July 2023
Whilst the Australians are up two-nil in the Ashes and half the nation bathes on the beaches of the South of France, we are just three weeks from the beginning of a fresh racing season ‘Down Under’.
From the dizzy heights at a time when we had a cash splashing government with record turnover at weanling, yearling and broodmare sales, 2023 has seen a cooling on all three fronts in Australasia.
Having had tremendous increases in prize money across the country, headlined by New South Wales, the next 12-18 months will be very interesting in terms of gambling turnover and investment in bloodstock across all levels.
Noting interest rates in particular, there is no doubt there has been added pressure on the discretionary spend on many of the 93,040* registered owners across the country.
Syndication and micro ownership has been fantastic for the sport, breaking down significant barriers to entry but the question could well be, are there too many shares in too many horses available? This over supply coupled with a lack of demand has already seen lower clearance rates and a significant drop in medians across all sales.
That being said, the industry is in rude health and is regressing from a seriously high peak of $640 million grossed at yearling sales in 2022, up from A$263 million just ten years ago.
The slackening clearance rates have been offset in part by the shift to online sales platforms with over 1000 horses catalogued in the month of June across Australia and New Zealand. From weanlings to tried horses, there has been a noticeable shift from the traditional A$10-100,000 yearling purchaser, reallocating those funds to a horse that can run within a month from the effortless click of a button.
In a similar manner, imported middle distance prospects have been accumulated in bulk. With approximately 400 tried horses imported from Europe annually, using a nominal average price of A$350,000 per horse landed, it is likely to take at least A$140 million out of the domestic spend – quite a large percentage of the yearling market. This trend is likely to continue at a rapid pace and does not include the number of tried horses purchased from New Zealand.
Whilst prize money levels are at uncharted levels off the back of the caffeine hit the industry received throughout COVID-19, navigating the comedown will be crucial to long-term stability.
Unlike our ancestors in England, Ireland & France, Australia does not have the primary and secondary markets of the United States, Germany, Italy, Spain, Morocco, Greece, Tunisia, Bahrain, Qatar, Saudi Arabia and the United Arab Emirates to complete the product life cycle. The recent announcement of racings closure in Singapore next year is a further reminder of this.
This coming season promises to deliver mouth-watering prizemoney on the track whilst on a horse trading level, there will be a laser focus on quality which will significantly test the lower end of the market. This will no doubt create pockets of opportunity with the safety net of healthy prizemoney at all levels.
Nevertheless, we still have to finish the Poms off in the cricket and make amends for a disappointing Royal Ascot – perhaps the Italian Riviera is the spot for 2024.