Little Red Feather Racing Blog

Gary Fenton

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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

LRF Cares is Formed to Help Retired Thoroughbred Partnership Racehorses

Posted by Gary Fenton on Jan 11, 2016 7:12:42 PM

Horse Racing Partnerships First Charity Designed to Care for Partnership Horses After Their Racing Careers.

I am so excited to announce the formation of LRF Cares, a 501(c)(3) charitable organization which will provide aftercare for horse racing partnership horses and other noteworthy causes.

The first goal of LRF Cares is to make sure every Little Red Feather horse, whether they retire in LRF colors or not, is given a proper chance at a second career. If a second career is not obtainable, LRF Cares will find suitable homes for all of its horses.

In the past, LRF found homes or second careers for its retired racehorses, like McLovin above, who became a well-known hunter jumper. Now, LRF Cares will take over this responsibility and hopefully add in a tracking system to keep up with retired horses and jump in if needed.

Owning racehorses comes with great responsibility and my father instilled in me the importance of giving back. Besides a full time job, and four children, I watched him donate his time to making our community of Beverly Hills, CA better (over the span of 20 years, he was Mayor, Board of Education President and Treasurer). I’m hopeful we have and will continue to make a similar impact in the horse racing industry.

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Topics: Horse Ownership Tips

It's Time to Remove Live Mutuel Tellers

Posted by Gary Fenton on Dec 30, 2015 12:02:00 AM

“I have the best time betting with a live teller,”
said no one ever.

If you can imagine the old supermarkets with its cashiers adding up each item using a cash register, you now know what it feels like to make a wager in the United States in 2015. Like the rotary phone, it’s time for live mutuel tellers at the racetrack to be a thing of the past. Sure, even as I just wrote that it tugged at my heart. Placing a wager with a live teller is classic. But so was Atari. If we were able to move forward to XBox, we can start using automated machines and smartphones.

In truth, most of us already have.

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Topics: Opinion Piece

Our Wish List for 2016

Posted by Gary Fenton on Dec 17, 2015 6:53:54 PM


As most people do when the calendar year turns, it's time to reflect on the year that was and set goals for the year ahead. Horse racing had a rejuvenating year in 2015 when it saw its first triple crown winner in 37 years. American Pharoah excited old fans and created interest in new ones. Getting attention on social media isn’t easy, and AP dominated it in 2015. With the champ now off to the breeding shed, what lies ahead for thoroughbred horse racing? Here are the top 5 things we hope change in 2016.

1. Let's See New Products

For the last couple of years I've seen scores of new people actually coming to the races. Interestingly enough, THEY DON'T COME BACK.

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Topics: Opinion Piece

Thank You Del Mar Thoroughbred Club

Posted by Gary Fenton on Nov 30, 2015 3:25:16 PM

People have short memories.

Three years ago, with the threat of Hollywood Park closing, a non-profit organization stepped up and stabilized the Southern California thoroughbred racing circuit. This non-profit worked long and hard within a model not seen or tested and doubled production of their near perfect product. Remember what the other Southern California racetrack did when Hollywood closed, and supply became limited… they tripled their season ticket prices.

With year two of the new Bing Crosby Season at Del Mar in the books, I want to personally thank the Del Mar Thoroughbred Club. Two years ago my partners were sitting in a dark, cold and empty Hollywood Park. For most of November 2015, owners were at the beach and watching races at an iconic racetrack in the 8th largest city in America. Instead of looking at a racing schedule that included gaps of dates at a quarter horse track, I saw November handle that was bigger and better than anything Southern California has seen in years. The last two Hollywood Novembers pulled in $6m+ in average daily handle while Del Mar 2014 and 2015 saw $7m+.

So, let's get the elephant of the room out.  Was 2015 as big as 2014?

No.

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Topics: Opinion Piece

Top 15 Things to Do in Del Mar in November!

Posted by Gary Fenton on Nov 1, 2015 3:42:00 PM


Thank you for the nice compliments on our previous top 25 things to do in Del Mar blog. As we've come to learn there actually is something better than a summer in Del Mar - - - and that's coming back in November.

Ask anyone who came last year and they will tell you IT'S BETTER THAN SUMMER. Del Mar Fall offers everything the summer does, without the tourist crowds and lines. Del Mar Fall is designed for the locals.. by the locals.. and if you want to get a feel of what San Diego is really like - visit it in November.

1. Clear blue skies at 7am and 5pm. And the weather is a perfect 78 degrees until the sun goes down. So prepare yourself for more outdoor activities like bike riding along the coast. Do it at 8am along the coast in Encinitas.

2. After a day at the races, head across the street to dog beach. Low tide means miles of beaches and the most incredible sunset you will ever see.

3. We got a new breakfast spot for you. Le Papagayo in Encinitas is known for fun happy hours and great jazz but over the summer they opened for breakfast. One warning though, your waitress is half asleep from working the late shift and may bring you a vodka soda instead of coffee. Be nice and drink it.

