Is Buying a Racehorse a Worthy Investment?

It is easy to understand the appeal of horse racing. The sense of euphoria as your runner steadily moves clear of the chasing pack can provide an unbeatable rush of excitement, while the majority of race-goers also enjoy the social aspect of attending events such as Royal Ascot and the Cheltenham Festival.

Racing does tend to have a reputation for attracting the elite, but it’s entirely possible for anyone to buy shares in a racehorse and this provides a fun way of keeping an interest in the sport. We take a look at the pros and cons of investing your finances in a thoroughbred.

race horse

Source: Catterick Racecourse via Twitter

Why Invest?

Anyone who invests in a racehorse should be aware that this isn’t an instant money-making scheme. Purchasing a thoroughbred or joining a syndicate is far from a get-rich-quick scheme and investors are unlikely to see any return for at least the first twelve months, but the possibility of reward often outweighs the risk and there is always the possibility of long-term profit.

Flat racing horses are usually sold after three years in the UK and can often be purchased by owners in Hong Kong or Abu Dhabi. If a horse has enjoyed relative success on the turf, it may change hands for a handsome profit and this will then be split between the syndicate. Petrushka was a high-profile example of a horse who made a handsome profit for its owners when the filly was sold for £3.5 million back in 2001 (albeit an extremely rare example).

The Ups and Downs of (Co)Ownership

Owning or co-owning a racehorse can also be tremendous fun and many investors enjoy the chance to follow their horse around the country and watch it in action. If you have the money to invest, it can be a great opportunity to experience life as a racehorse owner and that will allow you overall say on its future. This involves being responsible for key decisions, ideal for the investor who likes a certain degree of control in exchange for the money they put up.

But it also means following procedures and that includes those for naming a racehorse – there are countless rules to which you must adhere. A horse’s moniker is very important and can occasionally affect its odds, especially in races such as the Grand National. Oddschecker says Rock the Kasbah is among the most backed runners in this year’s ante-post betting, having attracted significant early money from fans of The Clash. Owning a racehorse will require far more responsibility than simply joining a syndicate, so it’s a decision which isn’t to be taken lightly.

Flat or National Hunt?

Flat horses are generally more expensive to purchase but they do race far more frequently and the rewards can often be far greater. Although jumps racing has enjoyed a recent resurgence, the prize money available for flat contests remains higher and if successful, this can work in your favour. First-time investors are likely to find it more affordable to join a National Hunt syndicate. Syndicate members will get to visit the stables on a regular basis and be able to watch their horse in training. There is also the possibility of being able to enter the parade ring pre-race. These are the major perks of being part of a syndicate and are a huge part of the appeal for racing enthusiasts. The runners are also likely to remain in training for longer and as a result, embark upon more winning opportunities. However, it is not uncommon for hurdlers and chasers to take three-to-four month breaks at a time. If you purchase a National Hunt horse, don’t expect to see it race every weekend.

racing

Source: David Carr via Twitter

Costs

Unfortunately, there are numerous costs involved in purchasing a racehorse and it’s unlikely you’ll see any significant return on your investment for at least the first two years of ownership. The initial outlay can vary greatly, with costs ranging anywhere from £60,000 to £200,000, and its price tag will be largely dictated by its breeding.

Once the purchase is complete, there’s a number of annual costs to incur. In 2015, it was reported that the average annual cost of keeping a horse in training was £23,000, a calculation that excludes additional veterinary costs and race entry fees.

It can be an expensive past-time and that’s why the majority of first-time investors tend to dip their toe in the water by joining a syndicate instead. This takes the stress out of the ownership process and small-share syndicates can be a great place to start. Costs tend to start at around £99 per month but it is also possible to opt for a bigger share if required or desired. The bigger the investment, the greater the potential returns.

Anyone Can Sign Up

It is not uncommon for celebrities to invest in a racehorse with the likes of Lee Westwood, Ronnie Wood and Sir Alex Ferguson all having multiple runners in training over the past decade. However, syndicates are far from exclusive and anybody is able to sign-up. Many of these organisations pride themselves on welcoming investors from all backgrounds and it can be a fantastic way of experiencing ownership for a fraction of the cost.

Is it Worth It? 

There is no definitive answer to this question. If you’ve got the time and enthusiasm to invest, then it is an enjoyable way to spend some of your disposable income. Most syndicate members and outright owners do tend to be horse racing followers and it always helps to have prior knowledge of breeding, trainers and race types. However, this is not a pre-requisite and it doesn’t necessarily equate to success.

There is an element of luck involved with owning a racehorse and while there is no guarantee of a return on investment, there is always the faint possibility of co-owning a future Derby winner or even seeing your horse go-to-post in next year’s Randox Health Grand National at Aintree.

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