Several stables offering "partnerships" or "syndicate" offerings for a percentage interest of the horse. There are many types of offerings so be sure to get all the details prior to investing.
Here are a couple examples:
Example Offer "A" is for a horse being sold to the group for $ 40,000 USD. They may have as few as 4 shares to as many as 25-40. Generally the stable retains a 5% ownership in the horse.
In the $ 40k sale price to the syndicate is a markup for the stable. Some feel this is unfair, but it is a business first and foremost. Businesses must earn profit to survive. These monies also need to be available to cover defaulting investors or horses that are purchased but do not have the ability to make it to the race track.
For simplicity, let's say you want in for 10%. Your portion of the investment would be $ 4,000 plus 10% (your share) of the first quarter expected cost to prepare the horse to race. It may cost 10-15k per quarter to feed, groom, house, shoe, train and keep the horse healthy with any vitamins or medication in the event of injury. There is another $ 1,000- $ 1,500 for a total investment of $ 5,000.00-5,500.00
Depending on the age of the horse at the time of purchase AND their training status- your first race could be from weeks to many months. All those months with no racing means there is no potential winnings to offset the horse's maintenance costs and you can expect quarterly cash calls. There are a couple ways to minimize your wait time prior to racing I will cover at the end of this article.
Some partnership offerings include a $ 500-$1000 management fee, even if the horse isn't racing. Others just want the expenses covered. These management fees can add up in a hurry. Horses do get sick and injured and those would be your expenses. It could be many months, if ever again, for some horses to race. Several horses every year do not ever make it to the track. The negatives risks are high.
It's finally time to race and you understand you have a 10% ownership responsible for 10% of the expenses, so it should be expected that you receive 10% of the horses earnings right? That's not exactly how it works because there are incentives for the jockey and trainer to win. Depending on the race level the jockey and trainer may receive a 10% bonus for a WIN. Occasionally the manager is entitled to a bonus as the horse reaches profitability or a certain earnings benchmark.
So with a winning horse you owe 10% of 100% of expenses but yield 10% of roughly 70-80% of the earnings. That's a lot of juice to cover to make any real money. YOU MUST GO INTO THIS INVESTMENT NOT EXPECTING TO MAKE A PENNY AND CONSIDER THE INVESTMENT LIKELY GONE! Failure to take this mentality into the world or horse racing will potentially lead to very disappointed investors.
Another likely event is your horse may get claimed from you before it makes any money-though the horse may have ran up medical bills or dental bills prior to the claim. You would still be on the hook for those monies.
Personally, I got in for the experience, the excitement, the opportunity to see new facilities and meet new people...and with a little racing luck we might be the owner of a horse that wins a race.... Being there to be in the photo in the Winner's Circle would be icing on the cake.
Before I invested, I researched several (but not every one) stables offering partnerships until the one I felt suited my personality, my comfort level with their amount of communication I would receive and how their fees and expenses affected my pocketbook.
Prices range from only a few hundred dollars to $ 10,000's of thousands. Here is a list of 50-60 Horse Racing Syndicates.
I will mention a few of the ones I looked into and kind of the pros and cons I saw before making my final decision. I started my task by eliminating several of the syndicates from the above link who have run a handful of races. I wanted a more established company due to my inexperience. From there, I began to focus on In the money % and win %. I did a couple year history look back and went for the most consistent stables.
My next step was to visit their websites and I ruled several out for lack of updating, overuse of fonts and colors that my gut said don't send them any money. I did check into a couple of the elite companies just out of curiosity but while Team Valor has the horses we see on TV and read about in the big races- they come with a hefty price tag and at this stage of my career, I want to enjoy the experience rather than try to stress over cash calls.
Moving from one extreme to the other, I reduced my search to closer to home which led me to Canterbury Park in Minneapolis-just a few hour drive away. Canterbury offered a year investment for roughly $ 300 but the number of people invested was close to 200. I read several complaints of how there were so many people who showed up on race day they all couldn't fit in the photo if the horse were to win so they drew straws or numbers and broke up into several groups. One group to the paddock, one to the backstretch, one to the owners box and the other to the winners circle if the horse won....No thank you. Too many people involved.
I decided to eliminate a few of the other potentials purely based on their location. One that I considered was Dream Team Racing Stable from New York, who had a ton of success with Mucho Macho Man. I like their web site, how they posted workouts and race results, detailed breakdown of expenses but ultimately I just wasn't ready to deal with someone so far away.
I narrowed my choice down to West Point Thoroughbreds and Dare to Dream Stable.
West Point's web site was very nice throughout the site. Their horse offerings and race results pages were very nice. Very high class. Terry Finley, the owner, does periodic videos and you can feel the passion for the horses. Dare to Dream is a much smaller stable near Chicago. Their web site offers just enough of the horse offerings, photos and breeze videos to keep up on the horses. They openly admitted they do not spend much on the site because their email updates are frequent and detailed and was a way to keep one less person on the payroll keeping their management fees down- which were much lower than West Point
West Point typically offers more expensive horses, which in turn should have a higher probability of reaching higher level races but its not always true. Dare to Dream offer more affordable horses for my budget and was winning at higher percentage and was in the money @ 65% clip.
Still undecided, I requested financials of real horse expense breakdowns of a winner, break even and a loser from the past year (with the horse names left off due to confidentiality) Both stables were prompt and detailed with their paperwork.
Here is where I ultimately made my decision.
The "management fees" West Point Thoroughbreds charged were so much per month that a horse would have to be really successful to offset. Despite these costs, I was getting continual follow from West Point and Dare to Dream. However, replies to my questions from Dare to Dream were far more detailed and informative than West Points. Still up in the air whether I should invest in one horse with West Point Thoroughbreds or two from Dare to Dream Stable , I began calling each for more info. Dare to Dream either answered right away or called back very shortly after. The lady from West Point ,who followed up regularly, always indicating she would be happy to answer any questions NEVER TOOK MY CALL. I was passed off every time to someone else. Needless to say, it made my decision quite easy at that point. I realized I would just be a $$ sign. That is not the kind of relationship I was seeking, especially first time out of the shoot.
I will say West Point horse offerings were much more expensive but my budget could not afford what they had to offer. I did see they finally named the one horse who peaked my interest last year ..Cleveland Sound..so I will follow him and see how he does- I will not have any regrets. I know they have had a couple horses in this years Triple Crown races. I wish Terry Finley all the best as he seems like a class act.
Dare to Dream Stable has been terrific to be a partner in ownership. Michael and Allen are low key, down to earth nice guys. When I still wasn't certain I could make the first race(10 hr trip) for my first horse I have owned, they remained in contact regularly thru my arrival. They personally met me at the gate and personally took me thru the owner license process. The fact they are a smaller outfit (20 horses) probably plays a factor in their ability to provide customer service, but customer service is huge in my book. Dare to Dream Stable was the perfect fit for my budget, my communication expectations and how they treat their owners.
For those looking to further protect your down side, there are a few partnerships across the USA where you pay a one time fee and the trainer carries all the training, feed, and vet bills. The pros are no further out of pocket expense. They play the claim game, so you are in and out of action regularly- no waiting to train a horse for a year. The caveat is in exchange for carrying the bills, AFTER jockey and trainer bonuses for wins are removed from the purse, the trainer keeps 65% of the balance.. Essentially you need to win a few of races to make any money- but again your "downside" risk is extremely limited as its a one time fee for the chance to catch lightning in a bottle.
Please contact me if you have any questions about my experiences with the above companies or want more info on the last option.