will have an idea of who might have been interested in a horse, but who for whatever reason didn’t bid or stopped bidding.

“There are reasons why people don’t buy a particular horse,” Hutch said. “It might be a misreading of a situation, or a prospective buyer wasn’t comfortable with the vetting. It could be a client goes off a horse or they buy a different horse. There are any number of reasons why a sale doesn’t happen.

“But what we’ve found is there are a frequent number of incidences where the valuation of a horse by a prospective buyer doesn’t align with the valuation put on that horse by the vendor, and that’s a genuine opportunity for us to see if we can try and bring the two closer together to facilitate an eventual sale.”

Plenty of horses are sold on this premise throughout every sales season, and plenty more under other circumstances. The story of Sheeza Belter (Gold Standard) is a good example because that filly, now a winner of close to $2 million, was passed in at the 2021 Magic Millions Perth Yearling Sale when initially offered by Mt Hallowell Stud.

As it turned out, retired trainer Justin Warwick had made a huge mistake that day, accidentally buying the colt that came after her. He had no idea of his error until the weeks afterward, when his ‘filly’ was discovered a colt by his pre-trainer.

Warwick contacted Magic Millions immediately, who assisted him in reaching out to Mt Hallowell Stud where Sheeza Belter had not only returned, but was wiling away her time unsold. Warwick bought the filly for the price that passed her in and the rest, as they say, is history.

“The average yearling sale, I would say, goes on for about a week after the sale,” Hutch said. “But it can go longer. As an example, we’re in the process of finalising the sale of a yearling from Classic right now.

“These things can get drawn out over a period of time, and people go back over the passed-in lots sometimes, deciding that they like a horse enough to go back and buy it. A lot of that comes down to us having relationships with vendors and buyers to make that interaction easy in the days and weeks after a yearling sale.”

Closing the deal

The sale companies do not have a particular team dedicated to post-sale clearance rates. Each of the bloodstock teams are across it all, which comes back to those individual relationships fostered all year round.

“From the time a horse is passed in, our general norm is firstly to communicate with the vendor on who they thought might have been interested in one particular animal,” Bowditch said. “Whether it’s them or us, we’ll start communications with those interested parties, and we keep the communication up through our own team via group chats. There isn’t one sole person in charge in that respect: it’s a team effort.

“We have a lot of clients who we know so well that we’re already across their individual needs and we’ll go out of our way to recommend passed-in lots to those particular clients, on top of the vendor's belief in who was interested in the horse.”

Bowditch said that in the hours post-sale, there is plenty going on, and in the days post-sale there is just as much going on. His bloodstock team, critical members like Dane Robinson and Ben Culham, are working virtually round-the-clock on passed-in opportunities.

“As time goes by, it becomes a more difficult conversation to be having,” Bowditch said. “A huge percentage of the private sales are done either at the auction or in the hours and days after it.”

All private sales contribute to the overall clearance rate. None will improve a statistic dramatically, but they can be the difference for a sale that closes with a relatively poor clearance rate for whatever reason.

“Our statistics continue to update, so if we sell a horse privately from Perth this week, a month after the sale, it will still contribute to the results,” Bowditch said. “Once you get beyond the payout date of 42 days, it can change a bit, but most transactions will generally happen in the seven days post sale, if they’re going to happen.”

Aligning expectations

This year, the clearance rates on all seven sales are healthy.

Book 1 of the Magic Millions Gold Coast Yearling Sale hit 90.08 per cent, with the overall catalogue sitting at 88.72 per cent. This sale has a significant edge in that it’s the first yearling sale of the year, and there’s money about and orders to be filled.

The 2023 Inglis Classic Yearling Sale boasted 87 per cent clearance for Book 1, while the much smaller Magic Millions Tasmanian Yearling Sale sat at 85.27 per cent.

The Magic Millions Perth Yearling Sale is the circuit leader by clearance rate at the moment, getting 91.93 per cent of its Book 1 catalogue cleared, and for the overall catalogue, that figure was 90.57 per cent.

Jumping forward to the Inglis Premier Yearling Sale, the premier session clearance rate was an even 80 per cent, and the Magic Millions Adelaide Yearling Sale last week finished at 84.34 per cent.

With the Magic Millions Gold Coast March Yearling Sale only just wrapped up on Tuesday, and the final figures still open to improvement, the clearance rate sits at 80.75 per cent right now.

“We had a lot of offers come in overnight (Tuesday) from the March sale,” Bowditch said. “Those were from buyers that were online, maybe going through the catalogue and looking at the photos and videos and jumping right in with an offer. Some of the offers aren’t accepted, obviously, and those are some of the unknowns in this discussion… people that weren’t here at the sale engaged, to our knowledge.”

The digital presence of buyers has added a huge dimension to sales for both auction houses, and that dimension has blossomed during and since COVID. It stretches from the pre-sale processes right through to the post-sale processes, but it hasn’t really changed the attitudes of both managing directors.

“Having the motivation to close a sale with the highest possible clearance rate will always be important,” Bowditch said. “We’re a company that will always strive for that 85 per cent figure, if not better, and this year we’re sitting at around that 14 per cent figure of horses passing in overall across all sales.

“That motivation to have only 15 per cent of horses left at the end of a sale is something where you’re giving most vendors a good feeling walking away, and it’s about keeping our vendors viable and in the game, be that in the ring or post-sale.”

For Hutch, identifying the reason for horses passing in is critical to any potential success post-sale, and he said the single biggest reason why buyers’ and vendors’ perspectives don’t align is value.

“It’s part of the challenge of selling horses and our job here is to try to help people meet in the middle,” he said. “I would say clearance rates this year are little bit off what the highs were of last year and the year before, but those comparative years were exceptionally high, even in a domestic context. If you look back through an extended period of time, it was very, very rare for clearance rates to consistently hit the heights that they have the last two years.

“But I would say that Australia still runs market-leading clearance rates in the context of the world market, and that’s a great reflection of the health of our market.”