Questions About Ownership
January 5th, 2007How do I become an owner?
Unless you are among the few people lucky enough to receive a horse as a gift, the only way to become a racehorse owner is to buy a Thoroughbred or an interest in one. This can be done through a private purchase, at an auction, or by claiming a horse at the racetrack.
How do I buy a horse?
If you are purchasing a horse at an auction such as those conducted by Barretts, Fasig-Tipton or Keeneland, you must establish credit before you bid, or be prepared to pay for the horse immediately upon the fall of the hammer. It is best to contact the sales company in advance to make the necessary arrangements.
Claiming a horse requires that you hire a trainer before the claim is submitted. Then you must obtain a claim certificate from the stewards and have the funds needed to claim the horse (claiming price plus all applicable taxes) on deposit with the horsemen’s bookkeeper (also called the paymaster of purses at some tracks) before submitting the claim. Each state has its own rules regarding claiming and the state’s racing commission office should provide you with this information.
Private sales are probably the easiest way to purchase a horse. Use the same care and attention to detail that you would use in making any major purchase and always get the best possible advice. A trainer or bloodstock agent would be helpful in this area, but you must choose them wisely.
You may also purchase a share of a horse in a partnership group. There are several established groups with proven track records. They offer shares in single horses or multiple horse syndicates. Many partnerships advertise in trade publications and have websites describing their services and offerings. It is a good idea to meet with several syndicate managers and examine each partnership prospectus before investing.
Always operate your horse business with the same level of attention that you give the business that has allowed you the opportunity to become a Thoroughbred owner.
How do I find a trainer?
Watch, read, listen, observe and communicate. Trainers are easy to find. They are the guys and gals with the dirty shoes who are saddling the horses for the upcoming race. There are literally hundreds of them at most major racetracks.
The key is to find the right trainer for you. Watch racing programs on television and listen to what the trainers have to say. Read articles about trainers and review their records in the Bloodhorse, Daily Racing Form, other trade publications and websites. Listen to established owners at the track and ask questions about their trainer. Visit the barn area, observe how different trainers handle their operations, and then interview a few prospective trainers before making a choice.
This is a good time to discuss the trainer’s racing philosophy and find out about training charges, the stable’s typical veterinary charges and any additional services or items that might be charged to the owner.
Communicate your goals and aspirations for your horse business to the trainer during these interviews and select one who understands your needs and desires.
Just as blind dates rarely produce a winning relationship, hiring the first trainer you meet is seldom a good idea. Give the same consideration to selecting a trainer that you would a business partner or mate.
What is a bloodstock agent?
Bloodstock agents are people who are paid a commission to buy and sell horses. They may also give advice on pedigrees, breeding, racing and some may consign horses to sales.
Many of the same principles used in selecting a trainer apply to bloodstock agents. An additional factor in determining the reliability of a bloodstock agent is longevity. Anyone can get lucky and buy a winner, but a record of multiple successes over a span of years is a decent indication of reliability and honesty.
It is important to remember that bloodstock agents, like stockbrokers, derive their livelihood from commissions generated by the money you spend, so it is important to find an ethical one with a solid reputation.
What is a claiming race?
A claiming race is a race where horses are entered for a specified price and must be sold to any owner who enters a claim (complying with state claiming rules and eligibility) before the race is run.
The purpose of claiming races is to level the competition by allowing owners to classify their own horses. Horses entered in claiming races at a level higher than their ability have little chance of performing well and earning purse money while horses entered in races below their true value have an excellent chance of winning and taking home the top prize, but run the risk of being claimed by another owner.
Claiming has been called, “the world’s greatest poker game.” It incorporates every nuance of the horse business, plus creativity and guts. The quickest way to start your stable, claiming provides instant action for the neophyte owner.
How much does it cost to own a horse?
The purchase price of the horse is just the beginning. Training expenses vary from track to track and trainer to trainer, but you can expect to pay anywhere from $35 to $100 per day, per horse, depending on where you race and who trains your horse.
Veterinary care is usually additional to the per diem training charge and can be very minimal to quite expensive. The health and soundness of you horse and the horsemanship of your trainer have the biggest influence on these costs. Typical monthly vet charges for a Thoroughbred in training would be about $150 to $500.
If needed, surgery and after-care can be expensive. Although considered unusual veterinary expenses, an owner should be prepared to pay for them.
Shoeing is also an additional monthly charge and usually runs about $100. Special shoeing can be as much as $400 per visit.
Owners competing at major racetracks like Del Mar, Keeneland and Saratoga can expect to spend about $29,000 to keep a single horse in training all year long while those racing at slightly lesser tracks might spend around $22,000.
How do I make money as an owner?
Horses usually earn a part of the purse any time they finish in the top five of their races. Purse values and purse splits vary from track to track, but typically, the winner receives 60% of the listed purse, with 20% to second, 12% to third, 6% to fourth and 2% to fifth place. Some States offer incentives for horses bred in their State which can increase the purse substantially.
In addition, if a horse consistently performs well, besides earning purse money, their value can increase substantially, making them attractive to other owners who may want to purchase or claim them for their own stable.
Horses also have a residual value for breeding purposes, which can number in the millions of dollars if a horse is successful on the racetrack and has a solid pedigree.
It is important to remember that the horse business is often subject to the whims of “Lady Luck” and hard work is no guarantee of success. However, if you operate your stable with your head instead of your heart, your chances of making money improve enormously.
How many times a year can I expect my horse to race?
Each horse is an individual. Some horses can race frequently and maintain their physical and mental fitness for extended periods. Others need more time to recover between starts or maybe frequent freshenings away from the racetrack.
Age is also a factor. Two-year-olds start their careers later in the year and usually only start a few times before they turn three. Many older claiming horses run all year long, while stakes caliber horses may only start in major races.
The current trend in racing is to give horses about three weeks rest between starts. Many horses can race back quickly (five to seven days rest) on an occasional basis and run quite well. Two weeks between starts was the norm for many years and it was common for horses to start 24 or more times a year. In the 21st century, the average sound horse starts about a dozen times a year.
Do I need a license to become an owner?
Owners are required to be licensed in order to participate in racing. Each state has its own licensing procedures, applications and fees. All require fingerprinting. Most racing commissions have a licensing office at the racetrack. There is a national racing license available but it is not yet accepted by all jurisdictions.
Are there tax advantages to Thoroughbred ownership?
If your Thoroughbred operation is run as a business, there can be some tax benefits. Each state and the federal government view racehorse ownership in varied ways. It would be best to consult your tax advisor to learn the specific advantages in your home state and the states where you wish to race.
