The quickest answer is this – by getting their horses to be part of horseracing. The most apparent way that anyone who owns a horse gets money is by winning all the races they get into. Other methods that owners can use their animals to earn include selling, breeding, or offering support services.
If you have a talented stallion, you can offer it and make a few hundred dollars. If you have a mare, you can offer it to breeders as a broodmare. Then, the offspring will be an excellent addition to the herd. You can later sell the little one or prepare it to be a racehorse. If your horse’s pedigree is impressive, you can sell it at the highest price since its sale value will be heightened.
As a horse owner, farms may decide to board any of your horses recovering from an injury. You wouldn’t need to get involved in the entire business – some companies sell and buy horses. Those institutions will help to manage sales.
Horses, Owners, And Moneymaking
Before going any further in this read, you should know that horse racing is a financially-risky and expensive endeavor. Also, horse racing is one of the most rewarding and exciting sports in the entire world. As mentioned previously, you can earn from owning a racehorse. But, you need luck, patience, and above all, in-depth knowledge of the ins and outs of the racing industry. Before you proceed, have it in mind that many racehorse owners make nothing, or if they do, very little.
If you intend to buy a horse, ensure that you contact an insider who will help you sync up with the industry. Please don’t go into the business expecting to make it like Jeff Bezos. However, doing it right means that you will have fun and possibly gain a couple of bucks. From this point, you’ll get the specifics of each money-making ideas that come with owning horses.
The many owners of horses have set a goal to earn by racing their stallions and mares. In horseracing, each race has a designation called ‘the purse,’ which translates to a certain amount of money. The purse money gets set by the track steward and is usually based on the competition’s grade level.
The purse money gets shared between all the parties involved to make the horserace a success. A portion of the money gets to the finisher’s pockets. In a good number of racing jurisdictions, anyone who made an entry into the race receives a percentage of the purse money. But more common is that the top six entries are the ones which get paid. Here is a table to illustrate the sharing:
|Position||Percentage||If the purse money were $10,000, he/she would get the following:|
Once the purse money has been distributed, the trainers and jockeys are paid. This is dependent on the agreement that had been made between the parties around the particular horse.
When racehorse owners decide to stand their stallion at stud, they could make money. There are sales from offsprings and awards from breeding that they could get. A horse that has been racing can retire and become useful in the breeding.
As compared to racing, getting a horse to be a stud has the potential of earning you more money. Galileo is the most priced stallion; its stud fee is unknown, but speculations have it that the figure is around $700,000.
Among the many studs, Tapit is the one that tops the earning charts in the United States. With every year that passes, he makes at least $35 million. Tapit breeds around 125 mares every year while doing it at a rate of $300,000 per mare. If your stallion is talented and has an excellent pedigree, you could earn between $2,500 and $10,000 for every engaged mare.
Here, what matters is whether your stallion has proven pedigrees or not. Here are some three advantages of horse breeding:
1. You can take a horse you groomed from birth to a race with all the confidence.
2. If a horse you bred wins the purse money, you are entitled to share in the booty and get a breeder’s award.
3. You needn’t have to pay for training/ training fees.
Pinhooking – Buying, Prepping, And Selling Horses
Pinhooking isn’t a familiar word because it has its roots among old Kentucky tobacco. The phrase ‘pinhooking yearlings’ talks about the practice of buying, breaking, training, and eventually selling them when they are race-ready. The profit margin you set reflects the money that you are to make.
Among owners of well-bred and high-end racehorses, this practice is common. However, things may not turn out in the right way for the horse owners. The young horse’s immunity can get compromised – it may get sick or injured before it even becomes fit to be sold.
Positively speaking, a young horse that develops correctly and goes through successful training will be worth more. Buyers who go for the horse are those who see the potential in it.
Support Service Provision
There are farms owned by racehorse owners that have leasable facilities. If you see a horse track, know that there are barns and paddocks around for use when a horse is injured or resting while being offseason.
You can establish those types of facilities and charge other horse owners a daily fee. This is more income on top of the business that your horses will get involved in.
The Nitty Gritty Details Of A Horse Racing Syndicate
This syndicate thing involves the selling of a percentage of ownership in one racehorse. You can start this business before buying a horse, or you can include the horses already bought.
The syndicate will need an agent assigned for it – they will be responsible for horse selection, owner finding, and paperwork finalization. The shares’ prices will depend on how many shareholders there are and the syndicated horses’ price.
So, the syndicate will own the horses and will cater to all the management and bill fees. The initially purchased shares take care of the horses’ purchase expenses, like transportation costs and vet checks.
