Dealing With Agents
- Oct 3, 2001
Several years before his death, comedian-actor John Candy teamed with Eugene Levy in a video spoof of musical documentaries. They portrayed the inept, accordion-playing Schmenge brothers in "The Last Polka." At one point in the film, the brothers decide that they would be much more successful if they were represented by an agent.
"You got to have an agent," one Schmenge declares.
"Yah," the other replies, "even some agents have agents."
In some segments of the equine industry, such as prestigious Thoroughbred sales, there is a strong belief on the part of a number of buyers and sellers that "You got to have an agent." In other segments, such as equally prestigious cutting horse sales, agents rarely play a role.
In between is the pleasure and performance horse market, where trainers generally double as agents in buying and selling transactions.
Agents come in many forms in the Thoroughbred world, ranging from such high-profile companies as Taylor Made Sales Agency and Eaton Sales in Lexington, Ky., to individuals who might represent only a few clients. Whether major agency or individual, the role of the agent is the same—to help a client either sell a horse for an appropriate price, or to purchase one for an appropriate price.
John Bradley is sales manager for Tattersalls in Lexington, where Standardbred trotters and pacers are offered to the public via auction. He likens the role of equine agent to that of a realtor, with the agent representing either buyer or seller and receiving a commission for services rendered, determined by an agreed-on percentage of the buying or selling price.
However, in the case of major Thoroughbred sales, the role of agent often is expanded far beyond merely representing buyer or seller in a transaction. Here, the agency also might be responsible for "prepping" the animal for presentation at a sale.
At both Taylor Made Sales Agency and Eaton Sales, the agencies often play a role that begins with breeding decisions of one year, and ends more than two years later when the yearling has been prepared and offered for sale. In the case of mares to be consigned to sales, the agents might be called on to help arrive at a breeding decision that will enhance the animal’s value when sold as a pregnant broodmare.
"We get as involved as the owner wants us to be," says Reiley McDonald, a partner in Eaton Sales. "We are often involved in mating decisions. After the foal hits the ground, we check it out regularly to determine how it is maturing in regard to legs, feet, and weight."
Duncan Taylor, president of Taylor Made Sales Agency, prefers heavy involvement with clients. "I would prefer to be in the position where I could help oversee the breeding and work with the owners to improve their program."
The depth of involvement also is dependent on the expertise of the owner in such areas as sale preparation. "Some owners don’t know how to prep for a sale," says Taylor. "Others are experts."
Regardless of the degree of involvement, the pace picks up for agent and owner alike in January of the young racing prospect’s yearling year. It is then that the decision-making process concerning which horses will be chosen for consignment to the major summer yearling sales intensifies .
By spring, agencies like Eaton Sales and Taylor Made will make specific suggestions as to which yearlings should be consigned and where they should be offered.
The next step is sale preparation, and both agencies specialize in getting the young horses ready for the many prospective buyers who will examine them on the sale grounds and for the yearling’s approximately two minutes in the sale ring spotlight. Both Taylor Made and Eaton Sales operate a farm, plus have overflow outlets, for the preparation work.
Eaton Sales prefers that young horses arrive at the prep farm 60 days ahead of sale time. During that time frame, the horse is groomed, fed, and cared for, with the goal being to send forth at sale time a racing prospect that has sound, correct limbs, is free of blemishes, has a sleek coat, and appears both fast and beautiful to the eye of horse racing aficionados.
With mares, the prep time is more like 45 days.
The cost for this prep work runs between $30 and $40 per day. Both Taylor Made and Eaton Sales charge a $35 per day prep rate.
At Taylor Made, the $35 per day prep fee kicks in at 45 days before sale time. The charge for horses which arrive at the prep center prior to the 45-day time segment is $25 per day.
A sales agency often does not make a profit on the daily fee, says McDonald. The prep farm would be lucky to break even on the daily fee, he says.
The agencies’ prime income is in the form of commissions when the consignees are sold. The commission rate generally ranges from 2 1¼2% to 5% of the selling price and is paid by the consignor.
Taylor Made, says Taylor, charges a straight 5% commission. However, there also is a minimum commission of $1,000, even though the horse sells for less than the $20,000 that would produce a $1,000 commission. If the horse does not command the price the owner demands and is bought back or not sold, the agency also charges a $1,000 fee instead of figuring the commission on the last bid.
Eaton Sales, says McDonald, has a sliding scale that is the same for all clients. The amount of commission, ranging between 2 1¼2% and 5%, is determined by the number of horses consigned and the price for which they are sold. Eaton Sales also charges a $1,000 fee on buy-backs.
Prior to the auction, the agency will be in charge of advertising. This is an important role, says Taylor. The agency must know where to place ads that will be effective in touting the horse’s capabilities and will reach the correct market.
At the auctions, intensity for the agency reaches the zenith. One of the key decisions involves setting a realistic bottom price for the animal consigned. It is there that the agent’s experience and expertise come into play, along with objectivity. In some cases, it is the agent’s task to help an owner overcome "barn blindness" when settling on a realistic value for the horse being offered for sale.
At Eaton Sales, a panel of eight examines each of the horses being offered, and on the morning that an individual is to be sent under the gavel, a consensus figure is reached and presented to the owner. It is the owner who ultimately must decide on the bottom dollar to be accepted.
