Investing in thoroughbred racehorses

47 0 0 0 13 6. American Pharoah, with Victor Espinoza up, wins the 141st running of the Kentucky Derby at Churchill Downs in Louisville, Ky. This weekend marks the 142nd running of the Kentucky Derby, the longest-lived sporting event in American history, dating back investing in thoroughbred racehorses 1875.

130 million bet each year on the books, and untold millions more on the black market. Racehorse prices generally follow economic trends. It doesn’t seem to be a coincidence that the market for racehorses hit a recent low in 2009. That was the heart of the Great Recession, when the disposable income of many Americans dried up—and when putting money into horseflesh seemed even more irresponsible than usual.

Racehorse prices have since crept upward, generally reflecting America’s economic recovery. The prices cited above are averages, mind you, and they’re pushed upward by horses from prized lines that cost a pretty penny—easily into the hundreds of thousands of dollars. 20Ks for the past few years. And if you want to get the most bang for your buck, consider buying a racehorse when the economy is tanking, similar to what smart investors do with the housing market.

Initial price is only part of the ownership cost. Owners must foot the bills for housing, feeding, and training of their horses, plus expenses for things like veterinarians and race entry fees. 60,000 or more annually if you’re the owner of a racehorse. Very few racehorses pay off financially. Don’t think for a second that buying a racehorse is your path to riches and an early retirement. In fact, more often than not owning a racehorse is a money-losing venture. Barry Irwin, founder and CEO of the Kentucky-based horse-racing syndicate Team Valor explained to CNBC a few years ago.

The chances of losing are 90 percent. The pros in the business invest in hundreds of horses, with the hope that a few hit it big and their profits make up for all of money losers. Don’t think of this as a core part of your portfolio. Owning a racehorse can be a heckuva lot of fun.

Austin Frye, principal of Frye Financial Center, said to Investment News. After all, gambling can be thrilling, and when you’re involved in the game on a deeper, more personal level, as with thoroughbred ownership, the stakes are high and the payoff can be especially rewarding. If you get lucky, you can make a bundle. Yes, long shots occasionally pay off in a big way. And yes, some racehorse owners have unknowingly stumbled into fortunes. 315,000 to buy a mare named Black Caviar.

As noted above, once all of the expenses are added up over the course of several years, most racehorses cost their owners hundreds of thousands of dollars. So if you want to buy into the racehorse game, you better really hope you’re going to enjoy the ride. Money may receive compensation for some links to products and services on this website. Offers may be subject to change without notice. Quotes delayed at least 15 minutes. Market data provided by Interactive Data.

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Jockey Club Estates owns all the property and assets of The Jockey Club other than its racecourses. In the era subsequent to the delegation of the Club’s regulatory responsibilities, Jockey Club Estates has an integral role to play in developing its commercial assets for the benefit of The Jockey Club and the racing industry. The Jockey Club Jockey Club Estates is one of three commercial organisations which come under the umbrella of The Jockey Club. In accordance with the objects as laid out in its Royal Charter, The Jockey Club intends to use its influence and assets to further the interests of horseracing and it is dedicated to improving the sport and investing in its future.