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Gary Fenton

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Horse Racing Partnerships 101: The Truth about Markups

Posted by Gary Fenton on Jan 5, 2017 7:13:24 PM


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: How Training Expenses Work with an LRF Horse Racing Partnership?

Posted by Gary Fenton on Dec 14, 2016 12:03:13 AM


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 $50,000 a year in expenses for each horse. Therefore, a 5% share of an LRF racehorse costs the investor $2,500 or - since we bill quarterly - $625 each quarter. In a previous blog we discussed the breakdown of the yearly budget (trainer/vet fee, etc). You can read it here.  LRF does not mark-up expenses or receive a monthly management fee. 

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Topics: Horse Ownership Tips

Top 25 Things to Do in Del Mar (2016)

Posted by Gary Fenton on Jul 5, 2016 9:02:01 PM


At LRF, the three most important things are family, horse racing partnerships, and Del Mar.  Last years blog highlighted 25 great things to do in Del Mar. 25 was not enough. We're at it again. Without further adieu….  

The Top 25 Things to Do in Del Mar 2016.

1. Attend the Carma Poker Tournament - July 16th. This message sponsored by Madeline Auerbach. There is no better organization in California to place our retired horses. For a syndicate manager this allows us to sleep better at night.  Sleep is important. So, is your relationship with Madeline.  

2. Paddle Boarding. You can’t just get drunk on the Veranda all summer. Each year we try something new. Preferably in the water. Everyone raves about Fulcrum Paddle School. Wish us luck. We’re coming for you next year scuba diving.


3. The Mission Cafe. Best pancakes in San Diego. The only issue. It's not close to Del Mar. Hit it on the way to the San Diego Zoo. Or if you're visiting your college kid living on Mission Beach. Kudos to your parenting skills btw if you have a kid living on Mission Beach.

4. L'Auberge for Cocktails. People ask where to go to meet that special someone. We "hear" this is the spot. But, we're married, so we can't officially say for sure.

5. Saddle Bar for Drinks. People ask where to go meet anyone other than than that special someone. We "hear" this is the spot. But....

6. The New Children’s Museum - Downtown. This is the perfect spot - for your wife to take the kids for an afternoon while you’re at the racetrack on the Veranda with us. The kids will LOVE it. Your wife will love you for suggesting it. And you won’t care about either because you’re too busy trying to hit the exacta in the next race.

7. Handel's Ice Cream - Encinitas. Just opened and you've never tasted anything like it. You've also never seen a wait. There are more people in line than at Santa Anita on a Thursday.

8. Solo - Solana Beach. I've never walked out of this home store without buying something. The last time I purchased this Aaron Franklin gem.  He’s the best pitmaster in America. So, really you're getting two for one here. You now have a great new home store and your summer reading.


9. Del Mar BBQ Championship. Did someone say BBQ?  Sunday July 17th, the official tour, KSBS, makes a stop at our favorite racetrack. Championship BBQ and LRF running Midnight Storm in the G2 Eddie Read. When people talk about dream days… this is our version of it.

10. Take a New LRF Partner to Dinner. Guess what…That couple you always see in the paddock… they are cool, like you. Introduce yourself and remind them besides winning races lately the LRF Racing Club is also responsible for many new friendships. And tell them LRF will contribute $50 towards the meal. That’s a good deal for maybe meeting a new lifelong friend.

11. Zoomars - San Juan Capistrano.  As you can see, we’re adding kid friendly items to this years blog. Jump on the train and enjoy a fun morning at the mother of all petting zoos. Don't believe us. Ask TVG’s Christina Olivares Blacker. Or don’t, and just run into her there every time. 

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Topics: Opinion Piece

Who Invented the Photo Finish Camera?

Posted by Gary Fenton on Apr 12, 2016 12:16:49 PM



Prior to 1937 race tracks placed 3 stewards at the finish line so when two+ horses crossed the wire together, they would look at each other and vote on who won. Obviously, this inexact science created arguments, and controversy, especially in big money races.  Can you imagine today if a million dollar Pick 6 was decided by three judges?  

This all changed in 1937 when Bing Crosby unveiled the Del Mar Thoroughbred Club. Bing wanted to do things differently. We know he enlisted all of his Hollywood boys to add a little panache (and of course help finance and build the race track) to the new race meeting. He also did something that changed horse racing forever. He brought in Paramount Pictures motion picture engineer Lorenzo Del Riccio, who had just recently created a new circular flow camera. This new device started the film when an object - in this case a horse’s nose - hit a specific point and began filming in the opposite direction. The famous instrument was used for the first time on opening day at Del Mar in 1937.

