Investing in Racehorses

Investing in racehorses should not be taken lightly and without due diligence. If a simple bet on a racehorse requires study of the Daily Racing Form and understanding …

Investing in racehorses should not be taken lightly and without due diligence. If a simple bet on a racehorse requires study of the Daily Racing Form and understanding of a horse’s pedigree, training and past performance, then acquisition and investment in a racehorse means thoroughly researching your investment, too.

Thoroughbred describes a breed of horse descended from a line of Arabian horses; an ancestry that can be traced back to the late 17th century, when the breed was brought to England and paired with local horses. The result is the racehorse that we know today, bred solely for speed and endurance.

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There are several ways to invest in a racehorse, and the method of choice will depend largely on how little or much you have to invest, and how much risk you are willing to take on. Initial investment can be as little as $500 as part of a syndicate, or as much as $35,000 for an outright sale. The initial investment is only one consideration, there are also regular and ongoing expenses for a thoroughbred’s upkeep including food, dietary supplements, bedding, training, jockey salary, veterinary costs, etc.

  • Partnership or Syndicate – in this way, the risks, costs and winnings are spread among the number of investors. In certain syndicates, a defined number of shares are sold, and each investor may purchase one or more, while in other syndicates, the responsibility is shared equally.
  • Private purchase – you make a direct offer for the purchase of the horse directly to the owner. Total expense and risk is borne solely by the buyer.
  • Lease option – you pay all of the expenses, and enjoy all of the winnings; yet because you’re not the owner, you’re commitment is not as high, as extraordinary expenses are borne by the horse owner.
  • Auction – online or in-person, auctions present a wide variety of livestock for sale in one setting. A catalog is usually available, and you will have the opportunity to inspect the horse and have it examined by your veterinarian. Horses are consigned to different groups: Yearlings, 2-year olds, horses in training, horses currently racing and horses for breeding stock.
  • Claiming Race – A buyer can buy a currently racing horse during any claiming race, simply by paying the owner’s claiming price before the beginning of the race. At the conclusion of the race (regardless of the outcome), the new buyer needs to be ready to take his horse home. One caveat, potential buyers may not have a veterinarian inspect the horse prior to the race.

Sources:
http://www.horseracing.com/buying-a-horse/
http://www.bankrate.com/brm/news/investing/20010606a.asp
http://www.arabianracing.org/Steps.asp?ID=1
http://www.allhorseracing.com/handicapping.aspx

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