So, you’ve gone on Google and researched how much money racehorse owners are getting from wins and breeding rights, and now you are here. I get it; horse racing is quite lucrative, and we all want to be racehorse investors. I think there is something to do with the sport that screams prestigious, and we all want that.
But having a dream is one thing, and making it a reality is another. I’m not saying that becoming a racehorse owner is impossible, but it is not how it all seems on TV. Racehorse owners invest a lot of money, with higher risks than any other business. Yes, there are many controllable aspects of the sport, like taking care of the horse and its training, but even if you manage to get a racing bloodline cheaply (which is impossible), there is no guarantee that that horse will have any success.
With that said, racehorse ownership is not always about the money, right? It’s also about connections and passion for the sport. So, what does it take to become a racehorse owner? Is it an investment worth diving into, or should you continue to be just a spectator?
We all want to see our horse included in the free Saratoga racetrack picks, but is it possible?
As you probably already know, there isn’t a straightforward answer to this question. If we are talking about any investment, there is no one-size-fits-all approach. It depends on your budget, net worth, goals, and many other things.
So, let’s cover some of the basics of racehorse ownership just to give you an idea of how hard it is. I’d personally stay away from racehorse investment and continue to be a spectator of the sport, but that’s my opinion.
What is Racehorse Investment?
At its core, investing in a racehorse means owning a share of a horse’s career, hoping it will win races and earn prize money. You can go solo and own a horse outright or join others in a syndicate, where you buy shares in a horse, much like owning stock in a company.
How Much Does It Cost?
There are two things you need to worry about from the start. The initial purchase and the ongoing expenses. These two go together all the time. You cannot take care of a horse if you spent most of your money on the initial purchase, and you cannot purchase a horse if you don’t have the money upfront.
So, how much does a horse cost? We all want to know the answer to this question, and the number varies so much. A well-bred yearling will cost you anywhere from $5,000 to millions. Yes, you’ve read that right, millions!
But the average price of a horse is around $75,000. And you have no guarantee about the success of the horse.
Now we go to the next part, which is even more important – ongoing expenses. Most people think that getting a racehorse is just a one-time buy. Still, ongoing expenses such as training, veterinary care, transportation, and insurance can cost you tens of thousands of dollars yearly.
Potential Returns: Is It a Money Maker?
Prize Money and Beyond
Winning a race can bring in anywhere from a few thousand to millions, depending on the race. Yet, as most investors quickly learn, not every horse is a winner. Roughly, only 40% of racehorses make enough money on the track to cover their expenses​​.
Breeding and Sales
If your horse becomes a star, the real money can come from breeding rights. Retired racehorses can fetch hefty sums for stud services. For example, the legendary American Pharoah’s breeding rights were reportedly sold for $20 million​)​.
The Risks Involved
High Stakes and High Risks
Horse racing is inherently risky. Horses can get injured or not perform as expected, and a promising yearling can quickly turn into an expensive pet. Investors should view the money spent as disposable income rather than a sure-shot investment​​.
Long-Term Commitment
Owning a racehorse is not a get-rich-quick scheme. It often requires a long-term commitment with no guaranteed return on investment.
Why People Invest Anyway
The Love of the Sport
For many, the love of horse racing and the joy of being part of the action outweigh the financial risks. The camaraderie among fellow investors and the thrill of watching your horse race can be incredibly rewarding​​.
Unique Experiences
Owning a racehorse can grant you access to exclusive events, behind-the-scenes experiences at racetracks, and the chance to stand in the winner’s circle—a dream come true for many racing enthusiasts​​.
Questions to Consider
How Much Are You Willing to Risk?
Racehorse investment is not for the faint-hearted. You must prepare for the possibility of losing your entire investment and then some.
Do You Have a Passion for Horse Racing?
Without a genuine interest in the sport, the risks might outweigh the benefits. Most successful racehorse investors share a deep passion for horses and racing.
Is This a Diversified Investment?
Wise investors see racehorse ownership as part of a diversified portfolio. Putting all your eggs in one basket is risky, especially when that basket can run away.
