Before we explore the many portals of investment one aspect of purchasing should be considered, public or private.
Public sales auctions are a common place to purchase thoroughbreds of all age, gender, and purpose. Auctions are held year round in all different states and countries. Depending on the time of year will decide what type of thoroughbred you will view. Yearling thoroughbred sales start in July and have many venues up until October. Mares and weanlings are usually presented at auction in the winter months, and two year olds in training will sell in the early months of spring. If you want to purchase your investment from public auction, you should be well prepared with guidelines and instructions. The web site for all sales companies can usually provide you with all the information and documents you will need to make a purchase. You can purchase a horse on your own but it is a more common and safe practice to find representation with a trainer or Bloodstock agent. One plus to purchasing at auction is the variety of stock contained in one location. A large range of individuals and price are easily viewed and presented in a specific time frame allowing you to find something that will match your business plan. A negative side of auction is the amount of uncertainty about what has truly been done to the product. The horses presented at auction have often times changed hands in preparation multiple times. You can not be sure what kind of cosmetic procedures have been done to get the horse 'sales' ready. Most importantly, in my opinion, you can not be sure how the horse was handled and treated when so many people have been involved in the prepping process.
Private sales are often times a better way to select your investment, but again would be better to have representation from a skilled agent or trainer. A private owner/breeder usually does not like the sale arena for many reasons. Many people do not like the sales arena because they feel it is to stressful and difficult for the horse. People that breed and raise their own horses like to keep hands on approach and you will find a raw product as opposed to the glitzy version of the auction horse. A private seller also sometimes simply doesn't want to pay all the fees associated with selling a horse at auction. A commission has to be made to the sales company representing the horse along with the prep fee, x-rays, etc. I sometimes prefer to purchase privately because you are getting a relatively untouched package and you don't have to look passed all the sales 'chrome'. Again as I have said before, it is like purchasing a car. You can go to the dealer where they detail the cars, apply shiny wax, and talk so quickly to sell that you don't have a moment to think. But it is a dealer with multiple selection to choose from and usually backed by a big name. Or you can choose to look in the paper and on Craigs List and shop for a car from house to house. The idea is that private purchase might be a better option but is very time consuming.
Once a decision is made on public versus private purchase, you now must decide what kind of investment would best suit your needs. I will list several options, but the detail can not be summed up in this particular article.
Pinhooking is a common short term practice that many people prefer because of low overhead. The idea behind pinhooking is similar to that of 'flipping' a house. The buyer purchases an individual at a certain age, puts a little work in to the investment, and then sells at another venue in a year or so with hopes of making a profit. One example; purchasing a yearling at a reasonable price and then paying for breaking and training and presenting the new product at a two year old sale in hopes of a larger profit. This is one simple and vague example, but again you would need to contact a representative for detail. Pinhooking takes a very special talent and it is not easy to make a large profit but once in a while, the market trends shift at the right time and it could lead to the largest investment gain in a minimal time frame.
Partnerships are another relatively low overhead investment that many people prefer when just entering the business. A partnership can provide security and stability that is already structured. A variety of partnerships are available and can be found by researching on line. The reputation of those who form partnerships is important to consider. Many people advertise on Facebook and other outlets the prospect of joining a partnership. Be cautious of selecting a partner. This type of investment requires a certain amount of money to be paid to one managing entity. The percentage of the partnership will determine the cost of your expense and investment. If you enter a partnership you must be willing to let the controlling entity make the decisions. People sometimes get disgruntled with partnerships because they don't agree with decisions pertaining to the horse. It is like investing with a broker in the stock market. You must choose wisely and be capable of monitoring without the ability to interfere with decisions. For some people, this will not be a great option because they would like a more interactive role in the decision making process. Other people thrive on this option because they want to be involved with the excitement of racing but don't want to make decisions with lack of knowledge.
Sole ownership is yet another option. If you would like to explore the world of thoroughbred ownership on your own, many things must be considered. Do you want to race then breed, simply race, or own broodmares with the idea of selling the offspring. If you want to be involved with racing, will you start from the ground up and purchase a yearling and put it in to training yourself? Would you prefer to buy an already 'made' product at a two year old sale? Do you want to claim a horse that has already been to the racetrack? These are all very serious questions to consider and each comes with a detailed portfolio that is entirely too lengthy to cover in this article. A professional agent will help in designing a portfolio and discussing all positive and negative ventures of each option.
Would you like to invest in broodmare stock? This option has the most overhead but is the longest term investment. Owning broodmares can involve a lot of cost and it is a lengthy process to get a return on your money. You have to find a stallion suitable for your mare, pay the stud fee out right or engage in a foal share, hope the mare maintains pregnancy, and the birth happens without any medical issues. However, if you want a long term investment and you develop the right bloodlines a broodmare clan could be your best option.
The possibilities of investment in the thoroughbred industry are endless. Each option would be best suited with a business plan and skilled representation. Thoroughbred racing is an exhilarating sport and not only can you make a very possible return on your investment, you also enjoy the experience. Investing your money in the stock market is almost a riskier decision than thoroughbreds. And who wouldn't prefer watching their professional athlete develop a career as opposed to reading the paper and monitoring stocks while eating a bowl of Cheerios at the breakfast table.
Posted by: Jessica Maciejewski
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