NY

[whodey17]

Originally Posted by disappearingdan_akaplaya

we have ownership seminars here in chicago in response to some of the other posts in this thread. whodey i have to disagree with some of whatya say. #1 having a dress code would decrease attendance dramatically. certain areas like restaurants in a track already have dress codes but having it all over the entire place again would decrease attendance signifcantly! i disagree with getting rid of the big barns as you say. alotta tracks rely on these barns to fill their races

Good points.

[Linny]

Originally Posted by Cannon Shell

"Free markets" dont really exist except in textbooks. What other sport allows a few participants to corner the market on all the talent? It is like the Yankees and Red Sox having a 100 man roster and everybody else playing shorthanded. No one is denying any rights or freedoms, the tracks would simply be putting in rules that would attempt to balance the scales and create more competitive and bettable races. If Todd had 40 horses at every track in America then that is fine. But if you wanted to have your horse racing in NY and he did not have room in his NY stable then you would need to find a different trainer. Multiply this a few times and you have a better product. A better betting product will increase handle which is the lifeblood of the whole industry.
Your examples were right on by the way.

As to the "supertrainer" issue, we are on the same page. Limiting stalls at a given track prevent a few from altering the way the game is played in a given area. I agree completely Cannon. When a few trainers can corner the market to the extent that it's hard to fill races, there is a problem.
As for the costs, and the busines vs. sport/hobby I must assume that there will always be a handful of wealthy people willing to pour money into the game but even the richest get tired of losing money after a while. I once read a quote from (the late) Ogden Phipps who was asked about the importance of earnings by racehorses. His answer was "That's how they keep score isn't it?" Well if you are a Phipps and racing is bred into your genes along with the income to participate. No matter how much you enjoy the game, pouring millions into something with negligible results will drive you to something more satisfying.
No the wealthy don't make money on yachts or other luxuries but many owners will tell you that they get more satisfaction from their Bentley or their sailing yacht. People who have succeeded in life to the extent that they may make a substantial investment in racing are "winners" in life. They don't like to watch horses go to the sidelines with mysterious ailmets and see the associated fees rise. (This is not to imply that rainers are ripping off owners, just that as costs rise, they get passed along.) Most yachts or Bentleys that cost between $250k to $1m are not subject to being worth (literally) NOTHING in a moment. Insurance for cars and boats is reasonably priced so a "total loss" of either asset could result in being made whole. The costs of insuring racehorses is so high that the loss of a horse is usually a true "total loss."
When I first became a racing fan, a freind of my Dad's gave me a book about the "first families" of racing. Names like Widener, Whitney, Phipps etc graced the pages. These families are mostly gone now. The game has tended toward become a business at the peril of the "sport." Most new owners don't have the back ground of growing up in the environment of the landed gentry with a family tradition in the horse and hound. Today's owners are high tech success stories or prominent franchise holders etc. They come to the game with a background of successful business models, not the gracious traditions of the sporting life.
These peole see breeders making alot of money, stud operations making money and sales agencies making money and have to wonder why the OWNERS are the only group seemily losing in this game.

[Linny]

Originally Posted by Grits

Linny, I enjoy your contributions to this board, probably more than anyone here, and I don't know anything whatsoever about you except that you are one smart cookie, especially when it comes to NY racing, and clearly all aspects of the game for that matter.

You're right--dead right. Its a hard sell, regardless, partnerships or sole ownership--when one hears "be prepared to lose your money".

LOSE. Why do I want to stand in a winners' circle, just so I can have my photograph made--while LOSING money. Something is wrong with this picture to me. I don't like losing money for FUN. That's not fun.

Thank you Grits, I had missed this post. Very kind of you to say.

[sumitas]

NY breeders need more support, not less. The state bred races are for NY breds. If you want in, then buy a NY bred.
I highly doubt the NY thoroughbred program will be altered to benefit out of state interests at the expense of the NY horse industry.

[Cannon Shell]

Originally Posted by sumitas

NY breeders need more support, not less. The state bred races are for NY breds. If you want in, then buy a NY bred.
I highly doubt the NY thoroughbred program will be altered to benefit out of state interests at the expense of the NY horse industry.

