Owning Racehorses: ongoing reality check for the small owner – It’s All In The Maths
Owning racehorses is a great hobby. I gave up this hobby because of rising costs and dwindling stakes. In a nutshell, year on year, the cost graph keeps beating inflation whereas the stakes graph keeps falling behind the inflation curve.
Many years ago it was common knowledge that for ZAR 5million put into the game by an owner, he could expect to get out ZAR 1million. Today, this ratio has worsened to 10 to 1, so now owners must put in ZAR 10million and for this they get out ZAR 1million. In very basic terms, any owner who puts ZAR 10million into his hobby must now reasonably expect to write off ZAR 9million.
In general, all horses Merit Rated 90 and below will not pay their way in the game. Why? Because nowadays, for a horse to just “break even” it must win 3 races a year, for every year in training. So, a 6 year old which has been in training for some 5 years, must have won 15 races to break even. How many horses win 15 races in their lifetime?
By way of simple example, a very good racehorse called Judged Excellent, MR96, won his 7th race of his career at Durbanville last Wednesday. He is one of the better older horses around. You have to agree that with a Merit Rating of 96, he should be. Let’s take a quick look at how he has fared for his owners financially. Last Wednesday’s win took his gross stake earnings to ZAR 467,210. On average, 20% of this figure ends up in the pockets of the jockeys, trainers and “other deductions”, leaving a net ZAR 373,768 as net “income” to his owners. Wow, that’s healthy earnings for any racehorse. Is it though? No, it isn’t when you consider that he has been in training for 5 years at approximately ZAR 400,000 to keep (trainers, vets, physios, dentists, farriers, equine therapists, ownership renewals, etc.). So, one of the top racehorses in Cape Town with a Merit Rating of MR96 has run at a loss. And, that’s “writing off” his original purchase price of ZAR 600,000. But, no amount of money can replace the joy he has given his owners. Owners do it for the “Love Of The Game”. Or, do they?
And, will this divergence of Costs vs. Stakes kill the game? Absolutely NOT.
All it will do is drive small owners (and maybe the “middle market” also) out of the game. But, the game will still be comfortably sustained by the advent of mega-owners. And, that’s OK.
You may say, why will mega-owners stay in the game? Simple answer, mega-egos and mega-wallets.
It’s all in the maths. So, in essence, racing authorities can rest easy. Even if they DECREASE stakes further to sustain the business, it will survive, easily. Will the game be “poorer” without small owners ? Most probably NOT. Why? Because there will still be horses running for punters to punt on.
What’s more important to the survival of the game is thus the punter, and NOT the owner. So, the racing authorities should focus on keeping the punter coming back and increasing tote turnover. And, this won’t ever happen by dreaming up a variety of new bets. The focus should be on reducing the “rake”, thereby increasing the return to the punter to “keep him interested”. That, and moving away from handicap racing, towards WFA racing, but that’s the subject of a different article. Watch this space
Andy Kay (Ex-Racehorse Owner)
