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Two years ago, trainer Rick Hore-Lacy was facing the threat of being banned from Australian yearling sales because of his outspoken views on the need for buyers to have pre-sale X-rays available. At this year's Conrad Jupiters Magic Millions Yearling Sale on the Gold Coast, Rick was happily spending up big on yearlings, knowing from his X-ray inspections that they were all sound racing propositions.

Although some would argue that they had to be bullied into it, there has been a sea change in the attitude of Australia's breeders and sales companies about the desirability of pre-sale X-rays. Requiring major investment in the X-rays themselves and the facilities to hold and inspect them, an issue was always going to be if that expense could be justified. Record results from the Gold Coast Sale, up 13% on 2002, suggest that it was.

Magic Millions Managing Director, David Chester, said "we were very negative prior to the sale - we thought that it would have a detrimental effect as it did when it was first introduced in the United States. Prior to the sale most pundits were talking about a 10% decrease in both gross and average."

"We believe the opposite occurred - it was a major positive for the Sale as prices for yearlings with no faults sold for well over market expectations."

HOW DOES IT WORK?

The X-ray repository system is simple in concept. Each vendor has the opportunity to provide a full set of X-rays of every joint in each horse's legs. A minimum of 34 radiograms are required, at a cost of about $1,000 per horse. These are marked with the horse's identity and forwarded under secure cover to Magic Millions who record their receipt and store them in a central facility.

Prior to and during the sale, qualified veterinarians contracted by buyers are able to inspect the X-rays in a purpose built facility and to provide written reports to their clients on their findings. The repository is run by Magic Millions who provide safe custody for the X-rays and keep track of who has been looking at them.

Stating that he "thought the X-ray repository worked very well", Hore-Lacy spent $1,875,500 on 10 horses at this year's sales compared to $720,000 in 2002. He went on to say that "vendors have accepted the responsibility to provide sound horses, so the main job of my inspection has already been done".

Hore-Lacy admitted that X-ray inspections had "cost quite a few thousand dollars but I thought it was money well spent". Unlike some other buyers, he concentrated his buying attention only on horses with a clean set of X-rays.

"There were 700 horses in the sale. Out of that number I might as well buy horses with no problems, rather than trying to take a chance on those with them" was Hore-Lacy's attitude. He even extended his approach to a case where the X-rays appeared to have been tampered with. "One of the horses I was interested in had 2 X-rays missing, so I didn't bid on it" he said.

Hore-Lacy's cautious approach was typical of that seen in the USA when pre-sale X-rays were introduced 7 years ago, according to American veterinarian Dr Stephen Hance, who was recruited by Magic Millions to provide assistance to Australian vets getting used to the new system.

"The first sales in the US which had pre-sale X-rays were 'radiogram sales', where buyers shied away from any horse with a problem" said Hance. "The difficulty was that vets had no way of knowing the normal incidence of a problem in an X-ray of an otherwise sound horse".

"Prior to the introduction of pre-sale X-rays, a vet would usually only look at an X-ray when he was presented with a horse with obvious lameness. Even then, the X-ray would be of one small part of the horse after it had been visually inspected, had its joints flexed and maybe nerve blocked".

"American vets just weren't used to looking at X-rays of every joint of large numbers of horses, so they initially recommended against purchase of any horse with a problem" said Hance.

"Then the rejected horses started winning good races and we came to the conclusion that a lot of the problems we were looking at on the X-rays weren't so serious after all. It only needs one case of a horse with problem X-rays to win a Group 1 race to get people to buy" he continued.

"Now, after looking at thousands of these over many years, vets are more likely to accept that a certain condition can be easily corrected by surgery and give a qualified go ahead instead of an outright rejection" said Hance.

An example of this at the Magic Millions sale was a well related horse initially expected to sell for $250,000. Bone chips in one knee, clearly visible on the X-ray, subdued bidding enthusiasm for the horse, which was eventually knocked down to a leading trainer for about half its expected value. However, that trainer's vet advised him that an operation to remove the bone chips has a high probability of success and on that basis, the discounted price represents good value.

In other instances, the horses had already been operated on prior to the sale. Dr Angus Adkins from the Scone Veterinary Hospital explained that "many of our clients took precautionary X-rays when their sale entries were 8 months old. In a few instances, we operated on the horse. Its full surgical history was included with more up-to-date X-rays taken a few weeks before the sale."

Adkins agreed that surgery was a cost effective solution for at least some of the problems evident in X-rays. "If you can buy a horse for $100,000 less and fix it with $3,000 worth of surgery that represents a bargain" he said.

THE X-RAY REPOSITORY

To arrive at the position where large scale inspection of X-rays was possible, substantial investment has been required from vendors, the Magic Millions company and to a lesser extent buyers. Typical of the investment is the $100,000 that Magic Millions Business Manager Sean Walker, estimates it has cost to erect the purpose built X-ray repository near the main sales auditorium.

Completed just days before the sale, the facility was designed to take into account as much of the industry requirements as it was possible to accommodate. Walker visited the USA in September 2002 in order to examine the workings of the repository system at Keeneland.

"We wanted to know about everything - teething problems, legal, logistics, security, stationery, computer systems and staffing" said Walker. "We found that the Americans had more than 5 years experience at doing this and we wanted to take advantage of their knowledge".

Improvements on the Keeneland system were incorporated as well. "Their accommodation was in trailer homes which had to be moved from time to time because they were in the car park" Walker observed. "We decided to build a permanent facility".

He went on to say that the Keeneland complex experienced traffic problems because it was all on one level, with people lodging X-rays and those wanting to view them using the same entrances. "We built a two storey repository so that people could deposit X-rays at the top level and the vets doing the inspections could operate on the bottom".

