Investment in thoroughbred race horses combines the opportunity for speculation, entertainment, and social gratification.
Like most investments, both positive and negative risk are elements to consider. We recommend investing in multiple horses as a technique to minimize risk and maximize opportunity. Owning a 'stable' of horses provides more runners, more races, more fun and more earnings potential.
We offer two types of partnerships:
Racing and Residual (RR) and Racing Only (RO)
Q: What are some of the 'Partnership' share benefits?
A: Owner's License.
A: Access to the stable areas and backstretch.
A: Box seats on days your horses run.
A: Free clubhouse admission any day.
A: Access to the paddock area.
A: Special clubs for owners, jockeys, and trainers.
A: Special parking permission.
A: Racing Trophy 'bragging rights'
Q: How are purses shared and distributed?
A: Purses are calculated 'net' of Trainer's fees and Jockey fees. Example: $100,000 Purse. Subtract $10,000 Jockey fee and $10,000 Trainer fee. Total fees sum to $20,000. So, $100,000 minus $20,000 = $80,000 'net'. A 10% share owner would receive $8,000.
A: Yellow Rose Racing's share percentage is calculated pro rata with all other share holders.
A: Distributions are sent out within 45 days of the race to all shareholders in good standing.
Q: How are partnerships set up?
A: Each horse is usually a separate LLC with it's own name, Federal Tax ID, and bank account.
A: To automatically diversify risk, we will sometimes package more than one horse in an LLC.
A: Books and Records are maintained daily and reports are quarterly.
A: Our CPA firm is Dean, Dorton, & Ford, PSC.
A: Our Law Firm is Sturgill, Turner, Barker, & Maloney, PLLC.
Q: How much purse money is distributed in North America?
A: In 2006, according to the National Thoroughbred Racing Association, wagering totalled $14,780,450,552 and purses totalled $1,116,423,912. These figures are UP from 2005.
Q: Where will the horses run?
A: Gulf Stream Park, Calder, Belmont Park, Aqueduct, Saratoga, Keeneland, Churchill Downs: we will enter the horses wherever we feel they can win nationally or internationally. How about a trip to Dubai, or Paris, or Melbourne, or Ireland!
Q: How much are the horses purchased for?
A: We normally purchase horses in the $25,000 to $250,000 range, sometimes more and sometimes less: it's not the price of the horse, it's how much horse for the price that counts!
Q: Are partnerships priced at cost of animal acquisition?
A: We mark up the price to include: administrative, travel, veterinary, shipping, evaluation, and consulting expenses, LLC fees, CPA fees, and all necessary and ordinary expenses. Naturally, the completed partnership package has to make economic sense as an investment.
A: Each offering will contain the unique characteristics for that particular horse or set of horses.
A: A 10% investment in an RR Partnership will usually run between $5,000 and $25,000 with monthly expenses to follow.
A: An investment in a 10% of 4 horses RO Partnership will run $16,000 to
$24,000 without any further expenses.
Q: How are partnerships concluded?
A: The Racing Only Partner ends when the pre-specified contract ends or an animal is withdrawn: a term of one year, for example.
A: When a Racing Only Partnership ends, an option to continue may be offered for a new term.
A: For the Racing and Residual Partnership, partnerships conclude when
animals are withdrawn or horses change ownership.
A: Fillies and mares are sent to breeding farms, sold privately, or sold at
auction 'open' or 'in foal.'
A: Major auction venues are Keeneland and Ocala.
A: Colts that qualify will be syndicated as stallions.
A: Syndication distributions are net of commissions, if any, and administrative costs and bonuses when appropriate.
A: Colts that lack stallion qualifications will be sold as sport horses: hunters, jumpers and trail horses.
Q: How long is an investor responsible for ownership expenses?
A: In the Racing Only Partnership, everything is packaged up front for a one time lump sum: no monthly or backend costs.
A: In the Racing Only Partnership, when the term of the partnership ends, an option on another term may be offered depending on the particular animal's
prospects.
A: In the Racing and Residual Partnership, costs are billed quarterly, in advance, until the animal changes ownership.
Q: Can an investor opt out of a partnership?
A: Yes, an investor can at his or her sole choosing return shares to the LLC: the LLC does not offer compensation for shares. This allows the investor to eliminate future expenses.
A: The shares can be sold to another investor privately within the partnership or outside the partnership: the responsibility rests solely with the investor.
A: No one can guarantee that an investor choosing to opt out will recover his or her invested capital.
Q: How much does it cost to train a thoroughbred race horse?
A: It costs from $30,000 to $40,000 per year depending on the horse.
A: Example: a 10% share spread over 3 horses would cost $330 per month or $990 billed quarterly in advance.
Q: What does the $330 cover?
A: Training is a labor intensive routine that includes the services of at least 4 people per day: additional labor costs are veterinary and farrier.
They include and Exercise Rider who gallops and works the horse at specific distance and speed. A Groom who is responsible for taking care of the horse, which includes, tacking the horse for his daily training, brushing and bathing after training, hoof care, cleaning and bedding stall, putting on bandages for leg protection, cleaning halter, and polishing all brass and name plates. A Hot Walker who walks and grazes the horse after he or she is trained and bathed. The Trainer manages all aspects of the horse and help, this includes feeding programs, gallop and work speed distances, entering the horse in races where he or she will be competitive, negotiating agents to engage jockeys for races.