Becoming Involved: Ownership and Investment in Racehorses

The thrill of winning drives every Thoroughbred racehorse owner. And winning can be a difficult journey, one filled with setbacks and anguish, but nothing beats the excitement and fulfillment when everything comes together.

Fiscal responsibility is a must as ownership can involve significant costs and investments that should be viewed as disposable income. Successful racehorses may yield lucrative returns through purse money earnings, future sale and/or breeding opportunities, but most racehorses do not prove profitable. 

A love of the sport motivates most owners, the opportunity for a fun and gratifying experience.

Ownership opportunities

Horses can be purchased by an individual (single entity) or partnership (multiple investors). And given the costs associated with ownership, partnerships are more popular than ever. Along with reducing the financial burden for investors, partnerships allow people who wouldn’t be able to afford a racehorse on their own to get involved in ownership. 

RELATED: HORSES: $122 BILLION ANNUALLY TO THE US ECONOMY

It doesn’t matter the percentage, owning a piece of a winning horse brings a sense of accomplishment and joy. Partnerships foster camaraderie and memorable experiences and are good for networking and celebrations in the winner’s circle.

Flexible ownership structures exist. Horses can be leased for racing, and some groups partner with the trainer, who picks up the training expenses in exchange for an ownership interest.

Partnership Expansion

Limited partnerships have always existed, but the growth of conglomerate partnership groups has exploded over the last couple of decades. 

The overwhelming majority of partnership groups operated under a standard model, where the size of the investment determines the percentage of ownership. 

These groups will operate under a banner like Dogwood Stables, Brilliant Racing, Eclipse Thoroughbred Partners, West Point Thoroughbreds, Centennial Farms, Team Valor, Donegal Racing, etc, and they raise money for a new partnership group every year, often acquiring racehorses through either yearling or two-year-old-in-training sales.

RELATED: Warrior's Club Breezes in Preparation for BC Sprint

Young racehorses bring a sense of optimism. 

Fractional ownership groups like MyRacehorse have emerged in recent years, offering investment opportunities for cheap (often less than $100 per share), but they exist along the same model as the Green Bay Packers, which are publicly owned by more than 360,000 stockholders. Those stockholders receive no actual monetary benefit from their investment, just the privilege of being a fractional co-owner.

Winning Partnerships in the Kentucky Derby

Seven of the last 10 Kentucky Derby (G1) winners - Mage, Rich Strike, Authentic, Country House, Justify, Always Dreaming, and California Chrome – were owned in partnership.

Commonwealth Thoroughbreds, which partnered with trainer Gustav Delgado’s OMGA Investments, Ramiro Restrepo, and Sterling Racing, had nearly 400 stakeholders as a co-owner of Mage. 

Three-Part Experience 

When attending the races, there are three elements that every racehorse owner needs to experience: paddock, stands, and winner’s circle.

Go to the paddock to watch your horse being saddled, talk to the trainer/assistant trainer and jockey, listen to any discussions of strategy or small talk.

Go to the stands and cheer your horse to victory!

Go to the winner’s circle to get your picture taken after a win.

It’s an adrenaline-filled experience that provides joy and satisfaction.

Hope Runs Eternal

Owning racehorses involves highs and lows. And owners will be quick to point out the lows, as it’s a tough business.

But the amount of risk should always be measured by the reward. And horse racing delivers great thrills and rewarding and captivating experiences that keep owners dreaming about developing the next winning racehorse.