Straight from the horse’s mouth

When you are trying to gauge how our wealthy entrepreneurs are handling the economic downturn, you have to look at all sorts of indicators.

Share prices, hedge fund returns, property yields and asset sales are all important, but there are a few more subtle indicators to watch, including art sales, luxury car sales and thoroughbred auction results.

This is one of the biggest weeks for thoroughbred owners, as wealthy owners and breeders such as David Hains, Gerry Harvey, John Singleton, Nathan Tinkler, the Fleming family, Bob Ingham and Tony Santic gather for the Inglis Premier yearling sale in Sydney.

As wealth levels soared between 2005 and 2008, so to did the price of yearlings (one-year-old horses that are yet to race), with top prospects regularly fetching $2 million to $3 million.

Wealthy owners poured money into racing. Tinkler spent around $80 million on horses and property in late 2007 and early 2008, while the Dubai-based Darley racing and breeding operation paid $500 million for the Ingham family’s thoroughbred empire. 

But the global financial crisis seems to have forced some wealthy owners to rein in their spending. In the first session of the sales, the average price paid plunged from $338,737 to $226,978, a fall of almost 50%.

The star attraction of the day, the first foal from three-time Melbourne Cup winner Makybe Diva, fetched $1.5 million – respectable, but nowhere near the $3 million price tag some experts had predicted.

The sales continue over the next few days, so it is possible that average prices will increase.

But there is nothing more discretionary than buying a race horse, and it’s a safe bet that Australia’s racing moguls are watching every penny right now.