Once the horse (or horses) gets purchased, each member (or shareholder) pays their percentage of the total expenses. These include monthly costs for the horse’s upkeep, training, and management. If you decide to go for a syndicate, here are some of the purchases that you should expect to pay:
1. Vet fees (as needed)
2. Trainers’ fees, charged daily by the hands-on trainer involved
3. Transportation charges
4. Chiropractic/dental charges
5. Track and farrier fees
6. Nomination and acceptance charges – these fees may apply for some particular races
7. Management fees
8. Associated administration expenses
9. Insurance fees
Other FAQs Of Interest
1. Can A Racehorse Be Depreciated?
If you are listed as an ‘active’ horse owner by the Internal Revenue Service, you are required to get involved with the racehorse’s activities. So, the ‘active’ consideration means that you need to meet specific requirements for participation. One of them could be spending a minimum of some set hours at a particular business activity.
At the moment, the IRS allows the depreciation of a horse’s costs over three years. To know if you meet the threshold of horse depreciation, check the guidelines given by the IRS.
2. Can A Racehorse Get Insurance?
Yes – yes, they can. Some owners who have highly-valued horses buy mortality insurance policies. The premium to be paid is, for most policies, around 5% of the market value of the horse insured. This coverage pays you if your horse gets killed, destroyed, or lost – for whatever reason.
3. Are There Any Taxes Involves When Horses Win Races?
Yes, they are. And once your horse has made a winning, you need to report it when you prepare your IRS tax filings. If you’re operating as part of a partnership or syndicate, there are unique forms that you will use to report your income. To avoid getting into trouble, see a pro accountant, and they will help you know your tax liability.
Questions To Consider Before You Saddle Up
Owning a horse or even a racecourse (*chuckles*) has some thrill to it. Getting a racehorse is cheaper than purchasing a team of professional sportspersons. Also, who wouldn’t like to put on big hats while holding a julep during the Kentucky Derby? Still, if you have thought that purchasing a racehorse is one good bet, think deeper. Remember, every step into the racehorse business is a gamble, and perhaps, you will not get too-much rewards.
Horses, like other risk-attracting items, can be money pits. Those stallions and mares will suck your wallet dry with bills, taxes, and fees. At the moment, the horse racing business is suffering the effects of economic turmoil. If you’re focused on saddling up, here are some questions you can put into consideration:
1. What Should I Do To Become An Owner Of A Racehorse?
As mentioned elsewhere in this article, most racehorse owners are part of partnerships (or syndicates). As in any partnership model, the prize money that comes gets divided among all the syndicate members.
Yes – be advised to start with a syndicate to become a good racehorse owner.
2. What Are The Perks Of Being Part Of A Syndicate?
There is a lot of economic sense when it comes to partnership. You see, you don’t have to be a lover of horses to enjoy the riding sport. A study notes that most racehorse owners earned $75,000 or less as their annual household income.
3. How Much Money Should You Spend To Be A Racehorse Owner?
You will need several thousand dollars. This could go higher if your goals are more prominent – you may either be wanting to own a horse’s piece of a fully-standing animal.
4. Where Can You Race Your Horse?
If you think your horse is talented, do not hesitate to throw them into the Triple Crown race. If you feel like the stallion or mare is not ready, get them to compete regionally. The items that dictate the level at which your horse should compete are the horse’s skills and abilities and the race type (such as a quarter or a harness).
5. How Can I Purchase A Racehorse?
You can get a racehorse at private sales or public auctions. Also, you can get one at a track during a claiming race.
Whatever move you make, bear in mind that horse racing is a business as much as it is a sport. It would help if you wrapped your head around the pitfalls and advantages of being in the industry. As mentioned elsewhere in this article, ensure that you do your research and do all the necessary checks with experts.
Other 3 Ways Of Earning Using Horses
In this last part of this article, you will know about some three ways of earning. These are outside the three that have been given focus in the previous sections. Read on.
1. Getting Horses Boarded in Your Stable
Once you make it like a boss, you will have a stable for yourself. You can use this stable to board other owner’s horses at a fee. If you have extra room in the stable, you can get little extra cash without having to do too much. All you need to give is lots of hay and an excellent environment for the horse to get quality indoor time.
2. Offering Tourist Rides in Your Locale
If your town or city is a tourist destination, you can get visitors to hike around and tour while riding on your horses. This will get you tapping into a green economic area. You can establish a brand that can grow into a profitable business.
3. Doing Horse Photography
With this method, you will only need the equipment and some photographic knowledge. It can be a good side income to sell photos of your horses to horse-related websites. These photos can be adopted by event organizers who need their audience to understand more about the animals involved.