Overview of Ownership
By Dana Byerly, Hello Race Fans Co-founder
Becoming an owner in horse racing is pretty easy, particularly relative to other sports. Few of us can imagine owning a piece of our favorite professional sports team, but owning part or all of a racehorse might fall into the category of “reasonable daydream,” particularly as there are many ways to get involved in ownership. Modestly priced partnerships diffuse expenses while limiting exposure to loss, while the high-flying world of auctions offer opportunities to spend hundreds of thousands on promising young horses.
While owning racehorses is never going to be a cheap proposition, there are plenty of examples of modestly priced horses that have reached racing’s highest pinnacles, in both accomplishments and purse money. Horses owned by partnerships have also performed well on racing’s biggest stages. A few examples…
Animal Kingdom, the 2011 Kentucky Derby winner, was owned by the Team Valor partnership.
I’ll Have Another, the 2012 Kentucky Derby and Preakness winner, was purchased at auction as a 2-year-old for $35,000 after selling at auction as a yearling for $11,000.
Mine That Bird, the 2009 Kentucky Derby winner, was originally purchased for $9,500.
Blind Luck, the 2010 champion 3-year-old female who earned over $3 million, was purchased at auction for $11,000.
Lava Man, a California champion from 2005 to 2007 who earned over $5 million, was claimed for $50,000.
While these affordable examples are notable, purchasing the horse is certainly not the only cost. Steve Zorn of Castle Village Farm partnership put together this overview of the cost of ownership on a per-horse basis (and this updated version). His example is specific to New York, but it does highlight the many associated costs of horse ownership, regardless of region.
What are the ways one can become an owner? Here’s a high-level overview:
Managed partnerships, also sometimes referred to as syndicates, are one of the easiest ways to become a thoroughbred owner, particularly if you’re relatively new to horse racing. Basically, the partnership takes care of purchasing and training the horses, determining when and where the horses will run, and administering the mountains of paperwork (which includes billing you!).
Partnerships come in all sizes and vary in focus. For example, some of the bigger partnerships, such as Team Valor, West Point Thoroughbreds or Starlight Racing, focus on premiere races and are priced accordingly, while a small, local partnership might focus on claiming horses. There is no shortage of partnership options, both at the national and local level. Be sure to check our post entitled “Is a partnership right for you?” where we enlisted three owner/operators to speak frankly about ownership and expectations, along with providing some insight into and tips about what to look for, or not, in a prospective partnership.
In a claiming race, every horse is for sale for a specified price. Prices vary depending on the condition of the race and range from a few thousand dollars to a few hundred thousand dollars. Claiming races make up a large portion of the races run on any given day at any given track and could be considered the bread and butter of thoroughbred horse racing. HBO’s short-lived series Luck showed some of the ins and outs of claiming races and their strategy.
If you’ve been around horse racing for while and have a relationship with a trainer that you trust, claiming horses can serve as an easy way to get involved in ownership without the high initial investment of some of the other approaches.
There are as many different types of auctions as there are claiming races: super-fancy yearling auctions, regional “mixed” auctions and breeding stock auctions to name a few. One look at the calendar of the Fasig-Tipton auction house can give you an idea of the breadth and depth of the thoroughbred sales market.
Even if you’re not in the market to purchase or sell a horse, auctions are a great spectator sport and can frequently be viewed live online. Glenye Cain’s book “The Home Run Horse: Inside America’s Billion-Dollar Racehorse Industry and the High-Stakes Dreams that Fuel It ” is a great account of the business side of the industry and in particular of the yearling auction scene.
If you’ve never watched an auction, here’s 2012 Kentucky Derby and Preakness winner I’ll Have Another being auctioned as a yearling in 2010 (what a bargain!).
It’s not uncommon to read about the private purchase of a talented young horse after a notable maiden breaker or impressive performance in a Kentucky Derby prep race. In fact, this is main strategy of some outfits. IEAH Stables purchased an interest in 2008 Kentucky Derby winner Big Brown after his 11-length maiden win at Saratoga in 2007. They also purchased an interest in 2009 Derby favorite I Want Revenge, who never made it to the Derby. Eventual Horse of the Year Rachel Alexandra was privately purchased by Jess Jackson’s Stonestreet Stables after her 20-length win in the 2009 Kentucky Oaks.
Racing “homebreds,” or horses that owners have bred themselves, is the most involved one can be as an owner, as the risk and investment is assumed before the horse is even born. Racing history is full of tales of “racing royalty” that have been breeding their own horses for decades, but certainly racing also has its fair share of small scale owner/breeders.
One interesting story is that of Union Rags, winner of the 2012 Belmont Stakes. His owner/breeder sold him at a yearling auction, instantly had seller’s remorse and was later able to purchase him back at auction. If you haven’t already seen it, the documentary Union Rags, An American Love Story brings to light many details of the mechanics of ownership in addition to telling a great story.
If you’re looking for more information on any aspect of thoroughbred ownership, the Jockey Club has recently launched a site to help you find it. There are also plenty of thoroughbred ownership organizations that make information available online, and your track may host occasional meetings and/or luncheons aimed at potential new owners. Following some of the high profile owners on Twitter, such as Ahmed Zayat of Zayat Stables and Samantha Siegel of Jay Em Ess Stables, can also provide insight on the various concerns facing owners.
In short, if you’re interested in ownership, there is no shortage of organizations that would like to help you get involved. Ownership is the ultimate wager in horse racing and like all other wagers, you are usually rewarded by doing your homework!
The Cost of Ownership Ownership is a great outline of the costs. In our partnerships at Flying G Racing, we break them down, item by item, for our local partners and team members. Especially for new owners, it is very important to keep them informed. Many are also eager to learn more about the industry. After all, the interest is what brought them on board in the first place.
But, I think it’s equally as important to educate the general public. With a little more understanding of the economic impact the thoroughbred industry has in their communities, we’d likely see more support from politicians and casual fans. Each of these “costs” employs someone!
For a list of partnerships or resources, check out ThoroughbredPartners.com
Thanks for stopping by Jake! We also have a discussion post about partnerships that the author of the Cost of Ownership (Steve Zorn) participated in.