04/26/2013 12:27PM

TOBA seminar outlines joys, expenses of owning racehorses

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In August 2011, during the annual Round Table Conference on Matters Pertaining to Racing held by The Jockey Club in Saratoga Springs, N.Y., the consulting group McKinsey and Co. unveiled a comprehensive report on the condition of the horse-racing industry.

Included among McKinsey’s recommendations for reviving public interest in the sport was a directive to attract more new owners to horse racing, which would help to reverse the aging-demographic trend plaguing the sport. The consulting group commissioned an owner survey for its report and called for the industry to develop more ownership tools and databases to assist in the initiative.

The Thoroughbred Owners and Breeders Association offers a series of seminars for new owners at various racing-centric locales throughout the year that provide a thorough overview of the demands, challenges, and rewards of owning and breeding racehorses. The seminars, available at cost to both members and non-members of TOBA, dovetail nicely with the McKinsey group’s recommendation for new-owner outreach.

The seminars feature panels comprised of industry veterans who offer professional expertise to illuminate what can seem like esoteric and challenging topics for the uninitiated. TOBA’s most recent seminar, held April 19 at Keeneland in Lexington, Ky., was the first to be webcast via the audio-visual services of The Blood-Horse, a TOBA-owned publication.

“Be a sponge for information.” That was the message of TOBA President Dan Metzger during his opening remarks, and that advice resonated throughout the seminar. Panelists from tax attorney Shannon Arvin of Stoll Keenon Ogden to veterinarian Scott Palmer advised prospective owners to formulate a clear business model and harbor realistic expectations before they make a financial commitment.

To aid owners in this process, Metzger and, later, two representatives of The Jockey Club, account manager Andrew Chesser and marketing director Susan Martin, discussed a variety of products. These include The Jockey Club’s online registration system and its Equineline information-services arm as well as the OwnerView website, a resource still in development and launched jointly by The Jockey Club and TOBA in the spring of 2012 as part of the industry’s response to the McKinsey report.

One of the constants of Thoroughbred ownership is lost on many casual followers of the sport who only experience it through viewing celebrations in the winner’s circle: the considerable costs involved. The TOBA seminar introduced experts such as Arvin, equine insurance agent Joe Nicholson, and accountant Louis Fister to delineate several of the more complicated financial obligations owners must meet.

Most of the essential tips for owners were covered: Be aware of the “hobby loss” provisions and the material participation requirements in the federal tax code; be sure to purchase liability coverage for horses; seek to form a limited liability corporation, if possible, to limit financial exposure; and so on.

Workers’ compensation insurance regulations, which can apply to stable employees and vary from state to state in terms of cost, were briefly discussed by Fister and leading Keeneland trainer Mike Maker.

Maker also ran through a list of the daily feed, equipment, layup, and medical expenses of caring for and training horses and talked about his own business model as a successful trainer: Keep regular fees as low as possible and assemble a team that makes most of the stable’s income by winning races.

Palmer, an award-winning veterinarian with more than 30 years of experience and currently the hospital director at the New Jersey Equine Clinic, detailed the costs of medicine and briefly described the more common health problems associated with racehorses.

He also provided an alternative point of view to the perception that horses in the United States are overmedicated, noting that many owners instruct their veterinarians to only administer drugs when they are truly necessary, both to uphold an anti-drug philosophy and to keep costs down.

Even so, Palmer criticized what he viewed as a shortsighted focus by owners and trainers on near-term goals, saying that, “Today, horses are far too often treated for a race, rather than for a condition.” As chief executive of his or her sports company, Palmer said, it is the owner’s responsibility to prioritize the health and well-being of the athletes above all other concerns.

Winning races, of course, is the most obvious benefit associated with owning horses, but there are others as well, and several of the panelists related their accomplishments in sales and as breeders. Randy Gullatt, managing partner of Twin Creeks Racing and a former trainer, gave advice on how to manage the different demands of owners in a partnership and talked about how to maximize the value of an ownership group’s horses, which could require placing them in certain races as they develop or deciding if and when to retire a horse to stud.

Bloodstock agent Alistair Roden related the inner workings of the sales ring and offered pointers to those preparing to attend their first auction – and as with other areas of the industry, setting realistic goals and preparing assiduously were identified as two key traits necessary for success. Roden also gave a brief overview of pedigree and its relevance to the fortunes of what he termed a “fashionable” business.

Using 2005 Wood Memorial winner Bellamy Road as an example, Roden observed that as a young stallion, he has fallen out of favor somewhat after receiving much attention from breeders at the start of his career, in spite of his modest pedigree and due to his high speed figures as a racehorse. According to Roden, Bellamy Road is now in a “wait and see” period as his fourth crop prepares to reach the races.

Roden also predicted that the stallion’s stature – and thus the number and quality of mares in his book – could rise again, and quickly, if these latest juveniles show promise.

Ben Huffman, racing secretary at Keeneland and Churchill Downs, spoke as an expert on the ins and outs of the claiming game, a bedrock economic activity that determines the bottom line for many owners.

He encouraged prospective owners who are less familiar with the sport and who want to make a modest initial investment to begin by owning claiming horses, which will immerse them into the business quickly and hopefully provide an early taste of excitement.

Huffman stressed that the most important hire an owner can make is selecting a trainer skilled in the art of finding good racehorses in the claiming ranks. He also gave a step-by-step explanation of the claiming process, from bookkeeping and administrative rules to the mini-drama known as “the shake,” which arises when more than one owner files a claiming slip for a particular horse.

The seminar audience was treated to a lengthy, anecdote-filled account of the highs and lows of racing from Kentucky owner and breeder Ken Ramsey, one of the game’s authentic characters and most enthusiastic ambassadors. Along with the quips and laughter, however, Ramsey offered evidence of his complete involvement in the sport on a day-to-day basis.

One day before he would set a single-meet win record for owners at Keeneland, Ramsey spoke about his routine of studying the Daily Racing Form each evening to plot out the best spots for his horses. He described his marked-up condition book and revealed his strategies for picking the best trainers and jockeys for each individual horse based on the animal’s ability.

The personification of a hands-on owner, Ramsey nevertheless admitted that selecting the best employees – from trainers such as Mike Maker to his van driver – and giving them the freedom to excel has elevated Ramsey Farm to an Eclipse Award-winning operation. He also illustrated the connection between owning and breeding horses that can, once achieved at the highest level, create an enduring legacy in the sport.

After standing his champion Kitten’s Joy and breeding his best mares to the stallion at the outset of his career to great success, Ramsey is now reaping the financial benefits of one of the most popular commercial sires in North America.

Ramsey served, along with Palmer and Susanna Thomas of the Maker’s Mark Secretariat Center at the Kentucky Horse Park, as the seminar’s most impassioned advocates for Thoroughbred aftercare.

Thomas, who retrains former racehorses for second careers at the Secretariat Center and then offers them for adoption via a rigorous process, reminded the audience of the brevity of a Thoroughbred’s racing career relative to its lifespan and urged owners to take advantage of The Jockey Club’s recently added “retired from racing” clause in the American Stud Book when retiring their horses in order to keep them from circulating back to the track under another owner.

Thomas did not shy away from recommending euthanasia as a last resort for unwanted horses but asserted that, “We are at a tipping point in aftercare,” as long as those with a vested interest in Thoroughbred welfare continued to support the myriad organizations involved in retraining and adoption.

The next TOBA ownership seminar is scheduled for July 13 in Shakopee, Minn., with two others scheduled later in the year in Saratoga Springs and Laurel, Md.