As you can imagine this was revolutionary to the world of thoroughbred horse racing and tracks across the country called Del Riccio who was more than willing to sell them the newly patented camera. Hollywood lore has it that when Del Riccio created the camera he was under an exclusive contract with Paramount Pictures and the story goes Paramount began chasing him from town to town until a deal was reached.

How it works is technical. The circular flow camera uses a single vertical slit instead of a shutter; a strip of film moves horizontally across the fine vertical opening located in the focal plane. This limits the field of vision to no more than a few inches, the restricted field being aligned with the vertical line on the winning post on which the lens was focused. The strip film moved across the slit in the opposite direction to the race and at substantially the same speed as the rate of movement of the image of the horses as it passed the finishing line. This kept the image of the horses stationary with respect to the film. As soon as the first horse started to pass over the line, the camera began to record its image on the moving film from the nose backwards along the length of the body in succession. This produced a strip photographic record of the horses as they passed the vertical plane/winning post. Film was advanced continuously at a pace equivalent to the average speed of a racing horse, resulting in distortions of length but still preserving the order of finishers.

Improvements were developed to Del Ricco’s invention in 1948 by Australian Bertram Pearl whose system incorporated a mirror and neon-pulse time signature in the winning-post which would provide a precisely aligned image in which both sides of the horses could be viewed, and on which the neon left a set of stripes at 100th/sec intervals for accurate timing. If the reflected image of the horses aligned vertically exactly with the foreground image, it was proof that the camera was not viewing the finish-line at an angle (and therefore incorrectly recording the horses' relative positions). Pearl’s partner was his friend, society portraitist Athol Shmith and his contribution was to formulate means to speed the processing of the strip of negative down to 55 seconds and then to a rapid 35 seconds.

Although digital cameras are now used for photo finishes, the technology developed by Del Riccio was instrumental in reassuring gamblers they were betting on fair outcomes, and helped bring horse racing maintain its popularity in American culture.

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Topics: Opinion Piece

OBS March Sales Blog - Final Day

Posted by Gary Fenton on Mar 16, 2016 10:46:22 PM

As anticipated, the OBS March ended in fine fashion today with another seven figure buy pushing the sale just south of the 2015 installment.Following an uptick day of trading, OBS reported an overall two-day gross of $51,650,000 versus $55,432,000 in 2015 for the same 325 horses sold. The two-day average fell from $170,560 to $158,923. The RNA rate was 25%, compared with 23% a year ago. Overall, my thoughts are similar to yesterday. The middle market is not what it used to be at these sales with the big buyers competing for the same limited number of high end horses and strangely not wanting to dial back to the next tier horse. With the bulk of Kentucky Derby winners (and countless stakes horses) sold in the mid-range level, it surprises me that the best and brightest take a herd like mentality to horse trading.

As for LRF, Day 2 was productive. Before we begin, I must digress for a minute. In 2013, our horse Egg Drop won three consecutive stakes races, including the Grade I Matriarch (the last GI at Hollywood Park). Eggy was sold in 2014 in foal to Tapit for $1.9m to John Malone’s Bridlewood Farm.  Early this morning, we were invited to pay a visit to the historic farm where we saw Eggy, who is literally about to foal any second (again to Tapit).  We also met her first son, aptly named Won Ton.  That’s her (assistant at the time) trainer Phil D’Amato and funny enough, as soon as she saw Phil her ears pricked like when she was in training. We had a tremendous time. It was a nice breath of fresh air during the middle of the sales storm. It reminded us why this sport is so beautiful.

Back to the sale. Our short list got shorter early in the day when our vets scratched off two horses….leaving us with four.  We went hard for Hip #331, a Tiz Wonderful colt, but we stopped at $200k and lost him when he went for $210k to a co-ownership that includes one of the biggest owners in the game - B. Wayne Hughes (Beholder). So, we felt good being on the “right” horse and had no regrets not spending another $5k since when B. Wayne Hughes wants a horse he usually gets it.

At this point, with only three horses left, we re-visited Hip #60 which if you recall was bought back by his owner yesterday for $70k. The horse was still for sale - which gave us relief that we may walk away with a quality horse we wanted all along.  Still, we didn’t pull the trigger again!
Someone might ask, clearly you don’t want Hip #60 since it is still technically #4 on your list. Not true. We just wanted to play out our options. My favorite story to tell is when we buy multiple horses and everyone inevitably asks which one we like best/least. In almost every case the horse we place as the “last seed" ALWAYS ends up being the best.  If we are still considering a horse at this stage, we think very highly of it.

