In the midst of the coronavirus pandemic, with people staying home, not taking business trips and otherwise changing the way they work, Max Hodge would get questions from friends.
“Hey, what are you doing for Covid? Not much going on?”
“Actually, I’m probably working 10 times harder than I normally would.”
The vice president of client services at Fasig-Tipton in Kentucky, Hodge works hard all the time, but much of his winter and spring were spent helping the sales company ramp up an online bidding component to its live auction business. The platform was unveiled at Fasig-Tipton’s Maryland 2-year-old sale in June, and used again at the Kentucky horses-of-racing-age sale in July. In both cases, some horses sold via the internet – heretofore an anomaly for North American Thoroughbred auction companies, but now a sudden reality because of the global health crisis. Keeneland conducted an entire sale of horses-of-racing-age online in June – selling 12 of 31 offered. Wanamaker’s, a Kentucky-based start-up, launched in June as an online-only platform with monthly sales. They all joined the West Virginia-based ThoroughbredAuctions.com in the arena, mimicking virtually every business in the world with an online retail presence.
The 2020 changes may be related to Covid-19, but only partly. As with cars, clothes, groceries, even homes, the online disruption was coming.
“We’ve been evaluating it probably every six months for the last 15 years, at least annually,” said Hodge. “Do we want to do it? When are we going to do it? Obviously, there’s added expense in the development cost, added sale-day labor and prior to Covid there hadn’t been a huge demand for it, not enough to justify the added expenses associated with it.”
But the kernel of a big step forward was there. And it popped because of the virus and its restrictions on travel and public gatherings.
“We knew we were going to be doing all this at some point in time,” said Hodge. “We didn’t know we were going to be doing it all at once though. To say we have to do this, and we have to do this for our next sale, that was different.”
Wanamaker’s didn’t exist before Covid, but the idea did. Company co-founders Jack Carlino and Liza Hendriks used web-based auctions as their final projects with the Godolphin Flying Start Thoroughbred education program. Turning a class project into a real business wasn’t necessarily part of the plan, until it was.
“Your final project with Flying Start is a business plan and I did mine on an online auction house,” said Carlino, who graduated in 2018. “It didn’t exist because no one had done it.”
Hendriks, the daughter of Mid-Atlantic trainers Ricky Hendriks and Lizzie Merryman, was a year behind Carlino in Flying Start and pursued a similar final project. Last fall, she was in Australia – where online Thoroughbred sales are more common – and he was finishing up a stint with Hill ‘n’ Dale Farm in Kentucky. While driving between Hunter and Sydney, they debated the pros and cons of actually starting a business. About 150 miles later they were making calls to web developers from their hotel. Then came the pandemic.
“You have to interview 40 potential customers as part of the business plan for Flying Start,’ said Hendriks. “This was all pre-Covid and some people were hesitant, but most had really good feedback and thought it was time for the industry to go that direction. After Covid, it was more ‘Yes, this needs to happen.’ ”
Wanamaker’s held its first sale in June. The second in July was topped by $400,000 racehorse Fiya.
If the concept of online horse auctions in the United States has a grandfather – it’s ThoroughbredAuctions.com. Owned by Tim and Cathy Jennings, Thoroughbred breeders and nearly lifelong auctioneers, the company has deep roots in live auctions at Timonium and elsewhere and built its business on Quarter Horses, Paints, sport horses, even the Chincoteague pony auction. Now almost all online, the company has an established platform and methodology to sell horses via the internet – pandemic or no pandemic.
“I’m a live-auction guy,” said Tim Jennings, whose company conducted its first internet auction in 2012. “If you had asked me if this would have worked 15 years ago, I would have said no way. But it’s different now. We’ve seen so much change in the sport-horse market and it’ll happen with the Thoroughbreds too.”
A New Idea
Owner Rob Masiello buys horses at sales, privately, whatever. He understands the process, but there are always questions – especially with private sales. “I’m a stock guy, so I think about what the valuation of a horse might be and when you’re doing a private purchase you’re always wondering, ‘Did I overpay? Did I underpay? What’s this horse worth?’ ” he said. “It’s hard to know sometimes, and I’m sure it’s that way with the seller too.”
With Maryland-bred Fiya, purchased through the Wanamaker’s in July, Masiello knows. He bid $400,000 to get the 3-year-old son of Friesan Fire, a winner of two races on the turf at Laurel Park this year for owner/breeder Ann Merryman and her son Michael. Masiello saw the horse with Wanamaker’s, reached out to Merryman for a veterinary inspection and then got ready to bid. The auction closed July 30, and Masiello stressed.
