Little Red Feather Racing Blog

Gary Fenton

Recent Posts

Horse Racing Partnerships 101: How Training Expenses are Paid with an LRF Horse?

Posted by Gary Fenton on Jun 4, 2019 3:49:08 PM


It’s one of the most frequently asked questions we receive and for good reason. Understanding the risks and exposure is important when evaluating any investment. Owning a share in an LRF horse racing partnership comes with two expenditures. The initial share price to purchase the horse and upkeep/expenses. All partners pay all expenses from “Day 1”, no matter when you purchased your share of the racehorse. While this may seem like a daunting task, with LRF’s customer service, we make it easy.

On average, we budget $60,000 a year in expenses for each horse. Therefore, a 5% share of an LRF racehorse costs the investor $3,000 or - since we bill quarterly - $750 each quarter. LRF does not mark-up expenses or receive a monthly management fee. 

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Topics: Horse Ownership Tips

Horse Racing Partnerships 101: The Truth about Markups

Posted by Gary Fenton on May 28, 2019 11:33:13 AM


Nobody likes “markups”… especially in the world of thoroughbred partnerships. As the saying goes, “How can you charge X, when you just purchased the horse for Y last week?” In pure economic terms, I’m sure all of you recognize there is a markup in everything we purchase - from the shirt on your back, to a new HD television, to the cost of having a pizza delivered. Ultimately, it is you, the consumer, who choose if the value added from the company you purchase your goods and services from is worth the price. 

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Topics: Horse Ownership Tips

Horse Racing Partnerships 101: Are Trainers Entitled to a Bonus When You Sell a Thoroughbred?

Posted by Gary Fenton on May 26, 2019 5:58:38 PM

Most people don’t know, but many horse trainers expect a 5% “bonus” when an owner sells a thoroughbred racehorse for a profit. For example, a horse racing partnership purchases a horse for $100,000, races the horse successfully, then later sells a horse for $250,000. In such instance, due to the profit, the trainer expects 5% of the sales price or $12,500. He expects this usually for one of two reasons.  One, as a bonus for the increased value in the horse.  Or two, if the horse continues to run and earn income for another trainer, for the lost purse commissions.  

This is a hot-button issue with many owners and horse racing partnerships. In almost every case this bonus is based on a handshake, ie industry norm. Trainers and horse racing partnerships and owners do not have written agreements.

As the managing partner of horse racing partnerships, we are immensely appreciative of the work our trainers do.  They spend countless hours, many before we wake up in the morning, supervising and caring for our horses. 

An owner though, recently told us he was taken aback when the issue arose. “I purchase the horse, and pay a daily training fee and 10% of purses. We win a few races and I see a small return...but I'm not still not in the black with the other nine horses I've had with the trainer.  Finally, I'm lucky enough to receive a small payday and my trainer tells me it’s ‘standard' to receive 5% of the sales price. But I’m still generating a net loss from all my horse investments.” 

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Topics: Horse Ownership Tips

Horse Racing Partnerships 101: Tax Talk

Posted by Gary Fenton on May 19, 2019 11:04:30 PM

Owning a racehorse can be the most exciting investment you ever make. But, it is first and foremost an investment. If treated like the business that it is, the IRS affords many of the same protections and write-offs as investing in real estate or other business ventures. 

So, yes, it is a write-off! As long as you can pass the IRS Hobby Loss test (see below). If successful, there is a second test to determine when (and how much) you can write-down. Thankfully, it is generally accepted that investing in horse racing partnerships satisfies the Hobby Loss test.

Test #1 - Hobby Loss Tes
The IRS must first and foremost recognize your investment as a “legitimate business investment". As you can imagine, the IRS won’t blanketly allow taxpayers to write-off just any business investment.  An activity for personal pleasure that doesn’t generate profits is not a legitimate business investment but instead classified as a “hobby”.

Per the IRS, the following factors, although not all inclusive, may help you to determine if your activity is an activity engaged in for profit or a hobby.

  • Does the time and effort put into the activity indicate an intention to make a profit?
  • Do you depend on income from the activity?
  • If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?
  • Have you changed methods of operation to improve profitability?Do you have the knowledge needed to carry on the activity as a successful business?
  • Have you made a profit in similar activities in the past?
  • Does the activity make a profit in some years?
  • Do you expect to make a profit in the future from the appreciation of assets used in the activity?
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Topics: Opinion Piece

Top 25 Things to Do in Del Mar (2018)

Posted by Gary Fenton on Jun 12, 2018 9:27:25 AM



photo courtesy of DMTC

Everything smells and tastes better in the summer, most notably in the middle of July! Del Mar 2018 is nearly here. Where stress levels drop to 0 (except when the stewards innocuously take down your horse) and it's sunshine until nine. With purse increases in Southern California, racing is hotter than the weather (always 78) and with over 400 active partners, Little Red Feather will descend upon the seaside track for its best summer yet. Breathe, soak it in, and enjoy our annual list of the Top 25 things to do this summer (and every summer) where the turf meets the surf.  

