Sunday, November 24, 2013

Don't believe what you read

Great excitement, if one regards other people spending a lot of money as exciting.  A Galileo yearling, we're told, fetched 5 million guineas at Tattersalls' October Sale.  And now Chicquita (no, not the famous one, but this year's Irish Oaks winner) has fetched, we're told, 6 million euros at Goffs' November Sale.  Can this be right?  Or, in other words, can both of these statements be right?  No, of course they can't: if one is true, the other is automatically false.

What is the price of something?  Well, it's what the purchaser has to pay for it, of course, isn't it?  And if the price weren't that, then I suppose that one would have to say that it would be what the vendor receives.  (Although I think that, if there is a difference between the two figures - as there is in these cases, the difference being the auction house's commission - then it is, surely, only the vendor who would say that the horse was sold for the lower figure; everyone else would say that the sum for which the horse was sold was the sum which the purchaser paid).  In short, to any objective onlooker, the horse is sold for the sum which the purchaser pays, and the auction house's commission is that sum minus the figure which the vendor receives.

On that basis, the 5 million-guinea yearling was sold for 5 million guineas (ie £5.25 million) because with Tattersalls the figure one bids is the figure one pays, ie that's the total charged, and the 5% commission is taken out of that before the vendor, who receives 95% of the price, is paid.  Seemples.  With Goffs, it is far more complicated - but the gist of it is that if we say that the Tattersalls yearling was sold for 5 million guineas (or £5.25 million) we can't say that Chicquita Mark Two was sold for 6 million euros.

Chicquita Mark Two wasn't sold for 6 million euros: she was sold for 6.3 million euros, because Goffs have a misleading (well, it's not misleading if you read the small print, as all good insurance companies say) policy in that what you bid is not what you pay: the total you pay is 106% of the figure you bid.  Just to complicate matters further, what the vendor receives is neither the figure that the buyer has bid nor the figure that the buyer has paid: the vendor receives 98.5% of the figure which the buyer has bid, which is 92.924528% of what the buyer has paid.  (And it's the same for Doncaster, although there the sales are in pounds rather than euros - and to think that the Racing Post campaigned for the abolition of selling in guineas in favour of selling in pounds, or euros, on the basis that it would be less complicated!)

(And a further proviso one should add is that I would imagine that, in Chicquita's case, those commission figures would not be correct: although I'm sure that the purchaser would have paid 6.3 million euros, I would be very surprised if Paul Makin hadn't managed to negotiate a better deal with Goffs than the standard one which would have seen the sales company receiving 7.075472% commission.  With the collection of horses he was offering, he would have been in a very strong position to suggest his own terms, because both principal sales houses, ie Goffs and Tattersalls, would surely have been prepared to bend over backwards to get the job of handling the dispersal.)

So that's that: tonight's food for thought, which can be summed up by observing that the reports of these two transactions, when read together, confirm the Boomtown Rats' old exhortation, "Don't believe what you

As regards the pictures,while it was a big week for Paul Makin and Goffs, it was also a big week for Alamshar as I started lighting a fire in the evenings; and it was a big week for So Much Water as she as ridden for the first time (and, of course, she had to tell Big Bwuvver Roy about it).  And a standard week for Russian,Link, ie the usual roll in the shavings after work.

1 comment:

neil kearns said...

Two greys is the best photo myself andmrs k have seen in your blogs wonderful am desperately trying to come up with the appropriate music based caption