Who is an owner? What's your story?

[ELA]

Originally Posted by phystech

I wonder how they get around SEC regulations regarding their offerings?

Given they aren't just marketing something to a few of their closest friends, in essence, they are offering an investment to the whole world via the web, print and TV. SEC regs have to come into play there somewhere.

I thought about going global a few years ago and actually printed up about 10,000 fliers which I distributed at Pimlico on Black Eyed Susan Day and Preakness Day. Other than the fact that out of those 10,000 distributed, I got three emails and 5 hits on a web page I had set up, I backed off because my fears were raised about SEC intervention once I found out that the first partnership I was in had been investigated and fined by the AZ SEC.

Given that so many of the partnerships out there charge a management fee, I guess I was a real idiot - I never charged my partners a dime in management fees. I bought my shares in each horse just like everyone else did and made my money off my share of ownership, just like the rest did. We all made the same or lost the same, based on percentage of ownership.

Great question -- and, I had often wondered about the "securities" aspect of this. Being in the financial services industry, I am more than well aware of the NASD, SEC, securites, etc. element that this entire environment seems to either encroach or come very close to.

One person told me that technically they aren't "soliciting" and that's how they avoid registering, falling under securites guidelines, etc. I am not sure if that's true or if that's the case here. However, often there is disclaimer language that the advertisement, commercial, etc. is not a solicitation. Again, I don't know if that avoids any securites regulation or guidelines.

Another partnership company CEO told me that he cannot solicit people and that people must put something in writing saying they are requesting information and are interested, etc. That was quite some time ago so I don't know if that standard still exists.

Usually, when it comes to securities offerings and registrations, there are several benchmarks that must be met -- or avoided if you look at this from the opposite perspective, LOL.

Eric

[philcski]

Actually most of them put the standard securities disclaimer language ("this is not an offer to sell securities, past performance does not indicate future success, financial instruments run the risk of significant loss", etc.) into their advertisements and offerings.

[Norfolk]

I have owned horses for about 30 years and I still enjoy it.
Storm Cadet has pointed out a number of good points especially about commercial partnerships. I had a friend that worked for one and he said almost all bills they presented to the partners had a 10% markup. So when you get the transportation bill or the shoeing bill etc it may be marked up.
As for the sales, people should go to jail for what “some” of the partnerships do. I have seen cases where they buy a horse hours before the sale but still send it through the ring and bid it way up over value and then use that price to set up the partnership. Some trainers are known to do the same thing.
So as always “buyer beware”.
I would suggest starting out in a small local partnership. Find an honest trainer at a track near you. Ask people you know in racing a lot of questions about everything. Don’t invest too much until you get your feet wet and know the business a little.
Early on I went through a number of questionable trainers. I was lucky, about 25 years ago I met a trainer who right off I knew cared about horses and people. We became friends and have been partners for over 20 years.
Every owner I know will tell you the mistakes he/she has made. Don’t go into it thinking you are going to make money and work with someone who will keep you out of trouble with the IRS rules.
Horseracing has very many highs and very many lows. I have read in this thread about people winning races and how great it is. You should also be aware of the lows, i.e. when you are standing there with a group of friends and your horse come in last.

That being said there is nothing better than to see your horse cross the finish line first.
It doesn’t matter if it is a $5000 claimer or the Gold Cup.

I would highly recommend getting into the business. I have met many interesting people and have made a lot of friends. It is a great experience.
Just as I said earlier though “Caveat emptor”

Joe

[Storm Cadet]

Guys: Here's an excellent article/transcript from Bloodhorse regarding ownership by Terry Finley of West Point TB. Great read: Great question and answer from the public!

http://www.bloodhorse.com/talkinhorses/TF071207.asp

[Swap Fliparoo]

Originally Posted by Storm Cadet

They have to charge such high markups and fees because of national TV advertising TVG, and other additional national sales staff and PR people, web page management etc. But I always find them to be great guys, honest and very caring to their owner/investors.

I know a guy who sells shares for West Point, he said he's never selling to the husband, but to the wife. The guy walks in already knowing what he wants to buy... the only one you have to sway is the woman behind the dollars!

[parsixfarms]

Originally Posted by Storm Cadet

Guys: Here's an excellent article/transcript from Bloodhorse regarding ownership by Terry Finley of West Point TB. Great read: Great question and answer from the public!

http://www.bloodhorse.com/talkinhorses/TF071207.asp

Terry Finley's first answer in that chat is almost comical when he says that it "is very important ... to keep your distractions down at the sale and be as focused as possible." This coming from a guy who every time I saw him over four days at the Timonium yearling sale last fall was playing cards under the tent adjacent to the sales pavilion with bloodstock agents and pinhookers.

[The Bid]

It really is funny, the entire article is funny. The only part I like about it is the guys from Cleveland calling in, they are great guys.

[parsixfarms]

The most telling statement is where he says that "We do not take a position in the horses ourselves if we can help it." So basically, the West Point principals are participating in the horse business entirely with other people's money, with West Point incurring risk only if their rather large mark-ups fail to cover any unsold shares in the horses.

[BooBeez]

Originally Posted by mortyfeatherhands

Anyone here ever been in Idaho?

