There will be many who shrug off the recent Tatts results (UK) as just "one of those things".

I actually think there is a significant message in there that Australian breeders need to take heed of.

Forced to comment on the marked dissimilarity between the 2004 and 2003 results Tatts chairman Edmond Mahony commented: "After a decade-long period of growth, we have seen the foal crops increase dramatically & the sheer numbers are now taking their toll.

"The total spend on yearlings at Tattersalls over the last 2 weeks has been just over 65,000,000 guineas (A$175m), a total only bettered twice; but this year the pot has had to be spread much more widely.

"We have never catalogued such enormous numbers of yearlings, with 240 more than last year & a massive 36% (555) more than in 2002. These are sobering figures, & despite good demand for smart individuals in both Parts 1 & 2 of the Sale, & significant contributions from throughout Europe & further afield, the past 2 weeks have given all of us involved in the British & Irish bloodstock industry plenty of food for thought.

"The reality is that, while the foal crops have been rising steadily, we have been experiencing a period of relative economic stagnation, prize-money levels have plateaued, interest rates are on the rise, the property market has slowed & oil prices have gone through the roof. Combine these dynamics with a British & Irish foal crop which has increased by nearly 2,000 in the last 2 years, & it is little wonder we have seen a correction in the market.

The UK isn't alone in increasing foal crops. In the US 34,539 foals were registered in 2001; 32,235 in 2002 and 34,025 in 2003 (going against this trend a report by the Jockey Club last week indicated that 2004 covers were down 3.1% from 3,342 in 2003 to 3,239 this year). If you go back to 1975 (the year Affirmed was born) 28,271 foals were registered. The preceding year Seattle Slew was 1 of 27,586 foals registered and in the Class of 1970 (think 'Secretariat') 24,361 were registered. To put it all in perspective it wasn't until 1956 (11 years after Citation was born) that the registered foal crop exceeded 10,000.

Now, many will say that the barometer of market health is of course Keeneland and we all know the heady fireworks that resulted in that part of the world last month. BUT - how sustainable are such figures?

The auctioneers, the agents and the vendors would have us believe 'forever'. I'm not so sure.

Go back to Bill Oppenheim's column from The Thoroughbred Daily News which I reprinted in full in a post on 11 October. He stated: "These are pretty sobering figures, not least if you are going to be setting stud fees for next year, or thinking about paying them. Here's another set of sobering statistics: of the 512 yearlings sold last week in October Part 1, I reckon over 100 of them were bought by Maktoums and associates. John Ferguson, Shadwell and Darley signed for 67, and between Charlie, Anthony Stroud and anybody else who might have been buying for them, I'd say they'll have comfortably broken the 100-yearling mark. That's one of every five sold. Add in Demi's 24, and the game's two biggest operations bought over 25 percent of the yearlings sold last week, and spent over 40 percent of the money. Take the Maktoums out of the equation, and the value of horses in Europe would drop 40 percent overnight. Perhaps just as ominously, 23 of the 24 bought by Demi O'Byrne were by Coolmore stallions, and 17 of the 31 bought by John Ferguson were by Darley/Maktoum stallions--though they did also buy 10 by Coolmore sires."

On the 13 October Bill published another article in The Thoroughbred Daily News which stated: "The problem was not simply that prices [at Tatts] were lower than expected, but also that expectations-- based on things like the name of the sire and other costs of production--were higher than prices. That can be a result of aggressive consignors in a strong market, but last Friday's 'spike' to 38 percent not-solds was not due so much to an excess of greed as to a shortage of buyers at those price levels.

"...the feeling seemed to be, you were better off selling at a loss than you were keeping the horse, since you were liable to just lose more on it. It's an uncomfortable (if not grim) sort of economic reality, but there you are. There will certainly be some breeders rethinking whether their bottom-level mares should be bred, and even if so, whether they really merit breeding to some 'flash' stallion if the resulting yearling isn't even going to bring the stud fee. You can actually about break even selling yearlings in the 20,000-25,000 guineas range, but only if you can do that breeding to £5,000 stallions, incur manageable costs in the boarding, breeding, and preparation of those yearlings, and get a clean run with decent conformation and no huge vet bills. But a number of Monday and Tuesday's yearlings were bred on £10,000 or even £20,000 seasons. In those cases, no way are breeders making money. At this stage of the game, they're just relieved if they can get them sold."

Are the results from Tatts just a one off? Some would say 'absolutely' as they wave a number of 2004 sales results at me - Easter, Magic Millions, Karaka, Deauville, Fasig Mid Atlantic, Ocala Mixed, Florida, Del Mar, New York ... to name just a few.

Well whilst the 'top end' may be safe (although how the market average responds to a lack of Danehill stock post 2005 is anyone's guess), I also think that the average can wildly distort the reality. Consider Japan for just a moment. At the Select Japanese Foal sale in July this year, Sunday Silence was gone and one buyer, Fusao Sekiguchi, decided that the sale needed to post record results to send the right message to the Industry. So what did he do? He outlaid more than US$10.5-million during the two-day period.

His stoic attempt to (as he said) "support the bloodstock market in this country" is indeed admirable. But one doesn't need to be a genius to determine that the results may have been very different indeed if he hadn't unilaterally decided to spend more money than any single buyer in the seven 7 year history of the sale.

Flying in the face of such results, recent press has, in fact, urged us to INCREASE the foal crop. This is despite the fact that the ink hadn't yet dried on the NSW Racing report which states that NSW owners are paying $200-250 million per year on costs & are receiving only $91 million in prize-money & rebates, thereby subsidising the industry by $100-150 million per year. Nor does it take account the massive increase in catalogue size for sales such as Magic Millions (and interestingly, despite the number of horses catalogued stretching to the '1000+' mark, some vendors still aren't getting their horses accepted despite good breeding/conformation and are now facing the sobering reality of offering a yearling at a more 'unfashionable' (read as 'significantly lower average therefore less chance of making a return') sale.

Let's go back to the 'fashionable' catalogues for a moment. Even with the current broodmare numbers I'm somewhat intrigued as to how buyers will respond to an expected glut of horses from certain sires/studs at the 2006 yearling sales (the US Jockey Club Report mentioned above also revealed that in 2004 the number of stallions covering at least 100 mares increased 8.3% from 108 last year to 117 —a record—this year. Australia's final stats for the current breeding season will reveal some worrying similarities I suspect). A number of scenarios are possible:

- the market will hold true and in doing so prove that I have utterly no right to be casting any doubt on the subject!

- supply may well exceed demand for progeny of certain sires which, on the positive side (well, for some people) may well toss the ball into the buyer's court and drive down the average (enough to strike the fear of God into vendors and auctioneers alike)

- if the market does drop then service fees may also need to be adjusted (so add some fear to the stud owners/syndicate members as well)

- a number of breeders (particularly if they have over-bred their mare in taking advantage of a number of enticing deals this year) may find (unfortunately) that market realities can sting at times.

- vendors of well bred, well conformed yearlings whose sires covered limited books in 2004 may find that the supply/demand argument works to their advantage.

In contemplating the US market and comparing Australia to it (and then to Europe) I think we overlook Bill's words (particularly considering the domination of some of the stud farms Down Under) at our peril: "The breadth of the market in America, and the lack of depth to the market in Europe--have been ruthlessly exposed at Europe's yearling sales the last three weeks".

Yes, spin selling (aka marketing) plays an increasingly important role in the selling of horses. Just don't get so caught up in our hype that you don't see the wood for the trees.

Heady prices and 'record profits' make for great press (I've written about them myself) but I remain to be convinced that the market isn't set for a readjustment in the not too distant future.