The True Cost of Raising a Racehorse

Most people assume horse racing is  a business or hobby strictly reserved for the wealthy.  There is a common misconception it takes $20,000 or more each month to own a racehorse.  This figure is a gross exaggeration of the true cost of racehorse ownership.  It costs about $45,000 per year to keep a racehorse training operation running.  However, the total cost of raising a racehorse each year ultimately hinges on the trainer’s desires and the location in which the training takes place.  Let’s take a closer look at the numbers with RSR owner, Richard Schibell.

The Primary Expenses of Owning a Racehorse

The brunt of the cost of owning a racehorse is the cost of employing a horse trainer.  Some horse trainers have day rates in excess of $100.  This day rate is comprised of employees, supplies, feed/bedding, vitamins, workers’ compensation insurance premiums and payroll taxes.  In terms of employees, trainers have assistants, exercise riders, hot walkers and groomers.  Examples of feed and bedding include grain, straw and hay.  In terms of supplies, tack, bandages and other sundries are necessary.

The average trainer will claim he or she does not make a substantial amount of money from the day rate.  These professionals argue their earnings stem from a portion of the horse’s earnings.  This percentage is typically 10 percent of the animal’s earnings.  There is no way to determine if these statements are actually true for all trainers.  However, one thing is certain: trainers are not breaking the bank with their day rate.  Do not shy away from paying a trainer’s day rate as this is not a daily fee that must be paid 365 times a year.  Some horse owners even go as far as paying a farm day rate around $25/day so the animal can enjoy much-needed rest and relaxation.

Additional Costs Beyond the Day Rate

Aside from the day rate, there are additional standard monthly expenses of note.  As an example, horse owners should budget in about $75 a month for their horse’s dental treatment.  Budget another $75 per month for chiropractic work, $90 for the blacksmith and between $200 and $1,500 each month for veterinary care.  Those who are a member of a horse racing partnership will also have to cover accounting expenses to boot.  Certain racing syndicates will charge a monthly management fee to boot.

The Rest of the Fees

You do not have to pay anything to enter a horse in a race unless that race is considered a stakes race such as the Kentucky Derby.  Certain stakes races such as the Breeder’s Cup races, mandate an entry fee of $50,000.  The purse of this race is a whopping $2,000,000 so the entry fee is completely justified.  Stakes race have purses in the range of a couple hundred thousand dollars so the entry fee is typically about $3,000 or so.

Commissions must also be paid to the trainer and jockey.  Do not think of these commissions as fees.  Rather, they should be thought of as bonuses subtracted from winning purses.  For the most part, winning jockeys and trainers receive about 10% of the winning purse.  About 5% is paid for second and third place.  Be sure to keep this information readily available when establishing your horse racing business plan so you are not surprised when the winning purse is shown with such deductions.

Accounting costs must also be noted.  Horse racing partnerships charge accounting fees along with K1 prep fees at the end of the year.  Consider the amount of time required to pay monthly bills and maintain records for tax purposes.  Instead of doing all the financial work on your own, it might be better to outsource it to an accountant familiar with the financial aspects of this unique industry.

What is the True Cost of Owning a Thoroughbred Racehorse?

There is no clear answer to this question.  However, we can take a look at an example to give readers a sense of the aggregate cost of owning a racehorse.  The typical horse spends 10 months at the track with the trainer.  Another two months are spent on the farm.  Once the costs detailed above are averaged out, it is likely to cost about $45,000 per year to train and care for a racehorse.  However, this figure could be significantly less based on your locale’s economy.  When in doubt, consult with other local horse owners to get a sense of what it truly costs to own a thoroughbred racehorse.

Richard Schibell has been breeding thoroughbred horses and racing them for well over 35 years. Stay up to date with our content by following the blog at Richardschibellracing.com!

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