Oh boy...


I've been there. I've also been here.

I haven't been everywhere.

[Storm Cadet]

Originally Posted by parsixfarms

The most telling statement is where he says that "We do not take a position in the horses ourselves if we can help it." So basically, the West Point principals are participating in the horse business entirely with other people's money, with West Point incurring risk only if their rather large mark-ups fail to cover any unsold shares in the horses.

All the horse partnership companies operate that way. That's their goal as we discussed earlier. Sell out all partnerships. If you build 10 homes in a development, does the builder only sell 9?

[parsixfarms]

Storm Cadet,

I fail to see your point. As the manager of a small upstate NY partnership, I find it much easier to recommend that people buy into a horse in which I already have a significant stake. It's one thing to say that their goal is to sell out all shares in all horses. Who doesn't want to do this? It's quite another thing to say that their goal is to sell out shares in horses in which they do not want to risk their own money. And they are clearly saying that they do not want to have any "skin in the game."

[NoLuvForPletch]

Originally Posted by Storm Cadet

All the horse partnership companies operate that way. That's their goal as we discussed earlier. Sell out all partnerships. If you build 10 homes in a development, does the builder only sell 9?

Actually, all horse partnerships do not operate this way. The partnership I am involved in does have a position in the horse. As Terry says, their partnerships are not for everyone. I'm not defending that statement, but at least they are open about it and are comfortable with the idea that they are purchasing an animal for a significant amount less than what they are syndicating it for. It is the buyer's responsibility to understand what the deal is and that they are paying $44,000 for 10% of a horse that WPT purchased at auction for $205,000.

Personally I think it is tough enough break even in the game that paying twice as much for an animal than it was valued at auction just a short time prior is tough to swallow. On top of that they charge a maintainance fee and take money off the top of the earnings after a certain level. For each of the good stories (Flashy Bull, High Finance and Dream Rush) there are 5 not so good one's.

But like I previously stated, if you are looking for the stuff that they are offering for the mark-up (whatever that might be when they call themselves the "Ritz Carlton of the Industry"), apparently they are your guys.

[Storm Cadet]

Like Terry said, and I'm not endorsing West Point here, I left them years ago, is that some FOR PROFIT business models like his, Dogwood, Peachtree, Sovereign et al, do operate this way and they are very successfull with it.It's just another business model that they are comfortable with. It is NOT for everybody and they admit it!

I would love to start a stable and share like you do. We all split the risk! In fact a group of former CVF owners are trying to form their own with the main startup person holding 50% stake.

[geeker2]

I am envious..I am involved in a Racing Partnership where we can even get he Major Partner to give us the Financials.

Needless to say the experience has been less than fulfilling

[The Bid]

How envious can one be of a business outline that doubles the purchase price of a horse? You would think they were brokering diamonds or selling cars, to me its excessive

[Storm Cadet]

Originally Posted by parsixfarms

Storm Cadet,

I fail to see your point. As the manager of a small upstate NY partnership, I find it much easier to recommend that people buy into a horse in which I already have a significant stake. It's one thing to say that their goal is to sell out all shares in all horses. Who doesn't want to do this? It's quite another thing to say that their goal is to sell out shares in horses in which they do not want to risk their own money. And they are clearly saying that they do not want to have any "skin in the game."

Do you charge management fees to your clients or any markups on purchase fees, trainers fees or anything else?

[parsixfarms]

Originally Posted by Storm Cadet

Do you charge management fees to your clients or any markups on purchase fees, trainers fees or anything else?

No, I don't. I am simply reimbursed for the actual expenses that I incur on behalf of the stable.

[Storm Cadet]

Originally Posted by The Bid

How envious can one be of a business outline that doubles the purchase price of a horse? You would think they were brokering diamonds or selling cars, to me its excessive

I agree, thats one reason why I left...to try and find one with more horse flesh and less markup! I don't need all the advertising and stuff...give me Holiday Inn Express. A winner on the track is a winner on the track.

[Storm Cadet]

Originally Posted by parsixfarms

No, I don't. I am simply reimbursed for the actual expenses that I incur on behalf of the stable.

See that's what I'm talking about! You'd make a killing down here with all the people that have gone the other way and left the business because of excessive markups, training fees, vet fees marked up etc.

C'mon on down!

[NoLuvForPletch]

Originally Posted by Storm Cadet

See that's what I'm talking about! You'd make a killing down here with all the people that have gone the other way and left the business because of excessive markups, training fees, vet fees marked up etc.

C'mon on down!

The mark-ups are really the only problem. Obviously vets, dentists and the cost of boarding a horse are expenses that go along with the game. But marking up an animal, to cover your own costs and then some while not taking a position in the horse is where I have the problem. They are at NO RISK WHATSOEVER once the animal is syndicated, so their actions after their exposure is gone will always be questioned. The only incentive there is after that is either the ability to get these "investors" (I refuse to call them partners because they are not partners with WPT at all) to continue to pay the piper for more overpriced animals and/or they happen to get lucky with an ERINSOUTHERNMAN type, where the braniacs at WinStar give them a small fortune, they get a percentage of that money. Otherwise, they just put Sherm's race call on an ESPN broadcast and hope for more "investors" to call.