I recently attended both days of the Book 1 Yearling Sale at the Cape Town Convention Centre. This was my first “sale” of yearlings. I have noticed a recent resurgence in efforts to attract new blood to the racing industry in the form of new owners and punters.
Obviously, the sale was a good place to start to attract such newcomers. I read the Conditions of Sale at pages 37 and following of the catalogue and I found some interesting provisions.
At clause 4.4 it is stated that a vendor may impose a reserve price on any horse offered for sale. In addition, also at clause 4.4, the right of a vendor or auctioneer to bid for a lot offered by that vendor is protected. Clause 4.5 provides clearly that horses may be auctioned subject to a reserve price and that vendors may bid on such horses. Buyers are referred to the “NOTICE” that appears at the end of the conditions.
The “NOTICE” referred to, correctly, incorporates the provisions of section 45 of the Consumer Protection Act (the “CPA”). The really interesting condition is set out at clause 4.7 of the conditions that provides “CTS shall, at least 24 hours prior to the commencement of the sale, prominently display a list of lot numbers to be sold subject to reserve prices as well as lot numbers that will be sold subject to vendor and/or auctioneer participating in the bidding on them” (emphasis added). I have no doubt that you are well aware of the Auction Alliance matter and the legal Authorities associated therewith.
Section 45 of the CPA (at sub-sections (4) and (5)) provides that notice must be given in advance that a sale is subject to a reserve price and that unless advance notice is given that the owner or auctioneer is to participate in the bidding process he may not do so and that the sale may be upset by application to the courts. I did not see any notice prominently displayed that gave notice of any reserve prices.
I never left the auction hall even for a comfort break and I never heard any mention of owners or vendors declaring their intention to bid – and yet they clearly did. And, moreover, several lots were clearly subject to reserve prices.
It occurs to me that in this showcase of Cape horses and breeding it is vital to demonstrate integrity if one is to attract new entrants and followers. If a horse has a reserve price then start the bidding at that level and if it cannot attract a bid then move on and stop playing games. The auction could have been over in one day on that basis.
When sellers realise that their expectations of value are different to that of the market, natural forces of supply and demand take over to set a price instead of this illusion of artificial wealth that is being created. This “game” is unlikely to appeal to new entrants wishing to get started. By keeping values artificially high, very little will be achieved.
Maybe it is time to revert to some integrity in the industry. If the conditions of sale provide for disclosure then there must be disclosure. The law demands it. What happened last week appears, prima facie, to amount to a flagrant breach of the law.
Brian – Via email
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Cape Thoroughbred Sales Responds
It is not CTS policy to respond to anonymous letters. It is evident that the gentleman concerned was mistaken as a notice stating that ALL lots were subject to reserve prices and all the vendors and/ or the auctioneer ( or persons acting on their behalf) may participate in bidding on their own lots, was displayed and available at the sale.
Adrian Todd, COO, Cape Thoroughbred Sales (Pty) Ltd
