Here is the Q&A that came through with folks looking at the “intermediate” group. These seemed to be consensus of most questions. If you have additional questions, please put them in the comments section and we’ll use this thread to get as much accomplished as we can.
The number 1 question had to do with money and, in one way shape or form, went something like this:
How are any profits distributed?
Yes, I boiled this one down a bit and blunted it, but that’s the essence. After the first three months, the goal is to have 3 months expenses in the bank with any excess amount going out to a vote of the group with the following options: just leave it in the bank; look for another horse; distribute it in the form of dividends back to the members (again, leaving 3 months expenses in the bank).
Not to beat this to death, but while we are going to strive to make a profit I hope you all know now how difficult that is and that it is far from guaranteed.
What is the duration of the group?
As long as it takes. There are no barriers to this group. The LLC will last as long as we are willing to run horses. Every time we are horseless we will re-evaluate and folks will have the opportunity of getting out and, possibly, coming in – or disbanding altogether; this will be part of a group discussion.
Unlike the Racing Club, this is an ongoing obligation and, should things go south, we can’t just throw up our hands and walk away. We’re legally obligated for our share of expenses. If in a year you decide that this isn’t for you, you can sell your share if you’d like but who you sell to would have to sign the group contract. In the past with some of my other groups, when we become horseless is the time to evaluate who wants to stay in and who wants out. At that point, with all the obligations of the group paid, if a few want to walk away (and others may want to join), then that is the perfect time to do so.
In all honesty, what we’ve seen through experience is the world wants to join when things are going well and no one wants to pay the bill if things aren’t going well. I like to tell people to go in planning on never winning a race and be delighted when we do. Keep in mind also that we will be running horses where they belong and that a claim isn’t a bad thing – we won’t be keeping bad horses forever.
What are the tax implications?
You need to talk to your accountant. Every year members will get a K-1 showing profit or loss of the year’s activities. How that affects your individual tax scenario, I do not know.
How are decisions made?
Everyday decisions will be made by Clay and I. If we get an offer to buy a horse we own, that will go out to the group in the form of a poll. Voting will be of short duration, usually 24-hours because time is usually of the essence, so watch your inboxes. There may be the opportunity to discuss potential claims or private purchases through the forum as well depending upon time. However there is virtually no way to achieve consensus on 50 individuals, though a clear majority will rule. In close situations, Clay and I will decide.
Will members need to get licensed?
If the group fills to its 50 member limit, then each member will have a 2% ownership stake, under the 5% threshold to be licensed in MN and IL. However I will check with the Commission and see, for those of you that want to be, if you are still allowed to be licensed if you own under the threshold. Licensing fees are $50 for the license plus fingerprinting ($21.50 to run the prints) and are the responsibility of the member. The licensing of the group is paid for by the group.
How much extra could we have to pay?
As I hope you all know at this point, this can vary. There are vet bills, farrier, shipping, training etc. I think over the course of the year we factor in $2,600 a month for expenses, that’s probably close. How quickly we do or don’t run out of money is contingent on the success we have on the racetrack.
One other thing to remember, if the group fills everyone will be 2% owners. Up considerably from the .05% of the Canterbury Club but, looking at $4750 a month in bills for 2 horses ($14,250 for 3 months) then the average liability per member (estimated), if there are absolutely zero earnings during that period, is $285 every 3 months.
Where will we race?
We will race in Minnesota and Illinois – we will follow Clay.
I hope that this helps somewhat. It may end up generating more questions, and that’s okay too. Just lay them out there and we’ll get ’em answered!
Ted, one of my questions that did not seem to make the cut was – will back side access be any different than the current group?
Could you clarify the licensed owner a bit. Are you saying that to be a licensed owner right now you have to be at least a 5% owner of a horse, or horse on site? If so what happens when your horses is claimed, sold or retired or just horseless? What are the benefits of being a individual licensed owner?
In order to need to be licensed you must own 5% if a horse. If you don’t you do not need to be. I’m not sure if that means you don’t have to be or you CANT be – hence my need to check with the commission. My guess is thy don’t want those folks licenses to limited the amount of traffic on the grounds.
If you’re not licensed access to the backside will be the same as it is now.
Aside from admission to the track and access to the backside there really are no additional “benefits”.
So, if we only had 2% if we got a license we could go backside when we want? Isn’t there also a perk for owners if ordering a table at the track?
Only on race day which is another reason I think that the 5% threshold needs to be met – the group will not get 50 tables on race day.
ALL – I spoke with the Racing Commission office this morning and you can only be licensed if you own more than 5% so the answer is: No, you will not be licensed and backside access will be limited. I will do all I can to join you all and bring folks in for workouts and to visit the barn. I don’t envision doing any tours but more focused backside visits on the barn and workouts, though I would open up the Canterbury Club tour to folks that would like a more wide-ranging tour.
Sounds like an interesting venture so keep me in mind!
Sounds exciting to me – another item to cross off on my bucket list! I’m in!
I would definitely be interested
Ted what are the numbers of folks interested? What is the time table to get this off the ground?
We look to be right around 35. Is like to be ready to go shopping by 2/1/15
Ted, is it easier to find good horses that could run in higher claiming and a few stakes races, or lower level claims, (like Mary Jean was for us). i like the idea of having 1 horse that runs for higher stakes, but I realize if that horse would become injured or be unable to race for a good part of the canterbury meet, it may be kind of anti-climactic owning a horse that can’t race.
In choosing Mary Jean and Terice last year, what does Clay rely on the most? Watching workouts, or races that a potential horse is running in? Relying on the opinions of others in the barn, or jockeys that may have ridden the horse or on a horse that’s raced against them? What kind of homework is done before deciding to put in a claim on a horse?
Claiming a horse is as much art as it is science. The past performances give you your first glimpse at a prospect. Several things can determine if a horse becomes a target: class drop, back class, maybe a turf horse running on dirt. Then you go back and look at the races and watch the horse work (if you can identify it). If you know someone who has had access to the horse, you can leverage that knowledge to get an idea of the horse’s ability, health and tendencies. If all looks and sounds good, then you watch the horse come over from the backside for the race, see how they prepare him and watch him warm up. If all still looks good and the claiming price is right, you fill out the claim slip and hope you get the horse. Anther factors is who you are claiming from: whether or not your trainer can improve upon their work. You don’t want to claim from someone who may be a bit shady but you may want to claim from someone who operates on a shoestring because you know with a little TLC, proper nutrition and a different regimen, that horse could be productive again.
These are just some of the factors that go into claiming a horse.
Wow – Maryjean won a race today at Hawthorne for her new owner. She’s a running machine! Congrats to them.
Still in disbelief that neither if Our Girls were claimed during the year, especially MJ. A pretty safe claim by Revelli.
I see Maryjean is entered to run on Friday in a $5000 claiming race. After just winning at the $8000 level, why would the trainer choose to drop her down? Just wondering.
I’m not sure. She does have a lot of mileage on her and mYbe she’s developed an issue. Though it is also the end of the meet with a layoff coming up and they could be taking a calculated risk that she won’t get claimed before the break and they can get another win.
Another possibility: she won her claim price back in the last race so why care if she wins and gets claimed now? You’ve made a bunch of money on her in less than an month. Cash in; move on.