Alternative Investments : The Racehorses !
One the most well-know alternative Investment, like Wines, is Racehorses. Despite the «p At first glance, equine investment may seem a « passion » investment, with the reputation of being reserved for the wealthy. However, it is becoming an increasingly accessible type of alternative investment which may prove to be interesting. fiscally and financially.
There are two main ways to invest in Racehorses according to investors characteristics :
-Direct purchase of Racehorse implies that investor has fully ownership of horses. In this case, investors should conduct a due diligence, have a knowledges of Equine market etc . It is the most expensive form to investment in Racehorse as investors should ensure all related fees to horses maintenance 1000 € – 2000 € per months in France in average.
-Association/syndicate to purchase/rent a horse and create a racing stable. This form allows multiple individuals to buy shares of a horse racing stable. In this case, all fees are included in the price of the shares (price of Horse, maintenance, foods, vet, etc ). The Staple employs at least a Horse Trainer and the rider (jockey) , so salary of staff are included in the operating costs even if Trainer and Jockey keep a % of race rewards prize.
How racehorse are profitable or not ?
The price of Racehorse is determined by multiple factors but mainly based on its past performance to win race and the associated Prize/Rewards and the age. The age determine also the potential for young horses not having the required age to compete. The young horses are called Foal when there are under 1 year and Yearling between 1 – 2 years.
The Prize is depending the prestigious of the Race but the repartition the Rewards the same whatever the race: 50% to the first, 25% to the second, 15% to the third, 6% to the fourth , 4% to the fifth (in France for a galloping race. The allocation is slightly different for a trotting race ( 1rt 50% , 2d 25%, 3rd 13%, 4th 6%, 5th 3%, 6th 2% and 7th 1%). From these amounts 15% is for the Trainer and 5% for Jockey (in average).
The breed of the horse and its lineage are also a very important factor in the price. A purebred horse from of known and reputable racehorses lineage can be profitable for reproductive/breeding purposes and characteristics: covering/stud for stallions and foaling for mares.
However, investing in racehorses are risky as horse carreer lifespan is relatively short between 5-7 years and are not linear. A foal can be promising but never winning a race, or a winning horse can get injured and end its career prematurely. The state of form and health of the horse are very uncertain and its rating of a horse is difficult to appreciate as long as it has not actually won a large number of races (and so at end of career). In addition, costs are also variable according to the Training, the Driver, the studs, the health etc … And generally, the most profitable horses are the property of wealthy groups for which operating expenditures can be supported.
However, the studs and harras more or less mediatised have breeding activities consisting in raising foals of bloodline or not and selling them during a race to claim (or they will be sold or auctioned).
Some facts !
Fusaichi Pegasus is the most expensive racehorse sell at 70 Million USD ! Its covering/stud for breeding is sell at 7000 USD each.
The rewards for the Melbourne cup ,one of the most prestigious horses race, is 8 Million Australian Dollars. The Prix de Arc de Triomphe, another prestigious race, has a dotation of 5 Million €. However, the dotation for the Coupe du Monde de Dubai in the United Arad Emirates stand at 12 Million USD including 7.2 Million USD for the Winner.
