Inside Wealth: Racehorse market breaks records riding high on tax breaks, stock market gains
Keeneland's 2026 September Yearling Sale, the world's largest thoroughbred auction, grossed a record $536.7 million.
The world's largest thoroughbred auction broke records this year despite concerns that the Gulf conflict would deter deep-pocketed racehorse buyers from the Middle East.
The Keeneland September Yearling Sale in Kentucky grossed $536.7 million this year, surpassing last year's record by about $5 million. At the two-week auction, which ended Sept. 26, 70 yearlings sold for at least $1 million, up from 56 last year, which broke a 19-year record. The average yearling price increased nearly 7% to $187,933.
The top lot, a dark bay colt with white socks, was bought for $3.7 million, by a group of investors including paper mogul Peter Brant. The colt was sired by champion stallion Into Mischief, who has produced three Kentucky Derby winners.
Horse breeder and accountant Len Green said tax breaks from the "one big beautiful bill" was an important driver of the strong auction results in recent years. At last year's September Sale , which took place two months after OBBBA was signed into law, sales jumped 24% from the year prior.
"If you happen to be successful and you wanted to have something that gives you a tax deduction and gives you publicity, taking pictures and being in newspapers, et cetera, that kind of thing, the horse business is a pretty damn good investment to make," Green said.
OBBBA permanently reinstated 100% bonus depreciation, a tax incentive that allows businesses to write off qualified business property. While bonus depreciation is more commonly associated with commercial real estate and private jets, businesses can write off 100% of a racehorse purchase in the first year of ownership. Racehorse owners can get more bang for their buck by writing off related assets like riding equipment and barns or forming an LLC, Green added.
He added that while the stock market and private-equity exits have created massive wealth, owning a sports team is still out of reach for many entrepreneurs. The racehorse industry has a much lower price of admission, he said.
Shannon Arvin, president and CEO of Keeneland, pointed to other factors, including higher purses in many racing jurisdictions.
Buyers from the Middle East, including members of the ruling families of Dubai and Qatar, have become a prominent presence at the top-end of the thoroughbred market.
Before the auction, Arvin thought it was possible that the Gulf conflict would deter Middle East buyers. However, it did not appear to impact attendance, she said.
"We always kind of hold our breath until they get here," she said. "But there wasn't anybody that we're aware of that didn't come because of the conflict."
Arvin said about a quarter of yearlings were purchased by international buyers, including from Qatar, Saudi Arabia, the United Arab Emirates, and Libya. Keeneland does not break out specific numbers by country.
The biggest buyer at the auction was a newly formed partnership of four racing partnerships and owners, spending $16.2 million on 20 horses combined. While partnerships have become more popular, they haven't reduced sales in the way that was once feared, Arvin said.
"What we've actually seen is that these partnerships, because people are joined up, they tend to spend more," she said. "It lets them diversify their investment and have more opportunities for success. And what I found in talking to a lot of those buyers that decide to buy in partnership is that they love the camaraderie of buying with others, of buying with their friends."
