The Verdict: Australia’s industry players evaluate its vibrant market – Tom Reilly
In a five-part series ANZ Bloodstock News speaks to some of the industry’s key players for their perspective on the incredible performance of the 2021 major yearling sales season.
We asked them for their take on what’s behind all the money that’s been flying around sales rings since January and also for their thoughts on the current general state of the Australian racing and breeding industry.
In today’s edition, Alex Wiltshire speaks to Tom Reilly, CEO of Aushorse and Thoroughbred Breeders Australia, to cast his views on the 2021 yearling sales season and the courage breeders and investors have shown in Australia through the challenges of Covid-19.
Have you been surprised by the strength of the yearling markets in 2021, with the backdrop of the uncertainty created amidst the prevailing Covid-19 pandemic?
When you think back to the very start of the year before Magic Millions, no one quite knew what it was going to be like. Obviously last year’s sales season had been completely interrupted, with Covid affecting half of the yearling sales and a huge amount of uncertainty.
I don’t think many people would have predicted that the sales would be as strong as they have been. It exceeded even our most ambitious expectations.
Why have people parted with the levels of money they have?
I think probably the biggest fundamental reason is the Australian economy. Despite the challenge of Covid, it’s held up extremely well.
At the start of January this year, Australians had $120 billion more in their accounts than they did 12 months previously, at the start of January 2020.
Of course there were people whose businesses were hugely impacted by Covid, but if you weren’t, a lot of Australians felt financially in a better position. Perhaps they had been able to save their money, having not been able to go overseas and spend their money there – Australians spend around $60 billion a year annually overseas.
Furthermore, a lot of businesses received JobKeeper funds from the central government, who had tipped in billions of dollars in fiscal stimulus to the economy, so that’s probably the fundamental reason.
Secondly, I think we’re very fortunate here that racing was able to keep going during the pandemic, almost uninterrupted.
That meant that, while other sports were off-air, we were able to continue to be out there, continuing to be seen, and that has seen wagering levels increase to unprecedented levels as well. But I think what it also does is demonstrate the strong levels of interest in racing. There were people who paid attention to racing who perhaps might not have done otherwise, so I think that’s given the industry a shot in the arm.
Thirdly, we have one of the most progressive industries in the world. We have a good funding model, good prize-money – across Australia it’s nearly doubled over the last decade – so it’s a combination of all of those factors.
What’s interesting is that it has been the domestic spend that has driven this. So a combination of an economic sense of wellbeing, the fact that racing has been in the shop window the whole time, all of that, plus the solid foundation that really allowed for it. This has all been driven by mass ownership and participation.
Is it sustainable?
It’s definitely sustainable. You could easily mount a very good argument that yearling prices in Australia are relatively among the cheapest in the world.
If you look at the very top lots, and compare them to the prices paid at Tatts Book 1 and elsewhere, and look at the potential for a return on that investment, you’re better off owning a horse here.
We’ve got a great story to tell the rest of the world and the international participation is one that’s been lacking significantly compared to previous years. There’s nothing quite like having people here and showing off what we have to offer.
I would hope we would still have a significant opportunity to increase that investment in the future.
How have breeders coped and responded with the pandemic? Have we seen a reduction in the number of people breeding from their mares this year?
We’re starting to get all the mare returns in now and it looks like the foal crop will not drop significantly. There was one stage where we had a lot of breeders saying they were less likely to breed, and there wasn’t that confidence to do so.
If you think back to early April last year, and leading into May and June, there was huge uncertainty, but I think by the time breeding season came around people started to get their confidence back up.
So, it’s interesting, we had thought the foal crop would drop significantly, but from the information we have it looks as though the foal crop will be almost identical.
Breeders had the courage of their convictions to keep going and keep investing, when there was still a large amount of uncertainty in the market.
How good are the opportunities for those looking to invest in the Australian thoroughbred market at the moment?
If you were a fresh investor and looking at different opportunities in different parts of the world, Australia has an absolutely open-door policy and people can come here and invest with confidence, invest here knowing that there’s strength at all levels of the market and therefore an opportunity to make a profit at all levels.
I would certainly argue that it’s the best place in the world to invest at the moment, whether you’re doing that as a potential breeder, or if you’re doing it as someone to trade – be that pinhooking etc – or even to race a horse.
Australia had 52 races with a value of at least $1 million last year, and that’ll be up nearer 60 in 2021. If you compare that to Europe or North America, we’re well ahead of the field. There’s a great opportunity for anyone to come here and participate in the racing and thoroughbred industries.