Next up was Hip #524 - a super Pioneerof the Nile Colt who worked in a fast 10.1. We heard the reserve was going to be around $250k which placed him at the high end of our budget for the horse but we kept our spirits up. We raised our hand a couple of times but then the bidding flew past $250k. Then $350k. Our thoroughbred syndicate competitor Eclipse Thoroughbreds and Kentucky Derby winning bloodstock agent (I’ll Have Another) Dennis O’Neill were hooked up against each other with Aron winning at $450k. Before you ask, yes it sucks losing a horse to a competitor, but we placed a different value and stuck to our guns.

We didn’t have to wait long for our next horse - Hip #535 - a really nice Union Rags Filly out of an A.P. Indy mare. The reserve was $199k and we felt we had a decent chance at getting the horse in the $200k range.  That feeling went away quickly as the horse jumped past $200k…on its way to $300k and sold to top bloodstock agent Donato Lanni.  

With one horse left on our list, Team LRF had a serious discussion about Hip #60. This led to another visit of the colt….and a purchase. By Congrats out of an unraced Kingmambo dam what we liked most about this horse was his quick breeze and the way he looked effortlessly doing it. It also doesn’t hurt to have a nice pedigree with the dam being a half sister to Hard Spun. We also hope this horse is ready to run early. We look forward to getting him to So Cal for a Del Mar debut.

Last, but not least, we made a run at Hip #597 and consistent with our sale we got outbid drastically by our friends at Live Oak Plantation ($375k).  

Leaving the sale with one nice horse is not ideal but very productive. We spend countless dollars and time at each sale whether we buy something or not. It’s our operating cost. We can’t factor that into the number we buy since in the end each horse we purchase must meet a high standard and inevitably perform on the racetrack. If it doesn't, your brand suffers. I feel good knowing we try to present the best product to our clients and the results recently reflect the hard work.

That's it for the 2016 OBS March Sale. I hope you enjoyed these blogs. We liked sharing our thoughts with you. If you have any questions, just email us.

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Topics: Opinion Piece

OBS March Sales Blog - Day 1 Recap

Posted by Gary Fenton on Mar 15, 2016 11:11:18 PM

Thank you for all the nice comments about the sales blog. The sales auction is a huge part of the industry and your excitement to learn more about the process is nice to see. For thoroughbred partnerships, these sales are the main settings for stocking up the barn for the coming year. Buying the right horse at the right price is what your partners demand and either you deliver, or they will find someone else who will.

Day 1 of the OBS March sale is in the books. Overall, thus far, the sale is a tad behind last year. OBS reported 160 juveniles sold for a total $25,718,500, down 16.2% compared with $30,704,000 total for 169 head for the first session in 2015. The average fell 11.5% from $181,680 to $160,741; this year’s median was $115,000, compared with $120,000 a year ago. The buyback percentage was 28.9%; it was 20.6% in 2015. Since it’s a two day sale with a random draw determining order, we will save our market analysis until the full results are in.  

What we did see was a continued trend of the big buyers (that's Bob Baffert trying to be stealth) purchasing the top tier horses leaving the middle market flat. Being a mid-ranger, buying a horse in this market is extremely tough. Consignors place home run reserves on their horses and when they fall outside the big buyers, instead of selling to us, they bring them home for another day.  I never judge a seller if they place a high reserve. It’s their horse, they can sell it for whatever they want. If I really like a horse, after learning that the horse is RNA (ie reserve not met) I may approach the consignor afterwards and make an offer at our price. Sometimes the seller has a change of heart and sometimes they don’t.  You can see which horses were sold this way (ie “immediately after the sale”) on the OBS site. They are marked PS.  One of LRF’s best horses, Bellamentary, was purchased last year under this set of circumstances. Thankfully, the reserve was not met that day.

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Topics: Opinion Piece

OBS March Sales Blog - The Day Before

Posted by Gary Fenton on Mar 14, 2016 10:20:31 PM

The day before the two-year-old in training sale is when it all comes together for thoroughbred syndicates. You physically re-inspect horses.  Review videos again.  And again.  Talk to people…and if you’re smart you’re not talking so much as listening. OBS March has 600 horses which is usually whittled down to about 30.  Sometimes 10.  Sometimes 50.  Each buyer has their own “check the boxes”.  With some sales you see many horses that fit your model.  Great, you feel better you may get one.  If you only see a few, chances are smaller. The most common misperception is you just find a few horses you love, bid and hopefully go home with your new purchases.  In reality, you look at your notes - the pros and cons - funnel down to a select number of flaws you can “live with” and if the price is right, you buy.  Every now and then a horse pops up that checks all the boxes and you fall madly in love.  Most of the time, you’re grinding through hundreds of horses and swinging at the best pitch you see. I’ve seen too many horses “you love” never pan out while the ones you simply bought because they fit the model in nondescript ways later become stakes winners.

