By Jessica Martini
With pandemic-induced travel restrictions and crowd-size limitations nipping at its heels, the Thoroughbred auction scene finally made its debut on the internet this year, first with the Ocala Breeders’ Sales Company’s Spring Sale in June and most recently with the Keeneland September Yearling Sale. The company tasked with helping both OBS and Keeneland offer their buyers the opportunity to bid online was Xcira Global Technologies. Founded by Gary and Nancy Rabenold, the Florida-based company helps facilitate online auctions across the globe in industries as diverse as art, livestock and automobiles.
“We started this bloodstock odyssey earlier this year and every single company we spoke to said, ‘We wouldn’t do it unless there was COVID,'” said Simon Wells, head of sales and marketing for Xcira, which also provides online auction platforms for Tattersalls, Texas Thoroughbred Association, Equine Sales Company of Louisiana, and Iowa Thoroughbred Breeders and Owners Association. “So it was almost like they were put in a corner. And they sort of adopted what most other industries have had for years. We have been doing this simulcasting–or as you would call it, online bidding–for 21 years in automotives.”
Wells continued, “We first started contacting Keeneland, [Vice President, Chief Information Officer] Brad Lovell and [President] Bill Thomason and talking to them about this about nine years ago. And they said, ‘I don’t think our industry is ready for this.’ So we have had the longest courtship.”
OBS was able to hold its March sale on schedule just as the pandemic was shutting down most of the world, but as auctions were canceled and postponed, OBS officials began looking for alternatives.
“We had the March sale as scheduled without online bidding and we had the rescheduled Spring sale in June with it, so it was a very small window where we had to crank it up,” said OBS President Tom Ventura. “Certainly from our end, it was the highest of priorities in terms of trying to give buyers as many options as possible. For the March sale we had already increased the phone bidding, had multiple phones and multiple people to handle the phones. For the next sale, we really wanted to try to have online bidding in place, so we went from zero to 60 in no time. We had our backs up against the wall to ramp this up and to Xcira’s credit, they dedicated the manpower to get us there.”
Recalling the moment when he was convinced Xcira’s online bidding platform would work for OBS, Ventura said, “As we’d been looking at online bidding along the way, the concerns we had were A) Is it secure? and B) Is there any delay? It wouldn’t work if there was any kind of significant delay. What really drove home how there is basically zero delay, I had the Xcira system on my computer screen in my office and I had the OBS sale feed on my TV and the online bidding system was actually a half a second ahead of the sound on my TV screen. It was subtle, but you could hear they weren’t quite synced up.”
Of Xcira’s quick turnaround at OBS, Wells said, “So much in livestock is done on the hand shake and everything is about reputation,” Wells said. “So I think some of the reticence to adopt technology comes from the fact that it’s reputations at stake. Tom and [OBS Director of Sales] Tod [Wojciechowski] have been great people to work with because they were willing to risk that reputation. They were in the closest hole because we turned them around in 30 days. We really had to spin that round quickly and we did say to them, ‘You are going to have a life jacket rather than a boat. And then we will build you a boat in due course.’ Which is what we are doing now for bloodstock. We’ve reached out to all of them now and said, ‘Give us a list of the like-to-haves rather than the must-haves and we are developing the product.”
The sales companies function as trusted intermediaries between buyers and sellers and Xcira’s focus is to provide the auction houses the technology platform to create an additional avenue for sales.
“You still need the auction house’s reputation to broker the deal,” Wells said. “We’ve spoken in the office about what makes it all tick and what is most important and what’s it most like, because bloodstock is new to us. And the closest we’ve seen is Christie’s Art. We do their internet bidding and it’s the reputation of the auction house that that painting is really a Vincent VanGogh and it’s that trust with the auction house. Absolutely it’s the same with bloodstock. There is a trusted broker managing the sale. And I think any system like this is still reliant on that. We are almost like the backroom boys and they are placing their reputations on the line. Keeneland put their reputation in our hands as far as the technology working, but as far as the actual transaction goes, it is still very much the part of the auction house to have that trust in the transaction.”
Michelle Labato, a veteran of on-line car auctions, handled the internet bids at both OBS and Keeneland. Sitting in the bottom row of the press box at Keeneland, Labato kept close watch on both the auctioneers and her computer monitor, which shows her how many people are currently logged onto the site and ready to bid. As the bids rise in-house, Labato updates the asking price manually on her screen. When an online buyer makes a bid, it appears in a large red box on her screen and she raises her hand to have the bid recognized by the bid spotters.
“Michelle started off in automotives, she was a senior clerk for some time,” Wells said. “I knew her when she worked in Orlando in the auto auction. Tod asked if I knew anyone who could clerk for them because they started to realize how quick and how specialized it was and we sort of paired them. She’s followed us everywhere, other than Tattersalls, for most of our sales. She gets on really well with [Keeneland auctioneer] Justin Holmberg as he has done automotive. You’ll hear him say, “C’mon internet’ or ‘You’re out Michelle.’ She almost becomes another bid spotter.”
Online bidding at the 12-day Keeneland September sale attracted a total of 1,857 bids, which resulted in the sale of 126 horses for a total of $12,165,900 to buyers in 17 U.S. states, Japan, United Kingdom, Canada and Spain. The highest price recorded online was the $825,000 paid by Yuji Hasegawa for a colt by Tapit out of GI Breeders’ Cup Distaff winner Stopchargingmaria (Tale of the Cat).
“Online bidding worked as smoothly and was as popular among buyers as we had hoped,” Keeneland’s President Elect Shannon Arvin said at the conclusion of the September sale. “When you try something new, you kind of hold your breath to see how it goes. We are very pleased with our partner, Xcira, and the online auction technology system, as well as the level of participation by buyers.”