“I’ve bid on enough now on my own, being in the back ring and bidding and I’m calm,” he said of a live-auction setting. “I was pretty nervous this time. You’re just staring at this screen, waiting for the bid to change. Bidding really picked up as it got closer to the end. It was pretty interesting and pretty stressful, too, but the process was smooth, there were no delays, I was able to bid when I wanted to.”
And he got his horse. Fiya, a son of Friesan Fire and the Two Punch mare Sista, shipped to New York to join trainer Tom Albertrani and will aim for a potential stakes start this summer.
Masiello sees real potential for platforms such as Wanamaker’s, especially with racehorses, because it’s different.
First of all, there’s no sale. It’s a virtual catalogue and the horses remain with their owners. Sellers register for an account, enter basic information, upload two required photos and any other content including a walking video, set a reserve and starting price, pay a $300 entry fee. Like a live sale, various forms of paperwork – Jockey Club papers, Coggins test, X-rays, veterinary certificates and so on – are required. For buyers, bidding can start the day the catalogue goes live but the sale typically lasts a week to give time for inspections and the bidding goes live on the final day. If a bid is placed in the final three minutes, the bidding clock resets to three minutes to provide more time to bid. Buyers also have the option of setting a maximum bid early in the process. Like other sales companies, Wanamaker’s charges a commission to sellers on a completed sale.
The first two catalogues included yearlings, 2-year-olds, racehorses, broodmares and broodmare prospects – and prices from Fiya’s $400,000 to $4,000 for Mixology (a 6-year-old Old Fashioned mare in foal to Army Mule). Of 19 horses offered, seven sold via auction with two more sold privately. In an industry as tradition-bound as Thoroughbred racing, it’s a start.
“We see racehorses and broodmares as fitting the model best,” said Carlino. “That doesn’t mean other types won’t also be able to sell, it’s just because there’s more on paper. Good pictures and video paired with a horse’s past performance are key and are enough in a lot of cases and we’ll help consignors with the details like video, photos and visit notes.”
Hendriks and Carlino see advantages in their model – the monthly sales, the lower costs to consignors who don’t have to ship horses and staff to a physical sale, the ability to look at horses on their home farms and so on. Factored in with the coronavirus and its restrictions on actually attending events, or the reluctance of people to travel, the online model gains even more traction.
“Pre-Covid we thought it worked anyway,” Carlino said. “It’s expensive to send a horse to a traditional auction and some horses just don’t fit as well as others. The Australian market and how it operates gave us confidence. If it can work in a country that has breeding and racing similar to the way that we do, it might be something people would turn to. I don’t think it will ever replace the traditional auctions. It’s more that it provides an outlet for circumstances that wouldn’t have an outlet before.”
Changing On the Fly
Founded in 1898, Fasig-Tipton is as traditional as any Thoroughbred business but that doesn’t prevent change or limit the need to adapt. People bid by phone. Auctions are livestreamed on the company website. Veterinary records and inspections are available in a variety of formats. Digital catalogues get updated based on racing results. In 1970, the company listed 11 conditions of sale on two pages in the catalogue. Now, 24 conditions spread over 23 pages. This year brought further change.
Covid-19 forced Fasig-Tipton to cancel sales early in the year and delayed the 2-year-old sale in Maryland more than a month. While shuffling dates and reviewing potential location changes, the company installed an online bidding platform. People registered to bid, applied for credit, bid on horses and bought horses through the new system. In addition, Fasig-Tipton beefed up its livestream capabilities and created an online repository for veterinary records.
All of it was necessary, especially when there were times leading up to that June sale when public attendance was in jeopardy. None of it was simple, or free.
Start with the stuff that can’t be seen. Fasig-Tipton upgraded its computer and network capabilities in the sales pavilion to speed up the livestream. The old version was delayed, several seconds behind the live action. If people were going to bid based on what they saw on video, that latency had to change.
“We’ve livestreamed for years so that’s there,” said Hodge. “But in addition to the regular livestream we had an additional livestream for the online bidding purposes that has no delay. The video you’re seeing and audio you’re hearing is a separate stream, separate machine, with additional internet uploading capacity. In Maryland we tripled our capacity for the sale and overhauled the interior infrastructure – access points, routers, that kind of thing – which was probably due, but it was something we had to do.”
On sales days, information matters. The bid board above the auctioneer stand, also overlaid on the traditional livestream, shows the live bid amount as input by Fasig-Tipton personnel. The online bidding platform, which required registration to access, shows the live bid and the auctioneer’s asking price.