Since when did racing in NY become the sole property of the NY breeders? The statebred program has lowered the overall quality of racing in NY not enhanced it. I remember when NY racing meant top quality, class racing. Except for Saratoga and weekends at Belmont that is no longer the case. I have no problem with NY bred horses, I just dont want to see them dominate the cards further than they already do.

[Cannon Shell]

Originally Posted by Linny

As to the "supertrainer" issue, we are on the same page. Limiting stalls at a given track prevent a few from altering the way the game is played in a given area. I agree completely Cannon. When a few trainers can corner the market to the extent that it's hard to fill races, there is a problem.
As for the costs, and the busines vs. sport/hobby I must assume that there will always be a handful of wealthy people willing to pour money into the game but even the richest get tired of losing money after a while. I once read a quote from (the late) Ogden Phipps who was asked about the importance of earnings by racehorses. His answer was "That's how they keep score isn't it?" Well if you are a Phipps and racing is bred into your genes along with the income to participate. No matter how much you enjoy the game, pouring millions into something with negligible results will drive you to something more satisfying.
No the wealthy don't make money on yachts or other luxuries but many owners will tell you that they get more satisfaction from their Bentley or their sailing yacht. People who have succeeded in life to the extent that they may make a substantial investment in racing are "winners" in life. They don't like to watch horses go to the sidelines with mysterious ailmets and see the associated fees rise. (This is not to imply that rainers are ripping off owners, just that as costs rise, they get passed along.) Most yachts or Bentleys that cost between $250k to $1m are not subject to being worth (literally) NOTHING in a moment. Insurance for cars and boats is reasonably priced so a "total loss" of either asset could result in being made whole. The costs of insuring racehorses is so high that the loss of a horse is usually a true "total loss."
When I first became a racing fan, a freind of my Dad's gave me a book about the "first families" of racing. Names like Widener, Whitney, Phipps etc graced the pages. These families are mostly gone now. The game has tended toward become a business at the peril of the "sport." Most new owners don't have the back ground of growing up in the environment of the landed gentry with a family tradition in the horse and hound. Today's owners are high tech success stories or prominent franchise holders etc. They come to the game with a background of successful business models, not the gracious traditions of the sporting life.
These peole see breeders making alot of money, stud operations making money and sales agencies making money and have to wonder why the OWNERS are the only group seemily losing in this game.

I think that most owners understand what the game is about before they get into it. I hate to say it but there is no sucessful business model for being an owner because there is no business to it. BTW there aren't that many breeders making tons of money and alot of owners have gotten into that end of the game and figured out it is not as easy as it looks either.

[sumitas]

Originally Posted by Cannon Shell

Since when did racing in NY become the sole property of the NY breeders? The statebred program has lowered the overall quality of racing in NY not enhanced it. I remember when NY racing meant top quality, class racing. Except for Saratoga and weekends at Belmont that is no longer the case. I have no problem with NY bred horses, I just dont want to see them dominate the cards further than they already do.

It is New York State. Maybe NY breds needed to be conceived in NY. That really should be the case.

Maybe then NY breds Behaving Badly, Fleet Indian, Pentatonic, etc. would have been bred to NY stallions; and make NY racing "better."

[Holland Hacker]

Originally Posted by Cannon Shell

How many rich people make money when they buy a yacht? How many make money when they pay $100,000 a year to be a member of a country club? Who makes money buying a vacation home (especially in this market)? Who said that you should make any money in the sport? The "business" of owning horses has a flawed model because there is no business of owning horses. Standing stallions or selling yearlings is a business, a very difficult one at that. I dont care if Jess Jackson makes any money at this. The problem is the whole attitude that anyone "should" make money. That is why the terms of many partnerships are very specific upfront. What ever happened to the enjoyment of owning horses for the sport of it?

CS

Please allow me the liberty of making some comments on your post and then asking you a question.

I think many people actually do make money investing in vacation homes, even in this market. Perhaps I am naive but I think most people who buy vacation homes are doing so for the long haul and not the short term or flip it to make a profit. Historically real estate has performed very well.

I also don't no anybody that pays $100K to join a Country Club and I only know of 1 or 2 clubs in my area (Central NJ) that even think about charging that much (Trump National & The Ridge at Back Brook). I also understand that the "initial out lay at the Ridge is in the form of a bond which is returnable and can increase in value based on future demand. My opinion is that if people have that kind of money to spend on a country club that more power to them. I think it means they were either born into it or have worked very hard to get it and should be able to enjoy it.

