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How to get into horse racing ownership

Investors looking into ownership of racehorses need to decide whether to invest in flat or jump horses, or both.
Photo by Jordan Mansfield/Getty Images

Investors looking into ownership of racehorses need to decide whether to invest in flat or jump horses, or both. In Britain, there are over 40,000 owners or co-owners of 14,800 racehorses which are managed by over 580 licensed trainers. These runners compete 80,000 times a year.

Owners earn close to £130 million annually in prize money from meetings. They can also secure “appearance money” as an incentive for racehorses to compete in certain (popular) races. Racecourses generally provide several badges to owners and co-owners which provide exclusive access to the track, viewing areas, bars and restaurants.

There are several paths to ownership. You can choose to be a sole owner, a co-owner, or participate in a partnership between 2 to 20 individuals. You can also create a company that allocates shares between investors. There is a leasing option in which an investor leases a racehorse for a set period of time.

Co-ownership of a racehorse involves the participation of more than one owner, and is now the most popular form of ownership in Britain. The structure serves to lessen capital risk while enabling the joint owner to leverage the horse racing expertise or connections of the other shareholders in the venture.

Owners are required to gain sponsorship for their racehorse in order to reclaim the VAT and associated costs of owning a runner. The British Horseracing Authority (BHA) has published a guide that outlines sponsorship requirements.

A trainer or a bloodstock agent provides professional guidance to investors throughout the buying process. They charge a fee for their services which typically amounts to 5 percent of the purchase value of the horse. The Federation of Bloodstock Agents provides a listing of accredited brokers. British Bloodstock Marketing is one of the leading firms that provide advice to potential owners on the buying and sales process. BHA also has a comprehensive listing of trainers located in Britian.

It’s highly advisable to list the services of either a trainer or bloodstock agent, or both, in order to minimize your risks in the buying process. These professionals provide advice on the appropriateness of horses to participate in certain types of races. They can also help determine an appropriate purchase price for the transaction. Trainers and agents consult on the quality, lineage, and potential training regimens that can maximize performance on the track.

After the transaction, these professionals can help you gain insights on the costs of owning a racehorse. Your new asset becomes a liability due to transport, feed, training, boarding, and veterinary costs. Other costs include registration feeds, gallop fees, insurance, shoeing, race entry fees, and jockey fees.

The value of each individual racehorse varies a great deal. However, horses sold at auction typically command a price between £10,000 and £25,000. Buyers interested in purchasing racehorses can get more information from bloodstock sales sites. Racing Post publishes a calendar of bloodstock sales held throughout the year. Goffs is one of the leading auctioneers in Ireland.

Founded in 1766 by Richard Tattersall, Tattersalls is the oldest bloodstock auctioneers in the world and the largest in Europe. The firm offers 10,000 thoroughbred horses each year at 15 sales at either its Newmarket headquarters in England, or at Fairyhouse outside Dublin, in Ireland. Other places where you can get more information about purchasing racehorses include DBS, Brightwells, Darley, and Weatherbys.

The Yearlings Sales is where un-raced horses that are one year of age are sold through the ring, and are bought on their pedigree (family lineage) and conformation (the horse’s actual physical make-up). “Ready to run” racehorses are available at the Spring Breeze-Up Sales (un-raced two-year old sales).

The jumping fraternity converge on the South Yorkshire based auctioneer, DBS, in May each year for the marathon five day Spring Sales. A Horses in Training Sales is where horses are sold that have raced or been in training at some point but may not have actually run under rules.