“There’s a person operating the toteboard like always, but we added two online-bidding clerks working that side,” said Hodge. “They put in what the auctioneer had and what he’s asking for and that’s what the person working from home sees and what they can use to then place their bid.” As it does with a successful phone bidder or live bidder, Fasig-Tipton finalized the online sales immediately afterward – meaning the approval process was the same whether they wanted to phone bid, be on site or buy online.
In the end, Hodge was pleased with the process. At Timonium, 14 horses sold to online bidders and 96 horses received online bids.
“Based on the feedback and the inquiries we’ve gotten it seems fairly straightforward,” he said of the platform. “The sheer volume of last-minute applicants and the demand that put on the accounting staff was a new hurdle for us, but it went smoothly.”
Hodge said he saw a mix of online customers – some with agents or advisors on the sales grounds who bid on their own, others who converted from phone bidding to the website and still others who were new customers.
“Any time you can engage the person and get them directly involved in the experience, everybody’s going to benefit,” Hodge said.
Buyer Ken Kachel used the online system to buy at Fasig-Tipton’s horses-of-racing-age sale in July, and called the process smooth.
“I didn’t know how to navigate it when I started and they went beyond to help me,” said Kachel, singling out employees Paget Bennett and Joe Smith for their help. “They were fabulous helping me navigate how to get involved, the registration and the credit I needed to establish.”
Kachel was interested in three horses at the sale, and had someone on-site to look at them and do veterinary examinations. That “due-diligence” work was important, just like with a live purchase, so Kachel felt comfortable. He figured he’d spend about $30,000 so applied for that much in credit. The online bidding process includes a warning as your bids get close to your credit limit, he said, so keep that in mind. Eventually, he landed the 4-year-old Tapit gelding Better Tapit for $27,000. He’ll go to trainer Ricky Hendriks in Pennsylvania. Kachel had experience buying cars in an online auction, and compared the two.
“One thing they do with the cars is hire people who do nothing but do condition reports,” he said. “They go around the car and describe everything, exterior and interior. They tested all the equipment and graded the car 1-5. That puts more confidence in buyers, but I’m sure it’s not cheap and it’s different with horses because it can change every day. But the more information the better in terms of description, photos, videos, whatever you can do.”
Kachel did not use the automatic bid feature, but sees the benefit to buyers who can’t be on the live auction the whole time.
“I would do it again, and I would encourage anyone to do it,” he said. “It felt safe, it was an auction, just like you were there.”
Looking Ahead Wanamaker’s intends to continue its monthly sales, while eyeing industry trends and other developments that will affect business.
“It’s part of our advantage,” said Carlino of the schedule. “We want to give the timing advantage to sellers. If you have a mare, a foal, a yearling, a racehorse – it doesn’t matter when you sell it – we want to let buyers control their destiny more than they do with a traditional auction.”
Fasig-Tipton will stick to its schedule of live auctions, which includes six sales from Sept. 9 through Dec. 8, but also won’t rule out adjusting that model.
“Our entire focus has been our core product and our core product is live auctions,” said Hodge. “We had a lot of moving parts to put in place this year and we’ve got a massive schedule of auctions this fall where we’ll add the online component.
“Never say never,” he said of a future of online auctions. “You see what Inglis is doing in Australia. They sell 500 horses every two weeks online. They don’t have a claiming system [of races] so it would look very different if you took out the horses-of-racing-age market. But I think there’s a place for it in the United States.”
Beyond the companies mentioned here, bloodstockaucton.com looks to move into the U.S. market with an expansion of its platform used in Australia and New Zealand.
Web-based sale business blooms for Jennings
You want to talk about reach? In one form or another, Tim and Cathy Jennings’ horse auction company has sold everything from $1,000 Chincoteague ponies to $775,000 world champion Quarter Horse Good I Will Be.
And now they’re relative pioneers in the blooming online component of Thoroughbred auctions. The Jenningses conducted their first web-based auction in 2012, long before industry leaders Fasig-Tipton and Keeneland got involved, and have turned ThoroughbredAuctions.com into a source for buyers and sellers, especially after the coronavirus pandemic limited travel and public gatherings this year.
A dispersal of horses owned by R.D. Hubbard, the New Mexico breeder and former owner of Hollywood Park who died in April at age 84, resulted in 54 horses sold for $1,560,350 in July. The dispersal was scheduled for the annual Ruidoso Sale in August, but when that live auction was forced to move to another location due to the pandemic, Hubbard’s grandson Shaun Hubbard contacted the West Virginia-based ThoroughbredAuctions.com about an online sale. Twenty-two days later, the horses were sold.
