05/06/2015 3:03PM

Gisser: Fractional ownership is a winning concept

Lisa Photo
Fractional ownership brings people to the track and the winner's circle.

I’ve got to give the United States Trotting Association credit. They are trying new things to get people involved in the sport, and while I am not a huge fan of the Harness Racing Social Media Initiative (it should be an automatic part of doing business, not a special program), the Ownership Experience initiative announced May 4 may just work. Unfortunately, the USTA chose to make the most attractive and accessible part of the project, a fractional ownership program being offered at Scioto Downs and The Meadows, a secondary part of the effort. Or at least that’s the way it comes across in the press release from Converseon, who handles the project for the USTA.

If you missed the announcement, the campaign encourages potential owners to sign up for an ownership brochure. I have no idea if this will be a new promotional piece or is an attempt to gain wider distribution of existing ownership materials that the USTA has on hand. It’s a good idea, although it may be a shotgun blast hoping a few pellets hit the target. The next step is to identify the most qualified prospective owners and invite them to participate in “Ownership Experience” meetings. I was planning and running successful “ownership experience” meetings at Northfield Park 10-15 years ago, with help from the USTA. We called them ownership seminars. And they were effective. Even without social media. The key was local involvement of existing owners and horsemen.

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The fractional ownership idea, on the other hand, is a brilliant way to introduce people to horse ownership with little or no risk. It is a program that should be offered at every track and the USTA should latch onto this one with a hard sell. It can, in some instances, cost a participant less than a night at the track, and it gives the participant a chance to get all the trappings of ownership (except a name in the program) with no risk other than the initial investment.

Most of these programs require an initial investment of $300-500, but a few years back I participated in one at Running Aces in Minnesota that only cost $100. In 2012, the Bucket List Stable campaigned a roan 3-year-old Admiral’s Galley gelding named Tidbit. For my $100, I got a t-shirt and a percentage of his earnings. I even got to see him race live a couple of times, and I could have purchased a win photo of his lone victory had I chosen to. At the end of the racing season at Running Aces, he was sold, although in this particular arrangement the sale did not enter into the math for the fractional owners. I got a check for $88.90, my 2% share of the horse’s earnings during the time frame of the agreement. So for $11.10 I got a t-shirt that I still wear and “my” horse raced about a dozen times. It was a lot of fun, and the Bucket List Stable, the brainchild of Susan Schroeder, the Executive Director of Minnesota Harness Racing, was back at it in 2013 and 2014, although I did not participate. In 2014, the buy-in was $150 and 42 individuals bought a stake. The return was $96.75, but more importantly 42 people were at Running Aces on a regular basis cheering their horse on. Imagine the energy in the winner’s circle after a victory.

The Minnesota program is a perfect example of grassroots marketing that is so important to this sport, and while it has taken a few years, I am glad to see the USTA grabbing on to the idea.

A similar program was offered at Scioto Downs in 2013, although not under USTA auspices. The Drinkin The Shade Stable offered a $300 buy-in and was limited to forty 2% shares.  The remaining 20% of ownership was held by the trainer, giving him some incentive, since he was not receiving a full training bill. In many of these programs, the Managing Partner also retains a couple shares to cover his or her time for administering the program.

The pioneer of fractional race horse ownership in harness racing is probably the Stake Your Claim Stable, founded in 1995 by Richard Jack, Ralph Ferrara, Eric Trosten, and Robert Barberio. They began with claiming horses, mostly on the East Coast, but over the years have spread throughout North America and have also offered fractional ownership on stakes horses, most notably Cami Whitestocking, who banked over $550,000. Their top 2014 performer, Blush Hanover, banked $171,000 last year.

Cleveland CPA Bob Smolko has owned horses alone, in partnership and fractionally, but really likes what fractional ownership can offer. He participated in the VIP Stable, originally known as the VIP Internet Stable (there’s that social media concept again).

“It gave me a chance to own small pieces of a number of horses, and to have “my” horse race at The Meadowlands. VIP had additional costs, a training bill after the in initial buy in, but it was still a good way to go. You have to remember some of the tax consequences, though,” explained Smolko. VIP originally offered shares of multiple horses through one purchase, but changed their program which now consists of fractional interest in individual horses.

Both VIP and Stake Your Claim also charge their investors for training bills, unlike the Bucket List Stable and Drinkin The Shade Stable one-time buy-in (which appears to be what the USTA program will offer). Stake Your Claim’s Richard Jack explains, “We looked into the one-price concept several years ago, but we felt we yielded too much control. The average investor typically has an initial cost of $1,500-$5,000 and monthly bills can vary widely (depending on the type of horse).”

My son Kyle, age 27 and a casual racing fan, was also intrigued by the idea. As a 3-year-old Kyle ran around the yard mimicking Roger Huston’s Little Brown Jug calls and he always loved the races. He even had a short stint as a Northfield Park cameraman, but now living in Arkansas, he is a thousand miles away from the sports’ epicenter.

“I like it. It’s almost like a fantasy league. A single buy-in and you hope for a payoff,” he said. “You get some fun and competition along the way and you don’t have to monitor this as carefully – it’s a less of a commitment and could be just as much fun.”

So it looks like the USTA may have found a winner in promoting fractional ownership. I am not sure social media is the right way to promote it, but I will take a wait and see attitude on that front. And I will wait for the details, but will probably send them a check when the time comes. Let’s face it, it would be a new and different way to” go cash.” See you next month.

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