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Topics: Opinion Piece

Welcome to the OBS March Sales Blog!

Posted by Gary Fenton on Mar 13, 2016 9:49:28 PM

Welcome to the OBS March Sales Interactive Blog. We hope these next few writings help give insight into purchasing a two-year-old at auction.

The two day dale beings Tuesday, March 15th and the LRF team has been on the grounds all week looking at breeze videos and physically inspecting the more than 600 cataloged horses here in Ocala, FL. Unlike a yearling sale, horses breeze either one or two furlongs which gives buyers their first glimpse of each horses talent and potential. These are logged and available for viewing here.

Being one of the biggest and best sales, all the major buyers, including our competitor thoroughbred partnerships are here this week.  And they are all looking for the same thing. A stakes quality racehorse.

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Topics: Opinion Piece

Fasig-Tipton/Two-Year-Old in Training Sales Preview

Posted by Gary Fenton on Feb 24, 2016 10:06:22 PM

Two-year-old in training sales are an exciting time of year. Winter is ending, the Triple Crown season is upon us and the hope of a new crop of horses fills the air. For the major horse racing partnerships, this is the biggest and usually best chance to re-stock the barn for the upcoming summer of 2YO racing. 

Fasig-Tipton kicks things off next week, followed by OBS two weeks later. These two sales can set the tone for the year, especially when it comes to the freshman sires. There are 30 new freshman stallions in 2016 with 14 represented in the Fasig-Tipton sale.

A big topic entering the sales this year according to pedigree expert Robert D. Fierro appears to be about sire lines. Normally, two-year-old in training sales are more about performance (ie breeze times) than the pedigree page. However, if you look deeper into the Fasig-Tipton catalog page two things jump out. 6 of the 14 freshman sires are from the A.P. Indy sire line, while over 50% of the catalog is made up of horses from just three sire lines…A.P. Indy, Unbridled and Storm Cat.

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Topics: Opinion Piece

How do Training Expenses Work with an LRF Horse Racing Partnership?

Posted by Gary Fenton on Jan 29, 2016 3:16:34 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 $50,000 a year in expenses for each horse. Therefore, a 5% share of an LRF racehorse costs the investor $2,500 or - since we bill quarterly - $625 each quarter. In a previous blog we discussed the breakdown of the yearly budget (trainer/vet fee, etc). You can read it here.  LRF does not mark-up expenses or receive a monthly management fee.

A typical LRF partnership lasts 2-3 years. Thus, a 5% share costs the partner $2,500 a year, or $7,500 over 3 years. In over 125 LRF partnerships, I can’t recall any partner being exposed financially for anything more than the initial share price plus $7,500 (for 5%). And that only happened once. We use that as our “worst case” scenario. Any partnership that has lasted longer than 3 years involved a horse that was racing/earning income to offset the expenses.

In order to operate this unique model and allow for partnership bills to be paid on time with each trainer and vendor, LRF issues four capital calls a year. In March, June, September, and December. These capital calls are simply advances and are deposited in the partnership’s separate bank account. These funds are then drawn down to pay expenses associated with the partnership. Before a capital call is issued, the managing partners review the partnership books and estimate the next quarter’s expenses. Most cases, the standard $625 for 5% is issued. Other times the managing partner may alter the amount for the capital call. If, for example, your horse will be running in a stakes race with an entry fee, we may increase the capital call in order to pay for such an expense (which is a good thing!)

Each LRF partner receives their quarterly capital call statement via email and all of the partner’s horses are listed on one statement. The partner may write one check to cover all of the payments or use a credit card (we escrow the funds and deposit individually in each partnership bank account).

Each partner receives accounting statements three times a year detailing each expense and is always free to request a cash flow statement at any time.

ALL UNUSED EXPENSES ARE REFUNDED TO EACH PARTNER. The dissolution of our partnerships occur when the horse is sold and usually consists of two distributions.  One for the sale of the horse and the other, a refund of the excess capital calls.

Due to this exclusive model, LRF distributes all purses AS THEY ARE RECEIVED. Each partner receives a purse check generally within three weeks from the horse crossing the finish line. To save on accounting costs, we may group smaller/nominal 4th or 5th place purse together with the next race.

That’s the LRF accounting model in a nutshell. Other horse racing partnerships and thoroughbred syndicates do it differently. Not sure there is a right way or a wrong way. We feel bill paying is a pain - especially for individual horse owners - and as part of the LRF Experience we try to minimize the mundane task so you can focus on the fun of owning a thoroughbred racehorse.

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Topics: Horse Ownership Tips

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