“It was strong, just good horses,” said Tim Jennings, who worked his first live auction when he was 14. “With everything, it’s all about the horses and who you get them in front of. It has surprised a lot of people, how well that sale did. This is such a tradition-bound business, so it’s not an easy thing.”
Tim Jennings and his brother Mike started Professional Auction Services in 1978 and hosted live auctions of Quarter Horses, Paints and show horses for 30 years. They even added online bidding to the sessions as early as 1999 (predictably, bandwidth was a problem). The business contracted during the 2008 recession – going from 3,200 horses sold to about 1,400 – as people cut numbers or sold horses privately. Professional Auction Services responded by dividing into two auction companies, one for sport horses and one for Thoroughbreds. Internet auctions became a reality in 2012, and the company handled dispersals, court-appointed sales through the United States District Court system, without ever looking like a threat to Keeneland or Fasig-Tipton. Still, horses changed hands and buyers and sellers were satisfied.
Over the years, the model evolved and now takes for granted many things the newcomers rave about – nearly real-time reserves, a full two minutes in the “sales ring” for live bidding, extended time if bidding kicks in late, staggered closings, seven-day sales, email and/or text reminders and more. The company website proclaims, “The way you buy and sell is changing.” To many, it has already changed but ThoroughbredAuctions.com continues to perfect its model and got a boost from the coronavirus.
“We’ve had a lot of phone calls lately where people say, ‘I think you’re really on to something,’ ” Tim Jennings said. “I think we are. The advantages are so numerous. You’re not restricted by geography, your horses can stay on your farm, you don’t worry about where you are in the catalogue – whether your horse sells late in the day, early in the day, whatever. That makes a difference.”
Jennings singled out a court-appointed sale in February as an example of how it works. Hip 1, the Scat Daddy stallion Finale, sold for $35,000 after going to just $12,000 with three minutes to go. The bidding lasted another hour and nine minutes, all completely automated, while other horses sold and while the horse ate hay in his stall at home.
The software, adapted from online cattle auctions and perfected over time, does most of the work though there’s more to it than computers.
“It’s a good idea, but just because it’s a good idea doesn’t mean it’s going to work,” said Tim Jennings, who breeds Thoroughbreds in West Virginia with his wife [they sell at Keeneland or Fasig-Tipton, for now]. “It’s a customer-service business, and that is what we are. We’re there to serve a need. We’re fortunate to have a proven system in place that can help people. We have the auction experience, the horse knowledge and the system to make it all work.”
Shaun Hubbard knew of ThoroughbredAuctions.com through his connection to the New Mexico Thoroughbred industry, and turned to the company for the dispersal of his grandfather’s stock – stallion Atilla’s Storm, mares in foal to him, racehorses, 2-year-olds and on down to weanlings. Aisle Runner, a 2-year-old New Mexico-bred by Attila’s Storm out of the Bernardini mare Garter, topped the sale at $91,250. Aisle Runner’s sire brought $90,000 as bidding extended another 30 minutes after the scheduled close. The top-selling broodmare stayed in the family as Garter brought $80,250 (in foal to Attila’s Storm).
Hubbard liked the auction software, and the national (or potentially international) reach and the company track record, but said the experience went far beyond any of that.
“The business aspect of it really intrigued me and first-hand what I was going to do with our horses and our operation when my grandfather passed,” he said. “But Tim and Cathy are second to none. That’s the best way to describe it. They acted like this was the first or second auction they’d ever done. They’re always available, they have a great attitude, there’s enthusiasm and you know that’s gone by the wayside in the last few years in so many industries. People lose enthusiasm and ultimately your product is not as good. Their product is good because of them.”
Hubbard’s grandfather, who turned a $90-a-week job with an auto glass company into Safelite Auto Glass and later AFG Industries, owned and bred Quarter Horses and Thoroughbreds and ultimately owned all or part of Hollywood Park, Ruidoso Downs, The Woodlands in Kansas, Turf Paradise and Zia Park. He helped launch the NTRA and the Racing Integrity and Drug Testing Task Force, served on the Breeders’ Cup board and supported numerous philanthropic efforts inside and outside racing. He might have told his grandson to hang on to a few horses, but he would have recognized the need for the sale and would have definitely appreciated the way it happened.
“My grandfather always said, ‘Stay focused on the little things, that’s how the big picture comes into context,’ ” Shaun Hubbard said. “He was always able to change with the times, so he would have seen the benefit of [the auction process] and appreciate all the work that went into it.”
