Encouraging signs at Goffs sale that bloodstock industry may finally be getting back on track

WITHIN 40 minutes of the kick-off of its most important sale on Wednesday morning, bloodstock auctioneer, Goffs looked to have a result.

The 12th lot on its catalogue of 400 yearling thoroughbreds, offered at this year’s Orby sale, sold for €775,000 to bloodstock agents Peter and Ross Doyle, guaranteeing that the top price achieved at last year’s running of the sale would be more than doubled.

Chief executive Henry Beeby, who auctioned the horse himself, pronounced himself pleased. “Thirteen of the first 14 lots sold: the first horse made €300,000, the top price last year was €350,000, so we’ve more than doubled that,” he said.

Racehorse trainer and breeder Jim Bolger sold the horse via his Redmondstown Stud operation. It was a double result for him, as he will train the horse, a filly, next year for its buyers, an as yet unidentified syndicate for whom the bloodstock agents were acting.

The reason they were willing to part with €775,000 for her is down to family. Her brother is Europe’s leading juvenile two-year-old racehorse, and looks destined for further glory next year, followed potentially by a lucrative stud career.

Bolger bred both from the sire New Approach, which he trained to win the 2008 Epsom Derby. Beeby pointed out that, given her family tree, the filly is already a potentially valuable breeding prospect, irrespective of what happens on the racecourse.

The price was topped late yesterday when South African agent Jehn Malharb paid €800,000 for a colt fathered by Coolmore Stud stallion Galileo. Malharb, who trades as Form Bloodstock, actually outbid Coolmore to buy the horse.

On Wednesday, Beeby readily conceded that €775,000 was a far cry from five years ago, when the top-priced horse sold in the Kildare auction ring went for €2.4 million. That was literally the peak for Goffs.

The following year, 2008, the sale took place as Lehmann Brothers collapsed and the European and US financial systems went into freefall. The company felt immediate reverberations. Bloodstock agents were ringing clients for whom they would normally have expected to bid for horses and were told “not now, call back next week”.

For a quite a few, next week never came. Bloodstock followed financial services and an array of other businesses into freefall. Goffs turnover plunged from €123 million to €71 million in 2008 and from there to €49 million in 2009 and €45 million in 2010, before coming back to €55 million last year. The company responded by cutting €4 million from its budgets in 2008 and reducing staff by 35 per cent.

In what is a familiar story for a lot of businesses, it also found itself with a bad debt hangover. Goffs guarantees its vendors will be paid in 35 days, which means that it has to chase up the buyers, some of whom never paid for horses bought just as the boom was fizzling out.

It took a €5.7 million hit in its accounts for the 12 months to the end of March 2010, which is its financial year, leaving it with a €6.4 million loss. “We decided that we had to deal with the problem up front,” Beeby said.

That was a provision. The company pursued its debtors and began recovering some of the money. Its chief executive pointed out that it worked out repayment plans with those who had difficulty, but had to take action against a few who just would not pay up.

It also sold its French auction house, Arqana. This year it turned the corner, making a €180,000 profit in the 12 months ended last March.

The company has been working on its marketing and is trying to pull in more buyers from abroad. Over the last two days, the auction attracted buyers from 22 countries.

But it faces stiff competition. Tattersalls in Newmarket, England, will see many of the same vendors who turned up at Goffs this week also bringing horses to its big sale next week. Beeby acknowledged that breeders use both auction houses, as this gives them access to the best possible spread of buyers.

This year, Goffs changed the format of the Orby sale slightly, reducing the number of horses on offer: just 180 went through the ring on the first day, compared to 209 last year, and there was a renewed focus on quality.

That appeared to have paid off, as the average price on the first day jumped by close to 50 per cent to €89,168 and the median price rose over 30 per cent to €55,000. At the sales end yesterday evening, the average stood at €90,300 and the median at €58,000.

While there were plenty of international buyers, some Irish players also got involved. Croom House Stud, owned by former Kerry Group chief executive Denis Brosnan, achieved the next best price on Wednesday selling two horses for €500,000.

One of the buyers was Demi O’Byrne, agent for Coolmore Stud, the global breeding operation run by John Magnier, who is a shareholder with Brosnan in a number of businesses, including nursing home chain Barchester. The colt was by Montjeu, a Coolmore-owned sire that died earlier this year.

Croom House also sold a colt for €240,000 to Shadwell Estates, owned by Sheikh Hamdan Bin Rashid Al Maktoum of Dubai. Castlemartin Stud, the breeding operation run by Chryss Goulandris, wife of Sir Anthony O’Reilly, took the third spot, selling a filly to Moyglare Stud for €420,000.

But Beeby stressed that it doesn’t always have to be a big-money purchase. Last year, one buyer picked up a filly at Goffs for €5,000. Now called Sendmylovetorose, and trained by Calendon, Co Tyrone-based Andrew Oliver, she won the prestigious Cherry Hinton Stakes at Newmarket in July, putting her close to the top of her generation’s pecking order and earning £34,000 sterling in prize money. She’s worth a lot more than €5,000 now.

Turnover plunged from €123m to €71m in 2008 €49m in 2009and €45m in 2010, before coming back to €55m last year