So you’ve dug deep into your pockets, taken the plunge, and purchased a racehorse. Congratulations… that was a down payment.
As with owning any piece of valuable real property, the fact is that there will be ongoing upkeep costs: Insurance, daily training, physical maintenance and repair, extra expenses for special occasions (such as race day) and, of course, the inevitable “dues to Caesar” in the form of taxes. Part of assuring yourself a non-traumatic experience as a thoroughbred racehorse owner is knowing what expenses to expect and making sure you have the money to meet them.
Most of the “big ticket” expenses are noted and explained elsewhere in this manual, but for easy reference (and arithmetic), everything you are likely to be paying for is listed below.
These figures are laid out so that you can, if you wish, prepare an operating budget for each horse in your stable. Cost management is recognized, even by experienced owners, as one of the great enigmas in racing; and, unless you have bottomless pockets or don’t care much for business, it is a crucial exercise, one to be undertaken thoughtfully and monitored regularly. Cost management seems to derive from an axiom in so-called “Murphy’s Laws” which says, “work expands to meet available budget.” So, to some extent, do all the cost of keeping a racehorse.
No fixed rate schedule actually exists for anything mentioned below (with the exception of taxes, some jockey fees, and your particular trainer’s Worker’s Compensation premiums). Apparently, costs are set by what the market will bear. Proof of that is the differential between rates in Northern and Southern California (Northern California costs, across-the-board, average about one third less). Given this condition, an owner might want to be prepared to negotiate each item cost in order to achieve a balance between expense and earning potential of the horse. Dollars, whether tens or hundreds, can be shaved off every kind of bill, and close supervision of what is required can save the astute owner perhaps thousands of dollars a year.
A free market that ranges from $50-$110 per course per day, Depending on locale and the trainer’s win record.
$17-$50 per horse per day (the occasional alternative to your trainer’s day rate.)
Usually in the form of a mortality policy, the premium runs approximately 5% of each horse’s value and includes transportation insurance on your horse (in the event it is killed or injured in transit within the contiguous United States.)
Worker’s Compensation insurance (your stable’s share of your trainer’s contribution based on a per stall/per day amount) will either be billed separately to each owner by a trainer, or more commonly indirectly passed on to you as part of your trainer’s day rate.
For additional information, see the section on “Insurance.”
Every January 1, your horses like all real property will be assessed a county tax based upon their category of use (i.e. yearling, broodmare, stallion, racehorse); this is a flat fee, and generally will not be more than $150.
Also, any corporate or partnership taxes appropriate to your stable (in the course of tax preparation and filing) must be figured into your overall tax bill.
A pleasant note: the federal government permits thoroughbred owners to declare depreciation on the value of their racing stock. Don’t forget to put your accountant onto this trail….
Most owners find a $200-$300 bill per horse per month, which includes pre-race Lasix injections, vitamin jugs, and scoping to examine the horse for signs of nasal capillary bleeding after a race or strenuous workout. The other possible costs are for x-rays, drugs, surgeries, serious injuries or illnesses.
Your horse must be re-shod about every four weeks. Regular shoeing includes trimming and runs about $90-150 her horse (the price depends on your locale and the farrier’s expertise). The addition of shoe pads (usually on front feet only) is approximately $10 per pair. When it comes to special order remedial shoeing and procedures farriers, like dentists, will charge according to their reputation, experience and what the local market will bear. The following are the most common procedures and their approximate price ranges:
Bar shoes (for horses with a propensity for developing hoof cracks): $200-$215 per pair, applied instead of regular shoes.
Quarter Crack Patches to repair serious and inevitable hoof cracks: $250-$350 per patch, and in addition to regular shoeing.
“Stickers” or Mud Calks (to give extra traction if your horse is to run in the mud): $50 and up per pair, whether front, back, or both. The variable here is a time charge, since the farrier also has to come around to remove the stickers, and he may be across town when that time comes. (Note: Stickers are not usually allowed in turf races.)
Jockeys fee – If your horse finishes in the money, the jockey receives a percentage of your share of the purse (see Chapter on Jockeys for the Fee Schedule). Riders of all others (losing mounts) receive a flat fee.
Pony to Post – $20
If the horse wins a purse: State taxes, track percentage, and percentages to trainer, barn, and sometimes the jockey (all variable).
A common cycle of conditioning will put each horse into a race about 8 to 15 times a year. In any given year, the horse can be expected to produce its best race 6 times. Since it may or may not win even at its best, assume that it will win twice (during the 6 “peak” times), and be in the money in three other races. Using the 8-15 per year average, then, your horse may earn 4th or 5th place money in two or three other races (besides those 6 “peak” races) in a year.
So. Check the back of the “Condition Book” for a thorough listing of the purses offered at your local tracks. [For a schedule of purse distribution, see Sample Forms & Charts] Determine the average purses, 1st through 5th, for which your horse will probably be racing (see chapter on “Entries”) and add up the dollars you can reasonably expect to win. Then, to get a theoretical projection of your net profit or loss, compare those dollars with the costs-per-horse listed above. Although this projection will never, in all likelihood, be “on the nose,” it is possible to create a “budget” for each horse you own.
In California, the winner receives 55% of the purse. The track deducts from that the contractual 10% payment given to the jockey. As a rule (though this is negotiable in the owner-trainer relationship), the trainer receives 10% of the winning purse, and the “barn” — meaning grooms, riders and assistants — will receive a “barn stake” of 1% to 3% of the purse. For the owner, 2nd place pays 20%, 3rd pays 15%, 4th place pays 7.5% and 5th pays 2.5%. The jockeys will receive 5% for 2nd or 3rd on any race with a purse value of over $10,000 (which means virtually any race at a major track in California). Trainers may receive 10% for 2nd, 3rd, or 4th, but those percentages are negotiable (please see chapter on “Trainers”). In addition, owners of horses competing in all races in which their horses do not finish first through fifth are entitled to a Participation Purse. Horses that finish sixth and beyond (and to fifth place finishers when their share of purse money is less than the corresponding Participation Purse) are paid $250 per start in southern California and $100 per start in the north and at the Fairs.
As you go through this exercise, two observations will probably jump out at you: It costs as much to keep a horse that wins huge purses as it does to keep one that wins small ones, and the “cheaper” your horse (i.e. the lower the purses it runs for), the more it behooves you to negotiate and “manage” your costs of operation.