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to have some extremely good horses. I would consider a 20%-win rate to be extremely good. Counting on your horse to pay for itself is a risky stance to take. As much as we all would like to have a Champion horse, it just doesn’t work like that on a regular basis. This is why
I want to talk about how you can share in
the expenses of your horse, as long as you are willing to split some of the profits if you end up with a runner.
PARTNERSHIP STORIES
I would not be able to take on the full
line of expenses, which is why I am going
to partner up. I want to be involved just
like everyone else, and partnerships make
that possible. There are some incredible partnership stories I have come across that
I would like to share. There is a horse that you might remember named Funny Cide,
a Thoroughbred who won the Kentucky Derby in 2003. One of the all-time great partnerships was formed by 10 friends, many of whom were school teachers with blue collar incomes, and they bought Funny Cide for $75,000. The gelding earned $3,529,412. The 10 partners likely could not afford the gelding individually but forming this partnership allowed them to participate in one of the most special horses in history. It took less than $10,000 per partner to buy into this horse and split the expenses 10 ways. If you divide
the career earnings by 10, it comes out to $352,941. Pretty awesome return if you ask me for not much risk. Not to mention, the money they used to buy this wasn’t all out
of pocket. They had some money pooled up from other horses that they had been involved with. Another story is based on a horse named Old Habits, who won the All American Derby in 1999. This was a partnership of women, who called themselves “The Girls” and was also made up of 10 members. Old Habits was purchased for $18,500 and earned $680,491. He was the 1999 Champion 3 Year Old and Champion 3-Year-Old Gelding. Dividing
his career earnings by 10 gave each member $68,491, which is much different than $68,491 today. These are only two examples of hundreds of successful partnerships that may have not been possible with one owner.
PARTNERSHIP BENEFITS
From the research I have done, partnerships work best when you choose a point person to be in charge. Otherwise, the partners are stepping on each other’s toes.
A good idea would be to pool money into a joint account and draw expenses from there. It is a lot to ask to have a trainer divide the bills to send to each individual partner. Have the point person take charge of this and inform the other partners when more capital is needed. It may be beneficial to form an
LLC with your partners as well. This creates
a business entity with its own tax ID number. This can simplify things if the partnership
is planning to own multiple horses and have
a presence in the industry. One of the great things about partnerships is that you do not necessarily have to buy 50% of the horse. If you’re not in the best place financially, or want to be involved in multiple horses, maybe take a 10% ownership, or even 25%. This way you can diversify your stable and give yourself a better chance to be in on a great horse. In the financial management industry, this can be compared to diversifying your portfolio. It’s not wise to buy one stock and hope it hits a homerun for you. The punchline is “don’t put all of your eggs in one basket.” If you spread your money out, in this case we are using racehorses, there is a possibility of hitting one out of the park. I will add that you now have multiple horses to watch, rather than waiting for just one horse to hit the track.
Partnerships are a great way to get involved in the horse racing industry and I know
many people who have already figured this out. It’s also a great way to grow the sport
of horse racing. Individuals with little to no experience can get involved in a partnership while allowing a more knowledgeable person be in charge. Consider a partnership as a great strategy to help prolong your involvement in the horse racing industry.
FINANCIAL PLANNING
Individuals with little to no experience can get involved in a partnership while allowing a more knowledgeable person be in charge.
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