Partnerships
There is little debate that the thrill of owning part of a racehorse
matches that of sole ownership. Because of this, and other more
practical considerations, many first-time owners elect to become
involved in racing through a partnership. The proportional initial
capital expenditure, combined with reduced recurring expenses,
affords most an economical entry into the business.
There are generally two paths to becoming involved in equine
partnerships:
1.
Purchasing shares in an existing partnership, or
2.
Forming a partnership with a group of friends or associates.
Investing With an Established Partnership
Many partnerships are looking for new investors. As a prospective
investor, you should investigate the partnership, particularly the
individuals involved. Naturally, some are more reputable than
others. It is important to select a partnership with goals and
philosophies that match your own, and whose financial requirements
are within your budget.
The considerations identified below may assist in selecting a
partnership.
1. Compare Partnership Prospectus
To find the names of existing partnerships, contact local horsemen's
associations, trainers and other industry professionals.
Additionally, the TOBA Membership Directory and The Source published
by The Blood-Horse, Inc. offer comprehensive lists of individuals
who operate partnerships, including their addresses, telephone
numbers and e-mail addresses.
Compile a list of partnerships to contact and request a copy of
their written plan or prospectus. In reviewing this material,
determine if the partnership is (a) oriented in the area of the
industry in which you wish to participate: racing, breeding, racing
and breeding or pinhooking*; (b) involved at the level at which you
desire to be involved: claiming, allowance or stakes horses; and (c)
a limited or general partnership, as this distinction will affect
your expense liability and your right to participate in the making
of certain decisions.
* "Pinhooking" is the term utilized to describe the practice of
purchasing a young horse, either a weanling or yearling, for the
purpose of selling that horse during the next sale season.
Pinhooking is a very speculative venture and may not be the best
introduction to Thoroughbred ownership, as it requires in-depth
knowledge and skill.
2. Meet with the Managing Partner
After identifying the partnerships most appealing to you, arrange to
meet with the managing partners. Don't be afraid to ask them the
same questions you would ask of any other potential partner.
Determine up front the answers to questions that could develop over
the course of the partnership.
3. What are the goals of the partnership and what is the plan to
achieve those goals?
The managing partner should be able to clarify the objectives and
the manner in which he intends them to be achieved. Is there a
developed plan? Does the plan appear realistic? What about the
partnership's goals? Are they consistent with yours? Will the
success of the partnership be determined by profit alone, caliber of
races won, by social activity, etc.?
