Why 2017 could be a make-or-break year for the bloodstock industry

DESPITE A RECORD-BREAKING 2016 on UK tracks for Irish-trained horses, Ireland’s racehorse industry is looking at the year to come with trepidation.

The Irish and British racehorse industries are governed by separate bodies, but the two have effectively operated as one entity for centuries.

However, the spectre of Brexit has gripped the sector, with currency volatility and the possibility of trade borders between Ireland and the UK threatening an industry that has operated with little change for a century.

At the auction houses, where Irish breeders sell their stock to international buyers looking for the next Cheltenham or Aintree champion, there are few champagne corks being popped despite a bumper year.

Trading at Goffs’ November sale of Irish foals and breeding stock passed the €40 million mark – only the second time the Kildare auction house saw transactions top the milestone.

Meanwhile, rival auctioneers Tattersalls, based in Meath, marked their 250th birthday year with a record annual turnover of nearly €280 million.

Goffs Group chief executive Henry Beeby says uncertainty about 2017 is playing on everyone’s mind as the new year beckons.

“I hear the British government saying one thing is going to happen in its autumn statement and then people who are meant to know what they’re talking about say the opposite.

“Ongoing uncertainty is not good for any market. That would be my overriding feeling and particularly a market that is dealing in a speculative and luxurious item such as a racehorse. I hope they get certainty as quick as possible, whether it is the positive or negative, we’ll deal with that.”

Henry Beeby

Irish Thoroughbred Marketing (ITM) chief executive Charles O’Neill, who promotes the Irish racehorse industry worldwide, says demand from the UK for Irish thoroughbreds is not going to disappear overnight, but Brexit is still on people’s minds.

“Everywhere you travel, Brexit comes up in meeting. People want to know what it’s going to mean and what the biggest issues are. Uncertainty is the biggest killer in all of this. It’s the not knowing,” he says.

“If we got the rules we could work to those and know what to do. But all the speculating is no good for the Irish thoroughbred industry.”

Barriers

One of the major ramifications from Britain leaving the EU is the possibility of a ‘hard’ border being introduced between Northern Ireland and the Republic.

“I think what would be very detrimental not just to Ireland, but to Britain as well, would be any kind of barriers of movement of horses, people or trade between the two countries,” says Beeby.

“When it comes to bloodstock, Britain and Ireland are really one industry – we work from one stud book. If you take Tattersalls clients in Newmarket and Goffs clients in Kildare, they are nearly one in the same.”

The hard border would also create problems for the racing industry itself, according to O’Neill.

“The last thing we need is borders up across the North. Horse racing isn’t divided in Ireland, it’s all 32 counties, so you have to make sure we have free trade for racing up in Down Royal and Downpatrick – they are as much a part of racing in Ireland.”

Charles O'Neill

O’Neill added that a hard border between Ireland and the UK isn’t the only issue on the mind of racehorse breeders and trainers.

“It’s not all down to free movement … with the volatility in the currency now, people are looking a lot more at where they are spending money.

“There is volatility and that brings more uncertainty. So you have to get around that and make sure Ireland is always the go-to place to buy horses, even in times of uncertainty.”

Attracting international buyers

While the thoroughbred industry will be joining the lobbying efforts around Brexit, the reality is its voice will barely be heard in the din of concerns from business and interest groups.

For now, those within the industry are focusing their attention on the matters more closely within their control, such as attracting more buyers from outside the British Isles.

Beeby says Goffs has concentrated its efforts in getting US buyers to sales after the upheaval of the UK vote to leave the EU.

“It reaped dividends because we had more American buyers than we have had for many a year, or possibly ever, at the yearling sale in September,” he said.

“We still focus heavily on our local markets, but we have spread our wings and appointed a couple of very good new agents in the US and Australasia recently to bring new people back to buy Irish horses.”

Overproduction

Aside from dealing with the fallout of the Brexit referendum, the industry is also contending with a problem more of its own creation – the overproduction of foals.

Beeby says the number of foals produced in Ireland peaked around 2007 before crashing alongside the economy during the recession. However it is now rising at a faster rate than anywhere else in Europe.

“We’ve got to be careful that we don’t flood a market that doesn’t need that many horses. We’ve seen the clearance rate at some of the sales dropping over the last 12 months, which means supply may be starting to edge towards outstripping demand again.

“There needs to be a focus on a relative quality – and I use the term ‘relative quality’ advisedly. We’re not talking about being elitist, but from our point of view, we will focus on a relative quality in every category.”

However, O’Neill doesn’t believe lower auction clearance rates is a necessary symptom of higher production.

“We just need to keep raising the standard and the quality of the breed, that’s where the problem is. We don’t have enough good mares producing the good horses. If they are good foals of the right quality, they will sell.”

Convincing Ireland’s breeders to sell their best stock through the Kildare-based auction house and not rivals in England will be another major challenge for Goffs this year.

Beeby says it’s an ongoing battle to change breeders’ perceptions that they needed to head across the Irish Sea to get the best prices.

In 2013, Goffs fetched the highest ever price for an Irish racehorse when it sold ‘Chicquita’ for €6 million.

“It is no disrespect to UK auctioneers, but breeders don’t need to go there,” says Beeby. “Goffs can look people in the eye and say when we have the best horses, we get the best prices. We have the buyers here.”