Slim pickings for racehorse owners
The price tag on racehorses -- starting at a few thousand and rising steeply from there -- is only a beginning. These finely tuned animals need to be housed, fed, trained and, much like children, kept in new shoes.
It is a perfectly sunny afternoon at Santa Anita Park, and Peter Lurie is watching the races, scribbling notes between quick bites of lunch, telling the story of how he came to own his first thoroughbred.
After a lucrative year as a voice-over actor, Lurie needed a tax write-off.
“Two things you’ve got to do,” his accountant told him. “You’ve got to buy a house, and you’ve got to get a hobby that loses money.”
To which Lurie replied: “What about owning a racehorse?”
“Yeah,” the accountant said. “That’ll work.”
Even then, more than a decade ago, Lurie understood the truth about thoroughbreds, a reality that might get overlooked at Santa Anita this week.
The Southern California track will play host to the Breeders’ Cup on Friday and Saturday, the second year in a row the series of big-money races featuring top horses from around the world has come here.
It is a glitzy event that reinforces the “Sport of Kings” image, the notion that racing is populated by sheiks and wealthy businessmen who spend millions on Kentucky-bred yearlings at auction. But the fact is, most owners are relatively normal people struggling with an economic model that doesn’t make sense.
Meanwhile, attendance is stagnant at most tracks, and the industry suffered a reported 11% drop in wagering this year, so purses keep shrinking.
Jeffrey Strauss, a Del Mar restaurateur who has part ownership of eight thoroughbreds, explains: “Anyone who goes into this business expecting to make money, they’re not playing with a full deck.”
During the last fiscal year, more than 4,700 racehorses were purchased for a total of $83 million at authorized sales and in claiming races throughout the state, according to the California Horse Racing Board. Those figures do not include private sales.
As an organization that helps promote racing, the Thoroughbred Owners of California nonetheless warns prospective buyers about a laundry list of costs they will face in upkeep.
The biggest part of maintenance is the “day rate,” which pays for housing, feeding and training at the track. Depending on the trainer’s reputation, this fee can range from $45 to $120.
That adds up to as much as $3,600 a month.
Veterinary bills start at about $250 a month but often run higher, the TOC says, and racehorses need new shoes every month at $100 to $200 each time.
On race day, an owner must pay for the jockey and the pony that guides the horse to the gate. Additional vet treatments, including Lasix and vitamin shots, can run $170 or more.
With taxes, insurance and transportation to other tracks, the annual total may be about $60,000 per horse.
“Let’s just say this,” Strauss said, “we all pray that the post office will close down on Saturdays so we’ll have two days a week when we don’t get bills.”
Expenses are tough to recoup because a great majority of horses run at levels below the lucrative stakes races.
In allowance races, there are set conditions -- weight, experience -- meant to level the playing field. In claiming races, every horse can be “claimed” or bought for a predetermined price, the idea being that owners will enter horses of like value and ability.
Last year in California, the average purse at these lower echelons was $20,400, the TOC reports. The winner received 60%, second place took 20%, on down to 2% for fifth.
So a horse crossing the line first in an average race earned $12,240. And the owner, after paying a 10% winner’s share to the jockey and another 10% to the trainer, walked away with about $9,800.
Figuring that most horses run seven to 10 times a year, it takes a lot of winning to cover expenses.
Finding a way
The arithmetic improves considerably when a talented yearling or a special claimer comes along, developing into a stakes contender.
This is a sport populated by owners searching for gems among about 34,000 thoroughbreds born in North America each year. They want the next Seattle Slew, a $17,000 horse that went on to win the Kentucky Derby and two other events that comprise racing’s Triple Crown.
Strauss did well paying $150,000 for a Kentucky-bred gray -- named the Pamplemousse after his restaurant -- at a sale, and Lurie won big when he claimed Da Svedonya for $16,000. Both had impressive winning streaks.
Steve Kenly did even better when he spotted a $50,000 claimer at Del Mar in 2004. Lava Man went on to win 36% of its races, earning more than $5.2 million.
“That’s the crazy exception to the rule,” Kenly said. “Generally, if you have a decent horse that plugs along, paying its own way, you’re doing well.”
So, like a lot of owners, he suggests proceeding cautiously.
A horse that is injured or inactive for a while can be shifted to a farm where the day rate drops significantly. Owners can ease costs even further by taking on partners.
There are small groups like the ones Kenly and Strauss belong to, as well as much larger syndicates. “You take a small piece, and you get the pride of watching your horse,” Kenly said.
Lurie, who has three partners sharing the bills for eight horses, offers another tip: Start small and stay within your means, especially after you’ve won a purse or two. He’s talking about a financially risky condition known as “horse fever.”
“You think, well, maybe we’ll buy this one and that one,” he said. “You have to say, wait, what could be the worst-case scenario?”
And there is no shortage of those scenarios, such as a horse that comes up lame after two races or the expensive purchase that never becomes a winner.
Another longtime owner, Nick Alexander, said: “The nature of this business is, there is more failure than success.”
‘The big turn-on’
Given the potential hazards of ownership, the question arises: Why would anyone do it?
“The average person can’t go own the Lakers or the Dodgers,” Kenly said. “Owning a horse is like owning your own sports franchise. You can pick the silks, pick the jockey. That’s the big turn-on.”
For Lurie, the attraction dates back to childhood and a father who loved the track but could never afford to buy a horse.
“It was his life’s dream,” said the actor, who went from providing voices for cartoons and video games to working as a host for a horse-racing television channel. “I almost get teary-eyed bringing him to the winner’s circle.”
Though most owners such as Lurie might never have a horse in the Breeders’ Cup -- which features no claiming races -- they say winning can be a thrill at any level. There is also the element of risk; a lot of owners are longtime gamblers. Still others grew up around horses.
On a recent Sunday, Alexander eschewed the comfort of a private box for a spot along the aisle, leaning against a handrail. He wanted to be alone in the moments before one of his fillies ran in a claiming race.
It wasn’t as if the successful car dealer -- “Nick Can’t Say No” -- desperately needed a win. Still, he admitted to an “eager anticipation” that appeared to verge on nerves.
“I think out of 30 years in this business, maybe 25% of the time we’ve made money,” he said. “It’s always a challenge.”
As the horses broke from the gate -- with track announcer Trevor Denman delivering his trademark “And away they go” -- Alexander’s horse fell behind. Not once during the race did Alexander move or change expression, not even as Raiding Party put on a late charge to pull ahead. Only after she had crossed the line did Alexander allow a smile.
“I love being around horses,” he said later. “I love the whole process.”
Friends and fellow owners offered their congratulations as he headed for the winner’s circle. His share of the $26,000 purse worked out to about $12,500, enough to pay expenses for the next few months.
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Estimated costs for horse owners in California:
Day rate: $3,600
(per day, track) $45 to $120
(per day, farm) $22 to $50
Veterinary fees: $250 and up
Farrier (shoes): $100 to $200
(special shoes and crack patches extra)
Annual insurance: 5% of horse’s value
County tax: Usually a flat fee of about $150
Jockey’s fee: $60 to $115
(or 10% of owner’s purse for winning; 5% for second and third)
Trainer’s share: 10% of owner’s share across board
Pony to post: $10 to $20
Lasix shot: $25
“Jug” shot (vitamins): $25 to $35
“Bute” shot (phenylbutazone): $10 to $15
Average purse for nonstakes races last year: $20,400
Source: Thoroughbred Owners of California