Saturday, June 7, 2003

You, too, can own racehorses


Investment with excitement

By John J. Byczkowski
The Cincinnati Enquirer

[IMAGE] Jackson Knowlton is one of the owners celebrating Funny Cide's Derby victory, with Jose Santos in the saddle.
(Enquirer file photo)
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The myth of the great horse Funny Cide is that a bunch of guys invested $5,000 each and ended up with a horse that wins the Kentucky Derby, the Preakness and is a favorite today to become the first Triple Crown winner in 25 years.

It's a juicy myth because it puts wealth and immortality within the grasp of just about any schmo. The problem is it's not entirely true.

The truth is a group of high-school buddies started a stable in northern New York with $5,000 each in 1995. Five knew nothing about racing. They started small, learned about horses and networked at tracks. A trainer who knew they were looking for a New York horse pointed them at Funny Cide. They sold another horse to help raise the $75,000 for Funny Cide - the stable's ninth purchase - trained him well, and the rest is history.

Experts warn it's risky to think that for the price of a decent used car, you could be sipping mint juleps with the governor in the winner's circle at Churchill Downs.

But anyone can invest in horse racing for as little as a few hundred dollars - with the same caveats that go along with any investment.

"Don't leave your brains at the door," said David Switzer, executive director of the Kentucky Thoroughbred Association.

On the investing side, horse racing is a business, not a bet. "If you're going to invest in this business, you're using discretionary income, (and) you're not using the mortgage money, you're not using your childrens' college fund," he said.

Don't go about it haphazardly, said Switzer. "If you have a business plan and you follow your business plan, you have a better chance of being successful."

People in the business talk a lot about the fun of racing, because only fun can make up for the expense and heartache of running horses.

Patty Gentry of Richwood bought her first colt in December 2001. Brian's Echo - named in honor of her first husband, who was killed in a helicopter crash - has won three times in 10 races. The colt produced enough profit to allow her to buy a filly last summer.

It's been fun, and it's been nerve wracking. "It would never be anything I would go into to make a living or to eat day to day," she said. "There's no way I could stand the roller-coaster ride."

Brian's Echo has been injured or ill just about as much as he's been healthy. The filly is recovering from surgery. "We're kind of struggling with her right now," Gentry said.

And the horses aren't exactly pets. Brian's Echo kicked his trainer last week. "He's actually kind of mean," she said. "He's feisty. He's got a little attitude behind him."

Gentry has been around horses most of her life. Her brother, Bob Elliston, is president of the Turfway Park track in Florence, and she also has a brother-in-law in the business. "It is fun," she said. "There's nothing quite like being out at Keeneland at 7:30 in the morning and watching the horses work out."

Her advice to novices is to find good people. Her brother and brother-in-law guided her to trainers and others she could trust. "It'd be tough getting into (racing) if you didn't know somebody or have connections," she said.

Human-equine match-up

How does a novice get connected? On the Internet.

Switzer recommends a Web site called The Greatest Game, an introduction to the business of horses, and a matchmaking service for people serious about investing in horses. The National Thoroughbred Racing Association, the Thoroughbred Owners and Trainers Association, and Keeneland, the legendary racetrack in Lexington, sponsor it.

Gay Fisher, executive director of The Greatest Game, said that while racing is heavily regulated, the business of buying and selling thoroughbreds is hardly regulated at all. The Greatest Game, she said, reviews consultants and makes them adhere to a code of ethics. It can then match prospective investors with those consultants, who act as their mentors in the business.

The Web site breaks down investing into five businesses:

• Owning a racehorse.

• Owning breeding stock.

• Pinhooking, in which investors buy and sell thoroughbreds as if they're trading stock.

• Investment partnerships for racing.

• Investment partnerships for breeding stock.

Investors apply for mentorship, and are matched with consultants, who pay a fee to be part of The Greatest Game. Those consultants could be trainers, bloodstock agents, current owners, partnership managers or others involved in the business of thoroughbred racing.

Know your horseflesh

Before and after you spend the money, count on spending time. Getting to know the business "is a lot of networking," Fisher said. "We always stress that if you're going to invest in this, you contact people personally and interview them like you're interviewing for a job."

Gentry is confident in the people she's working with. They're getting Brian's Echo ready for his next race, probably July 4 at the Mountaineer track in West Virginia. "I think he's got a pretty good shot," she said.

E-mail johnb@enquirer.com



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