Pros and Cons of Owning a Race Horse

by Redeeming Riches on April 30, 2013

The prospect of owning a race horse is a great way to gain prestige and be involved in the excitement of races, such as the Kentucky Derby. However, many horse owners often start out at smaller venues. Ownership of a race horse is an investment that is not guaranteed to have a positive return. There is no way to tell if a race horse will perform as expected at any given race.

Objectives

The ultimate objective of a race horse owner is to see a financial return on the investment and seek fame in races like the Kentucky Derby. There is also the thrill and excitement that are experienced during each race and when you bet on Kentucky Derby races. Patience and luck are the biggest factors to owning a race horse. Making a significant amount of money in the sport is tough. This is often due to how a horse performs from race to race.  Some races like the Kentucky Derby, horses buckle under pressure.

Cost of Ownership

The cost of a typical Thoroughbred will vary based on a variety of factors. A low-end horse costs about $1,300 at a minimum up to $3 million or more for a high-end horse. One thing to keep in mind is that a price for the horse does not include all the associated costs. This includes stabling and feed.

Unexpected Costs

There are a variety of extra costs associated with owning a race horse. These include the shipping costs, farrier costs, and various race day expenses. Farrier costs will often run between $125 to $150 for each horse each month. A race horse will also need to be transported to various race tracks and to other types of events seasonally. Race day expenses include vet wrap, pony to post, tape, and other things that have a cost of about $50 each race.

Extra costs will also include medications, veterinary care, and checkups before and after races. There is also a cost for mortality insurance and liability insurance. Mortality insurance is usually about 3 percent of the horse’s agreed value and is paid annually. Liability insurance is purchased per horse each year.

Race horse owners then need to pay for a jokey. This cost will vary based on where a horse places. The fee for a horse that does not place is typically between $50 and $75. If a horse places, then the jockey fee is up to 10 percent of the purse money. The trainer of the horse will also get about 10 percent of any purse money. A trainer will often invoice an owner once a month.

Typical Return

The typical return on the initial cost of a race horse is about 21 percent. This means $21 is earned for every $100 that is spent. The best way to help achieve a suitable return is to invest in multiple race horses.

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