Approximately 40% of horses who went through the ring on the final day of the OBS July sale had at least one internet bid, according to Ventura, who said online bidding was just one more option to provide potential buyers.
“I think it just adds another way for people to participate,” Ventura said. “I think the level of comfort for people doing things online has changed over time as people get more and more comfortable. Ten years ago, I was not comfortable doing banking online and now I can’t remember the last time I wrote a check. So different generations may be slower adopting these sort of things–I still don’t really know what Venmo is–but the technology is there, it’s reliable, it’s secure and it gives people options. Especially when we have a long sale. Our 2-year-old sales with extended under-tack shows and then a gap and then sales days, if people want to get their homework done and head back to wherever they are heading, this will give them that opportunity to bid or have their clients bid.”
The Rabenolds founded Xcira over two decades ago in the closet of their son’s nursery room.
“Gary and Nancy are both ex-IBM people,” Wells said. “Their first fax machine was in their son’s nursery in the closet when they first started the company. Gary stayed on at IBM and paid the mortgage and Nancy went off and tamed the automotive world. When we started with cars, we were told by the head of Manheim, the car auction people, that this was a passing fad and it would never catch on, exactly the same attitude that bloodstock has now. It comes full circle. But we have the benefits of all those lessons we learned.”
While many of the concerns are the same, the Thoroughbred auction industry does present unique obstacles.
“Automotives has had it for 21 years and their adoption rate for North America is about 40% of the vehicles go through an online buyer,” Wells said. “However automotive is a commodity item, there are a lot of vehicles that are commodity items and there is a Blue Book guide for pricing, but no one has yet made a Blue Book for Thoroughbreds. So I think that, whilst it’s an essential tool in today’s marketplace, it is just another tool. Horses are like a piece of fine art, so much of it is in that gut feeling and in that look. You stand at the back of it and it walks right and you can’t say why it walks right, but it does. There is still that need because they are not commodities like automotive.”
Wells said the internet purchases at automotive auctions tend to skew to the top and the bottom, with the middle market often requiring more of an on-site presence.
“Of that automotive 40%, they tend to be the two extremes, they tend to be the very expensive, the nearly new factory cars that dealers have, and the very cheap ones,” Wells explained. “Whereas the ones in the middle, where it could be debatable as to the conditions, those are the ones that remain in-person. I think with horses as well, I think a lot of people are coming down, looking at the animal and then going home to bid or having someone there who says, ‘I can look at it for you.'”
A comparison of the online purchases during Keeneland September shows nine on-line purchases during the top-of-the-market Book 1 and a further 16 in Book 2 for gross internet sales of $8,672,000. Seventeen horses sold online for $923,200 during Book 3 and 21 Book 4 horses sold online for $1,423,000. A total of 34 Book 5 horses sold online for a gross of $898,500. During the auction’s Book 6, 29 yearlings sold online for $249,200.
“For the auction house, it’s not just the people who have won the horse, it’s the underbidder who has pushed it up one more bid,” Wells said.
One aspect of the online car auction scene which Wells thinks might be helpful in Thoroughbred industry is a consolidated source of information.
“I think at some point there is a need for the industry to look at how it moves data about,” Wells said. “I think everybody is running their own show and they work in isolation. If you were to look at Autotrader, auto dealers have gotten over the fact that there are other auto dealers out there and they list alongside each other. If I want to search for an F150 in white and gold lariat and I want sat nav on it, I can go straight to it and I can click it and find it. If I want to search for a horse with particular characteristics, I’ve got a lot of phone calls to make.
“There is only one racehorse of a certain type,” he continued. “It is a slightly different industry, so I’m not really comparing apples with apples. There is a bit of apples and pears there because all horses are a unique item, whereas F150s, there are millions pumped out from Ford and there are loads of them about, so I can choose from lots of different ones and I don’t have to worry about the temperament of my F150. You don’t get a cribbing F150. So it is different, but I think there is a point where the industry should come together for the greater good in moving data around.”
As the technology has evolved in car auctions, the need to provide potential buyers with advanced information has also increased.
“In automotive now we are spending so much of the effort on inspections and conditions reporting,” Wells said. “You look at Carvana now, you can have a 360-degree picture of the interior that you can spin around and there is all that imaging. So when you are buying online, you are getting much more information about what you’re buying.”
Now that the Thoroughbred industry has offered its first online bidding opportunities, it is better positioned to face any future challenges presented by the pandemic, according to Wells.
“Who knows when or if the second wave does hit, but our system allows you to go completely virtual,” Wells said. “So you could leave the animal in its paddock and sell it from a distance. Which is what happened in other verticals, like livestock in South Africa. They had hoof and mouth and they weren’t allowed to move animals, so they had a goat sale, believe it or not. The dearest goat was about $15,000 and that was bought by a buyer from Thailand. And the goat never left the field it was in, it was all done remotely, a virtual sale where everybody logged in.”
After purchasing the top three lots online at the Tattersalls August Sale last month, Ted Voute was a satisfied customer of the new technology. Voute told TDN‘s Emma Berry, “Bidding online was very easy and there was no need for me to be there today, having seen the horses yesterday. We had a vet there today to cover eventualities like a horse taking a lame step before going into the ring.”
While it has taken time for the bloodstock industry to adopt internet bidding, Wells said there is no going back now.
“I can quote more than person as saying the genie is out of the bottle now,” he said. “You can’t put it back. It’s like Pandora’s box is open. I don’t think any customers would say they want to step back from it. It was out of necessity that it started, but then it becomes, ‘We would like to have this as an option.'”