"We also sited the repository close to the sales ring, so that people could do X-ray inspections and get the reports very quickly if a lot was due to be sold. We extended opening hours to before 7am or after 10pm if required" explained Walker, emphasising the level of co-operation Magic Millions had provided to the industry to facilitate use of the new system.

One of the Magic Millions initiatives well received by veterinarians was the provision of Dr Hance as a consultant. His extensive experience within the US system was relied on by many Australian vets as a second opinion.

"I was pleased to see that the Australian vets were not frightened to consult with me or their colleagues when they had doubts about an X-ray" said Hance. "The overall quality of the X-rays was of a high standard - certainly better than those when yearling X-rays were first introduced in Kentucky".

Hance explained that the angle the X-rays were taken from was important, as was the exposure level. "There were some poor quality X-rays where vendors had to have more taken. There is no doubt that this process very quickly sorts out vets who can do good X-rays from those who can't". He went on to say that the US experience was that vendors would not deal with veterinarians who could not consistently produce good quality radiograms.

Over 50 vets registered to use the facility, with about 60% coming from interstate and the remainder from Queensland. Interstate vets needed to be registered to practise in Queensland, in order to be able to inspect X-rays and report on them.

Asked to comment on the percentage without X-rays, Magic Millions Walker said that only 6 yearlings in the 4 premier sessions were presented without X-rays. However 70% of the horses in session 5 did not have X-rays. Dr Hance explained that initially the US experience was that only 20-25% of premier sale yearlings had them, but now the practice was nearly universal.

For secondary sales, because of the lower value of the horses, X-rays were not so common, but even there, vendors looking for an advantage meant that the percentage offered with X-rays was steadily increasing.

RESEARCH

One of the side benefits of the repository system is its potential to facilitate research on the incidence and treatment of common problems with young thoroughbreds in Australia. Major veterinary hospitals in breeding centres such as the Hunter Valley and Queensland's Darling Downs, have already heralded the possibility of following the future racing careers of sale graduates, correlating their X-rays with future racing performance and soundness problems.

Dr Angus Adkins of the Scone Veterinary Hospital has no doubt that his and other practice's X-rays would provide a valuable source of information for future study.

"We have already been approached by a number of parties such as the University of Sydney to make use of our material. Our concern is to make sure that any studies are done scientifically and that the results will be widely available" he commented. Adkins went on to say "of course our clients also have an interest in who looks at the X-rays and we need to ensure that individual stud's interests are protected."

Dr Hance has already made the observation from the X-rays he has seen, that there is a lower incidence of fetlock and hock conditions in Australian yearlings than in their US counterparts. "We do see however that Australian horses have more knee joint problems. It could be because Australian horses are not mollycoddled as much as those in the USA. Your yearlings are kept outside and get to gallop more, while ours are kept inside or in small yards."

He supported the idea of further research, suggesting "what everyone needs to be well aware of is that condition X is not a result of only one cause. Nutrition, management, topography and genetics all have a role to play and more study can only help us to better understand the problem."

Sean Walker of Magic Millions was another advocate of the research potential of the repository. "Magic Millions is a very proactive and innovative organisation" he said. "We are happy to encourage research and provide assistance for the best use of this valuable resource."

VENDORS PLEASED

In general, after initial apprehension, breeders seemed pleased with the overall operation of the repository and buyers response to having X-rays available. Typical of the vendor response was that of Collingrove's Adam Sangster.

"We provided good quality X-rays and written reports produced by our own vet. We are pleased that Australia is now up with world best practice in making this information available to buyers."

One issue which concerned vendors was the cost to buyers of getting their own vet to examine X-rays for dozens of lots. Some vendors were happy to let buyers view their own vendor reports and draw their conclusions from these.

Eliza Park's General Manager, Denis Roberts was not averse to doing this. "We'd prefer that buyers get their own vet to look at the X-rays", said Roberts, "but if they ask us what our report says, we'll tell them. We don't take horses to the sales with serious problems and our buyers know this."

Scone's Adkins expressed concern about this, saying that a buyer really had the responsibility to engage his own experts and make his own independent assessment, rather than relying on that of the vendor or the vendor's vet.

"Our professional indemnity cover cannot extend to someone we have no contract with" he said.

The incidence of buyers taking action under such circumstances is very low however. "In the US I don't know of a single such case since X-rays were introduced" said Dr Hance.

CONCLUSION

In general, the response to the introduction of the X-ray repository has been very positive. Angus Adkins admitted to being "amazed" at how well it had gone.

From an industry perspective, it seems that the change has been almost universally accepted at the upper end of the market and could be assumed to have paid for itself.

If one looks at the costs of implementation for this one sale, roughly 700 yearlings have been X-rayed at a cost of about $700,000. On top of that, if each yearling was inspected on average 3 times at a cost of $150, another $300,000 could be added.

For this $1 million in expense, what has the industry achieved?

Magic Millions sales receipts were up by about $5 million. While it is not necessarily due to X-rays alone, its a fair assumption that greater buyer confidence led to at least some higher prices. On top of that, it is probably the invisible dividends which will be of more long term benefit to the industry.

We now have a quality control system in place which will cement Australia's position as a source of well bred, reasonably priced horses for our major export markets in Asia. Such buyers will undoubtedly be inclined to buy with greater confidence in future.

Within Australia, it is likely that the costs associated with actual or threatened legal action, client disatisfaction, post sale refunds and returned horses will be substantially reduced. Horses will likely be more appropriately managed and trained to take into account their skeletal development and any remedial action needed.

In all a win for everyone. Its hard to see why it was so vigorously resisted for so long.

Cyberhorse 2002 Bill Saunders

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