In this case you pay all the bills and take all the risks, but you also reap all the rewards–and the purses your horse wins.
The purse for a race is most often split five ways. Here’s how:
- 50 percent to the winner
- 25 percent to second place
- 12 percent to third place
- 8 percent to fourth place
- 5 percent to fifth place
From the amount won by his or her horse, the owner also pays 5 percent to the trainer and 5 percent to the driver. For example, if your horse wins a $10,000 race the winning share of the earnings are $5,000, and 5 percent for the trainer and driver ($250) each will be deducted. The owner will be sent a check for $4,500.
On a typical racing program, between 80 and 100 horses will be entered, with 55 of them sharing purse money. Even without winning a race, it’s likely you will share in at least a portion of the evening’s purse money.
Also, while stakes payments and starting fees must be paid in advance by owners for some races, “overnight” races require no entrance fees. Don’t forget there are other revenue streams for your stable: If a horse you bought improves, he or she becomes more valuable—and that means the possibility of selling at a profit. Or, if you decide to invest in breeding stock and raise yearlings you might turn a profit when you sell your youngsters, either privately or at auction.
The Internal Revenue Code permits owners to treat their racing operations just as it treats any small business: Racing and breeding stock may be depreciated, expenses deducted and so forth. It’s not strictly a tax shelter, but your accountant, who will be another important member of your stable, will explain the tax situation.
The rewards are many
Owning a Standardbred racehorse is a risk-reward proposition perhaps unlike any other. There are many possible upsides to the experience.
The thrill of rooting for your horse, especially when it wins, is unequaled. Many people involved in racing meet others in the sport and make friends for life. The rewards that racehorse owners enjoy include:
- Owning a horse purchased for a modest amount can potentially win big money—or at least more than they cost to buy and keep.
- A colt with outstanding ability among his peers may have a future career as a stallion, and if successful in the breeding shed can generate a six-figure income each year, for as long as 15 years.