When the bay colt was led into the auction ring at Keeneland Tuesday night, the bidding opened at $1 million -- once an unthinkable price for a yearling thoroughbred. Bids came flying from all over the pavilion, and within a minute or two the price had skyrocketed to $9 million.

With the riffraff weeded out, the serious bidders now could get down to business. In the rear of the pavilion stood Joss Collins, the representative of Britain's Robert Sangster, who has dominated the high-priced yearling market for the past decade. This time, his rival was not an Arab sheik but Wayne Lukas, the prominent American trainer, who sat flanked by his moneymen, owners Eugene Klein and Lloyd French.

The bidding for the son of Nijinsky II and My Charmer grew by increments of $100,000 and $200,000, passed the existing world record yearling price of $10.2 million, all the way to $12.5 million, where Lukas tried for a knockout punch. He upped the ante to $13 million, but the Sangster forces were unfazed. After Collins nodded at the auctioneer to indicate he was continuing to $13.1 million, Lukas leaned back in his chair and shook his head to indicate that the most expensive yearling transaction in history was over.

Astronomical prices at the Keeneland sale don't shock the racing world anymore, but this record price did come as a surprise. "There wasn't the presale excitement over this colt that we've had over other record yearlings," said Keeneland publicist James Williams, "although it was generally conceded that he was one of the two best in the sale."

The record setter has an impeccable pedigree. His father, Nijinsky II, is the second-most prolific sire of stakes winners, ranking behind only his own sire, Northern Dancer. With Northern Dancer 24 years old, Nijinsky II one day will be the dominant stallion in the world.

The dam of the yearling, My Charmer, produced the great Seattle Slew and four other stakes horses.

There were a couple of other comparably spectacular pedigrees in the Keeneland catalogue, but the Nijinksy colt outsold them because of his looks. Lukas is as astute a judge of yearlings' conformation as anybody in America. Sangster says his trainer, Vincent O'Brien, who inspects the yearlings, has "the best eye for a horse in the world." To convince both men he was worth a record price, the colt had to be nearly perfect.

But can any yearling be worth $13.1 million? The answer, almost certainly, is no. If the Nijinsky colt goes on to win the English Derby and to be the champion of his generation, he might be syndicated for as much as $50 million as a stallion prospect, which would also be a world-record sum. Essentially, Sangster is taking odds of 3 to 1 that this handsome young thoroughbred -- who has never seen a racetrack yet -- will grow up to be the best horse on a continent.

But Sangster (who is in the bookmaking business himself) is not an irrational man. Since the mid-1970s, he has acquired tens of millions of dollars worth of horses from the Northern Dancer line. He owns countless racehorses, stallions and mares with many of the same genes as his newest yearling.

So when he makes a record-shattering purchase, he is probably bolstering the value of all his horses. He didn't have to be wholly crazy to spend $13.1 million for a 1-year-old horse. Just a little crazy. Top Prices for Thoroughbreds At Keeneland Yearling Sale

1. $13.1 million, unnamed, colt by Nijinsky II-My Charmer, purchased by British Bloodstock Agency-England, 1985.

2. $10.2 million, Snaafi Dancer, colt by Northern Dancer-My Bupers, purchased by Aston Upthorpe Stud, 1983.

3. $8.25 million, Imperial Falcon, colt by Northern Dancer-Ballade, purchased by BBA-England, 1984.

4. $7.1 million, Jareer, colt by Northern Dancer-Fabuleux Jane, Darley Stud Management, 1984.

5. $7 million, unnamed by Nijinski II-Crimson Saint, Gainsborough Stud, 1985.