Little Red Feather Racing Blog

Horse Racing Partnerships 101: Seriously, How Much does it Cost to Own & Train a Thoroughbred Racehorse?

Posted by Gary Fenton on Feb 15, 2017 1:13:31 AM

Buying a thoroughbred racehorse can be...should be....the most exciting investment you ever make. There is no better feeling than watching YOUR horse take the lead at the top of the stretch.

BUT HOW MUCH DOES IT COST?

It's the question we get asked the most - - and here's the answer.

Championship quality thoroughbreds cost between $100,000 and $300,000 to purchase and about $45,000 a year in expenses. Of course, buying a thoroughbred is competitive and purchase prices can easily exceed $300,000. We'd like to think if you have the right team representing you, they will be able to find a top thoroughbred racehorse in the range above. Furthermore, if you join a syndicate like Little Red Feather Racing, you can purchase as little as 5% and share in the above costs with fun and like-minded partners all professionally managed. $15,000 upfront and $2,250 per year for 5% allows you to spread your risk and own many horses for less than the cost of owning one on your own!

As for expenses, the $45,000 a year to maintain a racehorse in training (in Southern California) is broken down as follows:

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Topics: Horse Ownership Tips

Horse Racing Partnerships 101: How do Training Expenses Work with LRF?

Posted by Gary Fenton on Feb 10, 2017 10:18:35 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. Thankfully, one of the most consistent and predictable risks associated with horse racing ownership is expenses. As we like to say, whether you are stakes winner or a claiming horse, yearly expenses are generally without fail between $45,000 and $50,000.

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Topics: Horse Ownership Tips

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

Posted by Gary Fenton on Jan 18, 2017 10:00:00 AM

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: An Interview with Mike Smith

Posted by Billy Koch on Jan 16, 2017 7:06:24 PM


Mike Smith is riding high. Inducted into the Horse Racing Hall of Fame in 2003, Mike has won more Breeders’ Cup races than any other jockey. He was the regular rider for such super stars as Zenyatta, Shared Belief, and Azeri and currently is the rider of Songbird, Unique Bella, and Breeders’ Cup Classic winner, Arrogate. Last November, Mike guided Little Red Feather Racing’s Midnight Storm to his first graded stakes victory at Del Mar in the GIII Native Diver Stakes. We caught up with Mike after a morning of breezing horses at Santa Anita.

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Topics: Horse Ownership Tips

Horse Racing Partnerships 101: Happy New Year

Posted by Billy Koch on Jan 5, 2017 11:30:53 PM


As we start another year, everyone struggles to come up with a worthwhile New Year’s Resolution. Typically, if you are anything like me, we take a look in the mirror and our first resolution is to make sure you get back in the gym! In fact, gym memberships go up substantially in the month of January and, by April – once again if you’re like me – the gym days start to dwindle as the weather starts to heat up. Waste of time and energy. HA!

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Topics: Horse Ownership Tips

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

Horse Racing Partnerships 101: Seriously, How Much does it Cost to Own a Racehorse?

Posted by Billy Koch on Jun 9, 2016 12:49:20 AM

Early this morning at the gym, a professional athlete asked me what I did for a living. When I told him I was in the horse racing business, he responded - as most people do - with “REALLY? WOW! VERY COOL! DO YOU KNOW BOB BAFFERT?” After this exchange, the very next thing out of his mouth was, “I heard it’s like $20,000 a month to keep one of those. Expensive right? Seriously, whether you own singularly or invest in horse racing partnerships, how much does it cost to own a racehorse?”

The truth is, it does not cost $20,000 a month to own a racehorse. However, it does cost around $45,000 a year to maintain a racehorse in training (in Southern California) and we will gladly break down the numbers for you.

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Topics: Horse Ownership Tips

Horse Racing Partnerships 101: Breeding

Posted by LRF Staff on May 20, 2016 1:00:00 PM

In late fall, horse racing publications are dominated by articles announcing that many of the male and female equine stars of the racing world have been retired. If the horse is an intact male, he will be retired to begin stud duties. If the horse is a filly or mare, she will trade racing for motherhood and become a broodmare (a female horse used for breeding). This sounds simple enough, but the transition from athlete to parent often involves significant planning and considerable amounts of money.

For a filly or mare, her retirement destination is not always obvious. If a racehorse owner also breeds horses on his or her own farm, it is likely that his or her fillies/mares will retire to his or her farm, which is where the mare will live for the duration of her pregnancies and while nursing her foals. It is also possible for horse owners to breed horses without owning their own farms. In this case, they will pay to board their mares at another farm. For example, commercial farms such as Claiborne, Lane’s End, and Hill ’n Dale keep their own horses on their farms in addition to boarding horses owned by clients.

However, not all people who race horses, breed horses, and not all people who race and breed horses retain all of their horses for breeding purposes. In this case, broodmare prospects are sold privately or at public auctions. Two of the most famous sales for broodmare prospects are the Keeneland November Breeding Stock Sale and the Fasig-Tipton-Tipton November Sale. Two-time champion Ashado was consigned to the Keeneland Sale, where she sold for $9 million, while Havre De Grace, the 2011 Horse of the Year, sold for $10 million in the Fasig-Tipton November Sale. A filly or mare’s retirement plans are determined by her sole owner or if owned by one of the horse racing partnerships, the managing partner.

When it comes to successful colts, securing a stud deal is almost always more lucrative than the horse’s total racetrack earnings. A colt may have his retirement plans determined as early as his two-year-old-year or as late as at the conclusion of his racing career. Even though many racehorse owners do own farms, most farms are not home to breeding stallions. Thus, the majority of the top stallions in the United States are kept at farms who specialize in standing stallions at stud.

For the top farms, a colt usually needs to win at least one Grade I race (Grade Is are the most prestigious races) to become a sought-after stallion prospect. Once a colt wins a Grade I, his owner’s phone will start ringing with offers from stud farms. Stud farms aim to purchase the breeding rights of top colts and often divide the ownership into a syndicate (think horse racing partnerships) of shares upon retirement. Although the stallion will live at one farm, he may end up with dozens of new owners who own one or more breeding shares. These shares entitle the owner to a range of benefits including a share of revenue from the horse’s stud fees and free breedings to the horse with the shareholder’s own broodmares.

The colt’s owner may choose to sell all of the horse when he retires, but most retain some shares so that they can continue to profit from the horse after he leaves the racetrack. Secretariat made headlines in 1973 when he was syndicated for a record $6.08 million...BEFORE he won the Triple Crown. Fusaichi Pegasus, winner of the 2000 Kentucky Derby, was syndicated for about $50 million!

Regardless of a top horse’s gender, its breeding future is carefully planned so that it is afforded the best opportunity for success and its owners on the racetrack or in retirement can optimize their chances for profitability.

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Topics: Horse Ownership Tips

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