Q: Do you mark your horses up?
A: We do not. We charge a monthly management fee, a 2.5% commission on purse money earned and 5% of the sale price (or claim price). This way, when your horse does well, we are rewarded accordingly.
Q: What is the minimum cost of entry?
A: It depends on the price we have to pay for the horse at auction. The minimum involvement level is 2.5%.
Q: What are the ongoing costs after the first capitalization round?
A: It costs anywhere between $40,000 to $50,000 a year to have a racehorse in training. Each partner is responsible for their ownership share of the expenses and we will raise additional funds (typically $15,000) to cover 4 months worth of anticipated expenses at a time once the initial funds begin to run low in our operating account. Therefore, a 5% ownership interest would be responsible to contribute $750 during these capital calls.
Q: When will I receive a distribution if our horse wins?
A: If a horse wins a race with a substantial purse, a distribution will be made to each partner for their proportionate share. We try to keep enough funds in the operating account to pay for 6 months of bills.
Q: How are partnerships dissolved?
A: In the event that a partnership horse is claimed or is sold, we will dissolve the LLC and each partner will receive their pro rata share of the remaining funds once all remaining expenses are paid.
Q: How are the partnerships set up from a tax standpoint?
A: Each partnership in the U.S. is set up as an individual LLC and each partner will receive a K-1 to reflect their involvement in the LLC. Each partner will also receive a spreadsheet which breaks down the expenses for the previous year. We believe in full transparency.