Unlike other sports where team ownership is financially impractical for most people, horse racing has introduced several ways for people to participate in horse ownership through racing partnerships. This series of articles will span several months so you can become acquainted with this potential opportunity.
So You Are Considering Owning A Race Horse?
So why buy a race horse you may be asking? There are many reasons behind such a purchase, most are emotional. I love horses, I enjoy going to the track and watching them race. I enjoy occasionally placing a few dollars down on any number of betting strategies. But the most important reason for me is that there is no greater pleasure then standing in the winners circle after a race when your pride and joy crossed the finish line first. Or listening to a prominent handicapper of the caliber of Andy Serling (NYRA), telling you that your horse should win the race.
A race horse like any other investment you may consider requires an understanding of the business of horse racing. Starting off simply, there are several horse racing events you can consider; Thoroughbred, Harness (Standardbred), Quarters, Rodeo, Barrel and Equestrian to name a few. We will focus on Thoroughbred Racing because it is the most prominent and accessible.
So How Does A Horse Racing Partnership Make Money?
Your horse will be entered into a race that has prize money or a purse connect to it. Typically, the top five finishers receive money from the total purse for a race. This is where the money is earned. So the kinds of races your horse enters is important because you do not want to enter your horse into a race where he/she has little chance of cashing in. The money the horse earns from racing goes to covering the cost of maintaining the horse while anything left over can be considered profit.
The frequency a horse competes is also of importance because most Thoroughbred Horses race once per month. So ‘cashing’ is important because if the horse does not win any money, the maintenance costs still need to be covered. Whether this is a partnership or complete ownership, the monthly fee is what determines the viability of the investment.
Acquiring The Thoroughbred
Naturally, you can go to the Auctions and Sales that are offered throughout the country; receive the list of horses being offered, trace the breed lines for each horse being auctioned and bid on the horse. Of course, this is beyond the scope for most people and would require an enormous amount of time, effort and expertise. But, in order to get into the racing business, this needs to get done and selecting the right people to do this research is part of the equation. It is also, one of the primary reasons that horse racing partnerships have become an attractive alternative. The partnerships have access to this expertise and factor that cost across all the partnerships they offer.
So Where Do You Get The Information?
While the Internet is a wonderful source for this information, there is nothing better than an up close and personal look. Like buying a race care you want to look under the hood and I strongly recommend it.
Each year Belmont Racetrack like most Racetracks across the country, host a new owner’s luncheon. I attended the luncheon and the cost was $50 per person but will vary from track to track. These sessions are very informative. The organizers (New York Racing Association) try their best to convince you that you should treat this like a hobby but whenever I am told that at the end of every year I will receive a K-1 Tax Form, I consider it an investment. All the speakers at the luncheon reinforced one common thread; don’t go into this business expecting to make money quickly and that was refreshing.
Trainers Are The Key
Several key speakers at the luncheon I attended were Gary Contessa, one of the leading trainers at Belmont and Aqueduct, and Kieran McLaughlin, an Eclipse Award winning trainer and winner of the Belmont Stakes. Both were very open and up front regarding their fees. Trainers are more than willing to meet with people interested in owning race horses, they will invite you to spend a day at their barn and answer any questions you may have.
Interview as many trainers as possible. Ultimately, you need to trust your trainer and while you are paying the bills, it is your trainer that will deal with the day to day care and training of your horse. The bottom line, it will cost approximately $100.00 per day to care for your horse (however Mr. McLaughlin charges a little more). This charge includes; trainer’s fee, tack, feed, bedding, office, shoes, travel; Vet or medical fees tend to be bundled with this but may be separate. Please note, this is an average cost in New York and naturally the numbers will be different from state to state. Also, any number of things can go wrong thus increasing your cost. For example, if your horse gets sick or hurt, fees will increase.
Mr. McLaughlin was kind enough to take us to his barn. The barn was clean and his horses were obviously very well taken care of. Every horse was well groomed, the stalls immaculate, and I got to pet Soldat! His assistant was there with us and was very helpful, answering all our questions.
Partnership Management Make The Difference
There were several Racing Partnerships represented at the luncheon. The Partnership offers you the opportunity to purchase a percentage or number of shares of a horse. This method of ownership allows people who have modest amounts of disposable income to own a piece of a race horse. On average, the smallest share you can purchase is 3% but some partnerships do offer lower percentages.
Each partnership is run a little differently and here the Internet is helpful because most of the partnerships have websites. Check out as many as you can. Some of the partnerships charge an up front fee, some take a percentage of the purse money earned, some do both.
We met with Tom Bellhouse, representing West Point Thoroughbreds, they own King Congie. Also present was Rich Christiano, of Sovereign Stables, they own Negligee. Both were excellent sources for describing the different types of partnerships they offered. They run and manage the partnership make those decisions and deal with the day to day headaches. Those decisions include but are not limited to, when, where and what race your horse is entered in. They manage the partnership and the success of the partnership is their primary concern.
The buy-in cost to participate in the partnership will vary depending on many factors. This is your initial investment, so carefully read all information about this amount. The average cost for a maintaining a horse in training in New York is approximately $50,000/year. So if you own a 5% share of a horse, the on-going cost is $2,500/year. That average cost basically includes the cost for the trainer (since the trainer’s barn, houses the horse). In our example, you own a 5% stake, the maintenance cost is about $210.00 per month. You will be billed quarterly, in advance. So, your quarterly maintenance cost would be $630.00 per quarter. Again, this is assuming your horse requires no extra care (if the horses does then this extra cost is spread across the number of partners in the partnership). Remember the numbers I am quoting are relative, that means, you need to read and understand these costs before you enter into the partnership. Again, read the prospectus carefully and ask questions.
Check your local race track, I am sure they will be hosting something similar to the event I attended. If not contact some local trainers, they will be more than willing to meet with you to discuss horse ownership.
The Internet is one of the best sources of information to begin your research. This is your money, you are responsible for the decisions you make. There is nothing like the rush you will get as you watch your horse run in a race, regardless of whether they win or not! Just remember you are considering a HIGH RISK Investment, you are purchasing an athlete, a living breathing life, so be prepared for the ride of your life!