Like you I don't care if Jess Jackson earns any money in this business or is just spending his earnings from selling wine.

Originally Posted by CannonShell

What ever happened to the enjoyment of owning horses for the sport of it?

The Tax Reform Act of 1986 ("TRA") happened. Congress created the Passive Activity Loss rules which basically disallowed the deductibility of passive losses. Many "Rich" people were writing of their vacation homes, rental properties, horses etc. against their earned income and the government felt that the "Rich" weren't paying enough taxes. Before the TRA people were investing in horses, property and the like and writing off the losses so even though they were losing money they were only losing 2/3s of the money as they were saving a 1/3 of the losses in taxes. Additionally some of the losses were being generated by depreciation and were therefore not even cash losses so it may have even been cash neutral. Basically the Government perceived that the middle class was paying for the lavish lifestyles of the "Rich and Famous".

Having said that, I have a question for you, and you do not have to answer it if you do not want to.

For the last two years I have owned a small (2%) interest in a NYB filly. Last year she won 3 of 4 races at Belmont and earned roughly $90K. When I got my K-1 from the partnership I was shocked that it reported a loss of around $500. Being the Accountant that I am I figured it must have cost the Partnership $115K (90K + (500/.02) in "upkeep" for the horse. To me this seems a little high!

My question is how much money should a horse have to earn in NY to break even? I would have thought that her eranings of 90K would have been enough to make a profit, even taking into account depreciation.

What are your thoughts?

[Cannon Shell]

Originally Posted by Holland Hacker

CS





The Tax Reform Act of 1986 ("TRA") happened. Congress created the Passive Activity Loss rules which basically disallowed the deductibility of passive losses. Many "Rich" people were writing of their vacation homes, rental properties, horses etc. against their earned income and the government felt that the "Rich" weren't paying enough taxes. Before the TRA people were investing in horses, property and the like and writing off the losses so even though they were losing money they were only losing 2/3s of the money as they were saving a 1/3 of the losses in taxes. Additionally some of the losses were being generated by depreciation and were therefore not even cash losses so it may have even been cash neutral. Basically the Government perceived that the middle class was paying for the lavish lifestyles of the "Rich and Famous".

Having said that, I have a question for you, and you do not have to answer it if you do not want to.

For the last two years I have owned a small (2%) interest in a NYB filly. Last year she won 3 of 4 races at Belmont and earned roughly $90K. When I got my K-1 from the partnership I was shocked that it reported a loss of around $500. Being the Accountant that I am I figured it must have cost the Partnership $115K (90K + (500/.02) in "upkeep" for the horse. To me this seems a little high!

My question is how much money should a horse have to earn in NY to break even? I would have thought that her eranings of 90K would have been enough to make a profit, even taking into account depreciation.

What are your thoughts?

Holland I understand what you are saying but the point I was trying to make is that the IRS is right about this being a hobby for a lot of owners. Making it into a "business" and complaining about how hard it is to make money is the problem. If you cant afford or stomach the losses then you should not own horses. I want the sport to try to take steps to make it more economical for owners to get in and stay in the business but it will still be hard to do without selling horses either through the sales ring or privately off the track. The tax laws were changed over 20 years ago. We cant keep blaming that for all our problems.

I think that unless your horse was bedded on gold inlaid straw and fed surf and turf it would be hard to come up with $115k in yearly expenses. If you are making 90k in earnings a year you should be in the black unless the horse is insured for 2 million dollars or something like that.

[Holland Hacker]

Originally Posted by Cannon Shell

I think that unless your horse was bedded on gold inlaid straw and fed surf and turf it would be hard to come up with $115k in yearly expenses. If you are making 90k in earnings a year you should be in the black unless the horse is insured for 2 million dollars or something like that.

Boy I feel old now. 20 years since that TRA of '86.

I agree horse ownership should be more accessible and people I think mostly do get into it for the enjoyment, but a tax write off isn't always a bad thing.

I kind of thought that I was getting screwed I just wanted confirmation from some one that is actually in the business.