Little Red Feather Racing Blog

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

I Don't Understand..What are the Different Types of Races in Thoroughbred Horse Racing!?

Posted by Gary Fenton on Jul 7, 2015 9:37:00 PM




 

If you understand the above photo, this blog is not for you. However, if you're like the other 99% of the world, you need someone to explain why there are so many different types of races in thoroughbred horse racing!  

The easy answer can be summed up in one sentence - thoroughbred horse racing gets its revenue from gambling and gamblers bet on races that are evenly matched.

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Topics: Horse Ownership Tips

Seriously, How Much Does It Cost to Buy a Racehorse?

Posted by Billy Koch on Jul 2, 2015 12:48:09 PM

In last week's blog, we discussed the cost it takes to keep and train a thoroughbred racehorse. However, as you might have guessed, there is another - sometimes substantial - cost when entering the Sport of Kings and that is the actual purchase price of the equine athlete.

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Topics: Horse Ownership Tips

Seriously. How Much does it Cost to Own a Racehorse?

Posted by Billy Koch on Jun 23, 2015 11:34:00 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

What is the Condition Book in Thoroughbred Horse Racing?

Posted by Gary Fenton on Jun 19, 2015 11:49:00 AM



 

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Topics: Horse Ownership Tips

Top Seven Complaints People Make After Investing in Horse Racing Partnerships

Posted by Billy Koch on Jun 17, 2015 10:40:09 AM

Investing in a horse racing syndicate makes the barrier of entry into the world of horse racing far less daunting. These partnerships like Little Red Feather Racing, do most of the heavy lifting while you, the investor, may sit back and enjoy the ride. Inevitably however, there will be mistakes made along the way as you find out which partnership is right for you.

Listed below are the top seven complaints we hear from investors who may have joined the wrong partnership.

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Topics: Horse Ownership Tips

How do Thoroughbred Partnerships Pick a Jockey for Their Racehorses?

Posted by Gary Fenton on Jun 9, 2015 9:35:00 AM


Horse owners or the general partner of thoroughbred partnerships face an important decision before every start.  Who do you choose to ride your horse?

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Topics: Horse Ownership Tips

Is Investing in a Thoroughbred Racehorse a Tax Write-Off?

Posted by Gary Fenton on May 26, 2015 12:25:00 PM


Owning a racehorse can be the most exciting investment you will 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 as investing in real estate or other business ventures.  Below is a basic guideline to whether you can write-off your investment in horse racing partnerships like Little Red Feather Racing or West Point Thoroughbreds.  For a more thorough analysis please see LRF’s Tax Guide to Investing in Thoroughbred Partnerships.

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Topics: Horse Ownership Tips

How Do I Buy the Best Horse at a Racehorse Auction?

Posted by Billy Koch on May 21, 2015 12:24:09 PM

Next week - May 26-28 - we're (Little Red Feather Racing) headed to my favorite place on earth, Del Mar, CA, to the first ever Barrett's two-year-old in training sale at Del Mar. On the sales grounds are roughly 150 two-year-old racehorses that will go through the sales process - a breeze on Tuesday, physical inspections on Wednesday, and the live auction on Thursday. As a manager of horse racing partnerships, these sales are one of the most important aspects of our job. Our clients expect us to find the best horses at the best prices. Period.

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Topics: Horse Ownership Tips

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Our blog aims to inform you about fractional racehorse ownership and to entertain those interested in the sport of kings.

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