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 typically 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 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 LLC (partnership) and each partner receives 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.