In this months international thoroughbred magazine I examined the impact of death on the values of his final crops. The full text is shown below:
Art collectors have been known to pop open the champagne on hearing of the death of an artist. The reason is not extreme misanthropy, but rather the likely increase in the value of their collections. Values for art, bloodstock or any other commodity are supposedly set at the interface of supply and demand. Death sees an end to supply, so economic theory would predict an increase in values. With this in mind I thought it would be interesting to see whether stallion mortality offers opportunity for profit within the bloodstock world. Do buyers pay a premium for stock of the recently deceased and is there a “death effect” that could be exploited by pinhookers or agents?
In attempting to quantify if there is an upsurge in prices, I needed to compare the prices in the years after death with the prices just prior to death. To do this I looked at their final five year’s yearling prices and expressed each year’s sales average as a percentage of that five year average. For example if a stallions sales average was €10,000 in 2011, €15,000 in 2010, €8,000 in 2009, 15,000 in 2008 and €12,000 in 2007, then the average for the five year period is €12,000 and the 2011 result is 83% of the five year average (€10,000/€12,000) with the 2010 result being 125% of the five year average (€15,000/€12,000). By expressing the results in this way we are able to compare the effect for stallions who stood at very different stud fees.
In selecting the stallions I looked at the list of leading sires from 2002 and selected those stallions who are now deceased and with no more yearlings to sell. Stallions with very small sales numbers were excluded as were stallions that were exported or standing outside of the UK and Ireland
The stallions died at various years from the late nineties up to the beginning of this decade and varied in age and stud fee when they died.
I also noted the year of birth of the stallion and the year in which his last crop were sold. This allowed for an assessment of whether the age of the stallion at the time of death had an impact on the result. Some caveats in relation to my findings include the fact that working from the leading sires list excluded less established or sires who had died very young and also my five year average figure was not a weighted average figure. The data-set generated is contained below
Summary of Findings
At first sight, the results do not support the hypothesis that there is a “death effect”. The final years sales results are only 95% of the five year average, the same figure as the penultimate year’s results. However this is an increase on the 87% figure for the third last crop sold, so you could argue that a slight bounce is evident.
The average age of the sires when the last crop was conceived was 17.8 years. To check if this was significant I went and compared the results for those sires who were aged under or over 18 at the time their last crop was conceived against the overall averages. Although there were variations they were not particularly significant, so the age at death does not seem material to the findings. I found this to be surprising as it is well known that the quality of a stallions book declines with age (even though a stallions ability to pass on his ability is not diminished with age). However lesser mares will mean lesser offspring and accordingly lesser prices and I would have expected this age related effect to be more noticeable in the statistics.
I could discern no obvious grim reaper premium but given that there was a slight bounce in the final two years figures, it is possible that there was a marginal effect. Against that one could speculate that once a stallion dies, he is less likely to receive support from his owners who may have purchased stock in the past to boost sales figures. Similarly stud owners are less likely to spend money advertising the successes of the deceased than the living, so this again may have a slight negative impact on sales prices.
It is not speculation to state that bloodstock is not art and horses don’t appreciate in value with age. However, bloodstock values are a matter of fashion and the last offspring of an old master have to compete with trendy first season sires for marketplace attention. I had expected an obituary notice to help in that regard but it seems that death cannot be described as a good career move for a stallion.