It seems like ancient history to read the catalogues and the results of the major summer yearling sales 10 years ago. Nearly 600 horses were sold at these auctions, with the average price being about $45,000. The yearlings most in demand were offspring of Round Table, Graustark, Raise a Native and Buckpasser -- all of them great American racehorses.

But when the annual round of summer yearling sales begins Friday afternoon, they will provide startling evidence of how much the racing world has changed. Over the next three weeks, about 1,000 yearlings will be sold at three separate sales, and the industry newsletter Racing Update predicts that the average price will be $292,000. At the ultra-elite Keeneland sale next week, the average yearling will cost $600,000.

But the money isn't the most striking aspect of the 1985 yearling market; we're all getting blase about these astronomical prices by now. What is notable is the fact that American horses no longer dominate the thoroughbred world.

The Keeneland sale, in particular, is so Europeanized that it could just as well be held in Newmarket, England, as in Lexington, Ky. Half of the yearlings being sold are offspring of horses who raced in Europe. And within a year or two, the European stallions may be totally dominant.

Less than a decade ago, America was producing the best racehorses and stallions in the world. Our tough Triple Crown series probably was the best test on earth of horses' true ability and their likelihood of succeeding at stud.

But when this summer's results are tallied, recent American classic winners such as Pleasant Colony, Codex and Temperence Hill will be in much less demand than stallions such as Assert, Northern Baby and Master Millie, who made their marks in the English Triple Crown.

The demand for European-based horses is due, in part, to the fact that the principal buyers at the Keeneland sale campaign their horses in Europe. So they naturally want to buy horses who are bred for racing there. Sheik Maktoum may spend $1 million for a son of The Minstrel, whose offspring can run on grass but not on dirt, and he probably would not buy a son of His Majesty, who is as good a bet as anybody to sire a winner of the Kentucky Derby. But that is not the whole explanation. It is possible that, over the last few years, the top American horses have become inferior to their counterparts in Europe.

The great flood of foreign money started coming into the American yearling sales in the mid-1970s, and by 1979 the majority of the highest-priced horses were being sent abroad. Has this exodus had a perceptible effect on American racing? Just look at the horses who have won our classics since that time: Gato del Sol, Aloma's Ruler, Temperence Hill, Gate Dancer, etc. There has been only one truly brilliant horse to win a 3-year-old classic since 1979: Conquistador Cielo.

Because of this apparent drop in the quality of American racing, there is little demand from abroad for young American stallions. Of the stallions whose first offspring are 2-year-olds this season, Racing Update estimates that the five who will command the highest prices all are horses who raced in Europe. Of those whose first progeny are yearlings this season, the only American horse in the top five is Conquistador Cielo.

Chauvinists can point to the success of brilliant young sires such as Seattle Slew, Danzig and Alydar as evidence that this country's thoroughbred industry is still robust, but the evidence nevertheless suggests that Europe has overtaken us. When Robert Sangster, the Maktoum brothers and the other foreign buyers bring their bankrolls here for the next three weeks, they will be trying to keep it that way.