The agent must know the seller and his or her needs, says McDonald. Some, he says, are in a position where they must sell. Others are not and will have the option of racing the horse themselves if they aren’t satisfied with the sale price. Owners in that position, he notes, can afford to be more aggressive when pricing the prospect.
With the arrival of auction day for a specific horse comes the last opportunity to show off the prospect before it enters the sale ring. Each horse represented by Taylor Made Farm will have two persons assigned to it from the moment it leaves the barn until it enters the sale ring, says Taylor. One person will be leading the horse and the other will be standing close by to answer any last minute questions from prospective buyers.
Both McDonald and Taylor say they make limited personal contact with prospective buyers prior to the sale. Both say that they use letters to disseminate information about sale prospects.
For example, if a trainer is having a successful season with the son of a particular stallion, the agent might let him or her know that a colt bred the same way has been consigned.
Sometimes, they indicate, the role of the agent is to get a prospective buyer to take a second look. If a horse is on a buyer’s list and doesn’t present itself well when being checked out the first time at the sale facility, the agent might contact the prospective buyer and urge another visit to the sale barn.
Both men also agree that an agent doesn’t tell a trainer like perennial leading Thoroughbred conditioner D. Wayne Lukas which horses he should or shouldn’t buy. That decision will be made by the trainer or owner. However, it is the agent’s duty to make certain that a prospective buyer doesn’t overlook a horse which might fill that person’s needs.
Does having an agent pay off for the consignor?
Taylor, for one, will maintain that it does. In 1998, he points out, Taylor Made Sales Agency sold 10 horses each for a $1 million or more among five different sales. At one point, he says, the agency represented four horses, all of which sold the same day and all of which brought more than $1 million each.
While sale prices of Standardbreds might not as frequently reach the giddy heights of their Thoroughbred cousins, the role of an agent is of equal importance, says Tattersalls’ Bradley. Standardbred breeders, large and small, he says, often make use of agents in selling young racing prospects and broodmares.
Generally, he says, the commission charged by agents is 3% to 3 1¼2% of the selling price. However, he adds, the amount can vary by agent. In private transactions, Bradley adds, the fee might be 5% to 10%.
It is important, he says, that the agent be an expert in the specific area represented by the horse being offered for sale. For example, he explains, some agents are pedigree experts and can be excellent representatives when selling broodmares. Others are racing experts and might be better suited for representation of yearlings.
In some cases, Bradley says, sales agencies in the Standardbred industry offer preparation services at a price that usually runs between $20 and $25 per day. Some of the major farms, such as Castleton Farm near Lexington, do their own prep work.
Proper preparation of a sales prospect is of utmost importance, Bradley declares. "You have only about two minutes in that sale ring, and you want the horse prepared properly."
Credibility, says Bradley, is key to an agent’s success. "This (sales agents and agencies) is a very small industry," he says, "and there are no secrets."
Cutting Horse Agents
The cutting horse world offers a direct opposite from the Thoroughbred and Standardbred businesses in the role that agents play, or rather, don’t play.
"The sport has strong owner involvement," says Ben Emison of Ben Emison Sales Company, headquartered in Weatherford, Texas. Emison orchestrates cutting horse sales across the country, including prestigious auctions during the annual National Cutting Horse Association (NCHA) Futurity each December in Fort Worth. Cutting horses going through the Emison sale ring have reached the $500,000 mark for an individual.
At least 95% of the time, says Emison, there is no outside agent involved in an auction. Instead, the horse’s owner and trainer will often both be present to play the role of agents.
"Cutting is a sport," says Emison, "where owners like to show and also like to be involved in every part of the business, including selling and buying."
If an owner contracts with someone to buy or sell a horse privately, he says, the commission paid is normally in the 10% range.
Pleasure and Performance Horses
Fitting somewhere in between the heavy involvement of agents in the Thoroughbred and Standardbred worlds and the lack of involvement in the cutting horse industry, is the pleasure and performance horse group—Saddlebreds, Arabians, Quarter Horses, hunters, jumpers, eventers, dressage competitors, and trail horses, to mention a few.
Here, says Suzanne Teater, of the Tattersalls Saddlebred Sales organization in Lexington, the trainer often serves as the agent, both at public auction and in private treaty sales.
There is no firmly established commission structure, she says, with each trainer working out details with his or her owners in advance of a sale. However, she adds, the normal commission, as with cutting horses, is in the 10% range.
When a horse is offered at one of the Tattersalls auctions, it normally will be presented by the trainer, who also will be responsible for demonstrating it for prospective buyers prior to the auction and with presenting information on its attributes and pedigree.
For the person seeking an agent to help in the purchase or selling of a horse, the best advice would be to locate individuals or agencies that deal in the specific field in which one is interested. Once that is determined, it would be wise to check with several individuals who have had dealings with that agent or agency.
Another step should be a frank discussion of what is expected of agent and owner or buyer in the way of decision making and, finally, a full understanding of the fee that is to be charged and the expenses that might be incurred.
About the Author
Les Sellnow is a free-lance writer based near Riverton, Wyo. He specializes in articles on equine research, and operates a ranch where he raises horses and livestock. He has authored several fiction and non-fiction books, including Understanding Equine Lameness and Understanding The Young Horse, published by Eclipse Press and available at www.exclusivelyequine.com or by calling 800/582-5604.
POLL: Stocking Up On Hay