1. We start this year in Youngstown, OH where Alice Handel invented an ice cream so good that 2,414 miles away it creates hour long lines in Encinitas, CA. Handals Homemade Ice Cream made America great again and Alice deserves a statute next to the Cardiff Kook. 

2. The La Jolla Beach and Tennis Club and Hotel is a hidden jewel with a slew of activities for both adults and kids. We highly recommend spending a night at this historic hotel. Private beach access in San Diego is rare. Take advantage of it. 

3. We love food. And BBQ. And last year we discovered the most authentic BBQ west of Texas. The Grand Ole BBQ in North Park serves it the Grand Ole way - - until they run out of food. Lines form starting at 6pm for dinner. Get there after 7:30pm and you're eating at Chipotle.

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Topics: Opinion Piece

Horse Racing Partnerships 101: How do Owners Pick a Jockey?

Posted by Gary Fenton on Feb 18, 2018 1:10:00 AM


Horse owners or the general partner of a horse racing partnership faces an important decision before each and every start.  Who do you choose to ride your horse?

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Topics: Horse Ownership Tips

Horse Racing Partnerships 101: Buying the Best Doesn't Mean Paying the Most

Posted by Gary Fenton on Oct 12, 2017 12:29:50 PM

 

In a recent blog “Seriously, how much does it cost to own a racehorse”, the costs of ownership were broken down to around $45,000 for routine maintenance and training fees excluding stakes nominations costs. Keep in mind that the costs are generally split between shareholders of horse racing partnerships making them a little more affordable. Many people go into horse ownership for the thrills and the experience, but in the end horse racing partnerships are a business with the end goal of producing a profit for its partners.

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Topics: Opinion Piece

We Once Saved a Horse's Life Stuck in Quarantine....She Runs Tomorrow at Del Mar

Posted by Gary Fenton on Jul 20, 2017 12:01:44 PM

We've won the Breeders' Cup and pinhooked horses for millions of dollars. And I promise you the biggest win in LRF history or my career will always be the time we saved Tooreen Dancer's (IRE) life.

The word "we" is a also big one. Saving a horse's life stuck in USDA quarantine takes more than one person. It involves lawyers, senators, heads of big organizations and two governments. No one will ever be able to tell me we don't care about our horses because one Christmas I saw an industry come together to save this one.

And she runs tomorrow in the 3rd race at Del Mar.

It was typical day at LRF when European Bloodstock Agent Niall Dalton called with the hope of an Irish prospect. Among other reasons, we liked the way she fought winning her debut at Dundalk so we made an offer and ultimately purchased her. 

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Topics: Opinion Piece

Top 25 Things to Do in Del Mar (2017)

Posted by Gary Fenton on Jun 6, 2017 11:18:08 AM


Del Mar 2017 is here! Where racing is king again and the only talk of field size is how busy 19th Street Beach gets before noon.

No matter what's happening in the world there is always Del Mar. Breathe, soak it in, and enjoy our list for the Top 25 things to do this summer (and every summer) where the turf meets the surf.  

1. There is only one thing better than waking up in Del Mar. Heading straight to the The Naked Cafe for breakfast. It's the most important meal of the day and you will never have a bad one starting off with the Buff Breakfast Burritos.  

2. Spend the morning at the barn. The backside is horse heaven. See how hard your trainers and their staffs work and we promise you won't feel like they are just running up day rates not running your horses.

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Topics: Opinion Piece

Horse Racing Partnerships 101: We Miss You Barry Abrams

Posted by Gary Fenton on Mar 25, 2017 1:19:10 PM

Trainer Barry Abrams retired last year and California racing is not the same. He co-owned the great California stallion Unusual Heat (a horse he claimed) and had a style of training not seen in decades (and still not emulated).  He was also a mentor to a young syndicate named Little Red Feather.

My favorite Barry Abrams story is this.  
 
He sold us and our partners 80% of a CA Bred horse named Unusual Beam and almost immediately the horse got hurt and needed 8 months off. As you can imagine this wasn’t an ideal start to the new partnership. So, Barry came to me and said, I have another horse!  As my eyes rolled, he explained the other horse, the CA Bred Lindz Winz, was just coming back from a similar injury and the same partners should “trade” 25% of Unusual Beam for 25% of Lindz Winz. 
 
TRADE!?  Is this Major League Baseball? 
 
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Topics: Opinion Piece

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