An Introduction to Racing Partnerships

In recent years many investors have found partnerships a most attractive vehicle for participating in the Thoroughbred industry.

Partnerships go back to the very beginning of American Racing with the initial syndication of America’s most famous stallions. Partnerships today exist with all types of horses, including broodmares, racing prospects and stallions.

Advantages

Diversification
Thoroughbred investments involve risk and the partnership format inherently spreads that risk amongst a group of investors.

Increased Buying Power
A group of partners pooling together their assets will be able to participate at a higher level of quality than an individual may be able to afford for his or her own account.

Professional Management
Most partnerships have an experienced managing partner who has the capabilities of assessing markets for value, selecting outstanding quality assets for the partnership and engaging the services of top farms and trainers for the partnership and their horses.

Questions to ask When Considering a Partnership

What type of partnership?
Is the partnership to be a Limited, General or Limited Liability Corporation? Each form has its own level of partner involvement and specific tax implications.

What is the background and reputation of the Managing Partner?
What do the references of the Managing Partner and his management team say? What is the record of their success?

Will the horses be purchased at auction or by private sale?
How are the horses evaluated for partnership acquisition? How are assets or potential assets valued? How will they be sold?

What fees are involved?
How is the Managing Partner compensated (i.e. management fee and/or commission)? What mark-ups, if any, are involved? Is there any additional compensation such as front-end or back-end fees?

What about expenses and distributions?
How are assessments for upkeep managed? How are earnings distributed and when?

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