4. Spend a morning at San Luis Rey Downs. Most trainers keep their horses up north in November and SLR is only 20 miles away. Pete Miller, and Phil D'Amato are great at entertaining those in horse racing partnerships. It's old school racing and makes you feel like you stepped in Tijuana in the '50s.


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Topics: Opinion Piece

Scams in Horse Racing Partnerships

Posted by Gary Fenton on Oct 19, 2015 5:04:00 PM

As much as we love this sport, unfortunately, like many industries, it has some bad eggs.  In the past, horse racing has been notorious for “ripping off its owners”. Thankfully, over the last 10 years corporate horse racing partnerships like West Point Thoroughbreds, Eclipse Thoroughbred Partners and Little Red Feather Racing have attempted to turn perception. With transparent pricing, communication, and first class service, corporate horse racing partnerships have given the industry a big creditability boost. In fact, one of the only growth areas in horse racing besides online pari-mutual gambling is thoroughbred partnerships. Look at any racing program today and you will see at least 50% of all horses are now owned by more than one person/entity.

The reason is simple. Owning 25% of four horses is better socially and financially than 100% of one. Everyone is joining forces and we wanted to blog about the 3 scams to watch out for when joining a horse racing partnership.

1. My Trainer or Bloodstock Agent Doesn’t Mark-up Horse Purchases.

I hear this all the time. “Why would I buy into a $100,000 horse you just bought yesterday at a sale for the hammer price of $60,000… when I can partner up with my trainer and three of his owners on a horse bought for the hammer price of $125,000 at the same sale without a mark-up?

The reason is simple.  You can’t.

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Topics: Opinion Piece

Horse Racing Partnerships Need to Rethink the Keeneland Sale

Posted by Gary Fenton on Sep 29, 2015 4:39:00 PM

As you know horse racing partnerships add value. They find horses, risk the purchase price and syndicate to 5% and 10% partners. In order to do so, they need to charge a premium for the value added services - otherwise known as a markup.

If you think about it, breeders are eerily similar. They risk money to bring horses to market and expect a fair return. Breeders and Syndicators almost do almost the exact same thing. They both sell horses for more than they paid.

Most horse racing partnerships purchase their horses from breeders at major auctions like the recently concluded Keeneland sale in Lexington, KY.  The Keeneland sale is the mecca of all sales. The jockey club estimates that 20,300 foals were born in 2014, with over 4,000 yearlings listed for sale at Keeneland in 2015.
 
The issue is the perception that this sale creates “the market”. In other words, when the hammer falls on a horse at $100,000 it is common to refer to the price as “what the market would bear”. You can see why. The biggest sale attracts the biggest buyers, and the horses go through a live auction.  So, naturally one would think if the hammer fell at $100,000 then hundreds of owners weighed the horse carefully, many probably bid on the horse and eventually “the market dictated the price at $100,000”.

This is factually wrong.

Did you know it is absolutely legal for sellers to bid up their own horse (known as a live reserve) or for auctioneers to artificially bid up a horse (known as a set reserve)?

This means if the seller has a $99,000 reserve, the “live money” you hear at the auction (eg $25,000…now $50,000…now $75,0000) may simply be the auctioneer bidding up the horse to $95,000.  If one real buyer bids $100,000 and the hammer falls, is that “the market price of the horse”? In my eyes, one, and only one, person in the whole world thought the horse was worth $100,000.  All the other buyers at the sale combined didn’t make a bid.

Another example that I see is when a bloodstock agent makes a deal with the seller to buy a horse BEFORE THE HORSE ENTERS THE RING for $100,000. And then the bloodstock agent bids $150,000 at the auction. His client pays Keeneland $150,000 and the seller kicks back the bloodstock agent $50,000. Happens all the time.

Keeneland actually writes in their conditions of sale "Sales results reported by Keeneland may or may not reflect the fair market value of any horse(s) going through Keeneland’s sale…”

Why this means so much for horse racing partnerships goes back to that word - markup.  A common question we get is “why do you get to markup a horse $50,000 one day after the horse was sold at auction for $100,000.”  Ha!

My answer is always how do you know the market value of the horse?  Why isn’t it $150,000?  Horse racing partnerships like Little Red Feather Racing and West Point Thoroughbreds add tremendous value for that increase. LRF also pledges an honest, and transparent transaction. No back room deals or kick backs.

It’s time to rethink the auction approach and educate the public on hammer prices and what an actual market price is and isn’t. We recommend two changes to live auctions. Sellers can set a reserve but live money only can bid. If the hammer falls below, then list the RNA price and the final live money price. This transparency creates a true market value and is a reason why you should buy horses from reputable sources, like the best horse racing partnerships.

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Topics: Opinion Piece

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