Elsewhere on the site you can read about the amount of money made by jockeys during the season as well as the amount that trainers can be expected to make over the course of a year. Both will offer some surprises if you don’t know much about the industry. Here we’re going to try to answer the same question but from the point of view of owners.
When it comes to money and owners, it’s easy to assume that they’re already rich so any money earned is little more than pocket change. After all, they already have enough money to be able to own a horse. Yet is that totally fair? How much of a difference can prize money and the likes make to people that own horses and what are their expenses.
Racehorse Owners Come In Different Shapes And Sizes
There are more than 8,000 racehorse owners in the United Kingdom. It is obviously true that some of them are rich, perhaps being lords, ladies or members of the landed gentry. But there are also plumbers, builders and far more blue collar workers who own horses thanks to the ability to buy them as syndicate members.
Obviously the amount of money you have available for your investment will dictate what you’re able to afford, with some only able to purchase a share or a horse whilst others can buy an entire horse without thinking twice about the matter. Given that racehorses can cost anywhere from a couple of thousand pounds to millions, you can see why it’s not easy to get into.
Tattersalls aren’t just a part of the racecourse, it’s also the name of the United Kingdom’s largest racehorse auctioneers. They put the average cost of a horse at 22,839 guineas and the fact that a guinea is worth £1.05 means that that equates to around £23,980. That’s why so many people are more likely to get involved thanks to syndicates rather than sole ownership.
Syndicates have been a popular way of owning a racehorse for decades. As long ago as 2003 there was an article in The Irish Times about the phenomenon. It made the point that ownership is more about the privileges that come with it, such as being able to enter the parade ring during races, than it is about any money you’re likely to make out of the experience.
According to the Racehorse Owners Association it can cost about £22,000 a year to train a flat racehorse and £16,000 for a jump horse. That is just the training and obviously the amount will differ depending on the trainer that an owner chooses to use. You can find out more about that by looking at our page on the money a trainer can expect to earn during a season.
On top of the costs of training a horse there are also numerous extras that will differ from horse to horse. The amount of races that they’re entered into will cost differing amounts of money, for example. Likewise insurance will cost various amounts depending on the horse, whilst veterinary costs are impossible to put a figure on in a general sense.
A solo owner of a horse will have to take on the various costs that are associated with ownership. The same is not true of people that own part of a racehorse thanks to syndicates. Just as they only own a bit of the horse, so too do they only bear responsibility for a bit of the costs. The manner in which the syndicate works will dictate the potential costs.
Some will take each incident in a cast by case basis, sharing the costs amongst the syndicate members. This is usually the case when it is a small syndicate, perhaps made up of friends or work colleagues. When it is a larger syndicate members will usually be asked to pay a monthly fee, which will then be used for any such incidentals.
Owners Lose Money More Often Than Not
There is an old joke that has long done the rounds in racing circles that goes, “How do you make a small fortune owning a racehorse? Start off with a large fortune”. It is obviously false to say that no money whatsoever can be made by racehorse owners. If the horse is particularly successful then the initial investment made can soon be made to look like a bargain.
The RHA believes that owners might want to question whether it’s worth running their horse in races that are worth less than £3,000 in prize money to the winner because of the ‘cost per run’ calculation. For jump races the ‘cost per run’ is higher and there is also an increased chance of injury, meaning that the need to weigh things up becomes even more pressing.
Back in 2003 the Marketing Manager of the British Horseracing Board told the Irish Times the following: “Owning a racehorse should not be regarded as a wise investment strategy. People have got to be prepared to lose everything”. It was also revealed that Elite Racing Club paid its members just a £20 dividend, in spite of one horse winning £116,000 at Ascot.
Again, the Racehorse Ownership Association is of the belief that every £100 of yearly outlay is likely to see just £21 returned on average. That outlay doesn’t include the initial expense of buying the horse, either. Part of the issue is the fact that it’s not a regulated market, so if you lose your money then there’s nothing you can do about it.
Why Own A Horse If You’re Unlikely To Win Money?
The main reason that most people own a racehorse is not for the hope of riches but rather the opportunity to enjoy the trappings of ownership. Harry Herbert is the Managing Director of Highclere Thoroughbred Racing, one of the first companies to offer people the chance to own part of a racehorse courtesy of a syndicate operation.
He said, “For a fraction of the price it costs to own a racehorse outright, you get the same kind of experience that the Queen, the Aga Khan or Sheikh Mohammed has”. That is particularly the case for Highclere’s owners, given that the company’s horses are selected by the Queen’s bloodstock buyer, John Warren. They’re then placed with top trainers.
Herbert continues, “We make it absolutely clear to those buying into syndicates that this is not an investment: it is a way to experience horse racing at the top end for an affordable price”. Of course, what he thinks is affordable and what you may think is affordable are likely to be entirely different amounts, given you’re looking at an outlay of about £15,000 in the first year.
Nick Brown runs Nick Brown Racing and he makes the situation clear to potential owners. He said, “My owners do it because they love the sport. You don’t join a golf club because you think you’ll win the US Open, and you don’t buy racehorses to make money. Racing is totally addictive”. It’s that love of the sport that encourages most people to buy a horse.
How Much Can Racehorse Owners Actually Make?
Whilst the above paints a picture of owning a racehorse as being a move that will almost certainly end up in you losing money, you can definitely make some money too. When Highclere was first starting out as a syndicate operation it had Petruska on its books, bought for 110,000 Irish punts before being sold to stud for £3.32 million after winning the Irish Oaks.
Clearly the amount of money an owner makes will depend on things such as how much of a horse they own, how many horses they own and what their stake is. If an owner is able to put their horses to stud then decent sums can be made every time the horse is asked to perform. In 2016, for example, you could charge as little as a few hundred pounds to many thousands.
At the top end of that particular money tree are successful horses that can earn more for their owners through stud fees than they would ever be able to courtesy of prize money. Galileo’s owner was able to charge $700,000 to stud, whilst Tapit charges $300,000 and makes around $12 million a year thanks to his studding.
If the owner decides to sell their horse then obviously even more money can be made. Those that have won one of the country’s most prestigious races, or indeed a prestigious race from around the world, will find that their potential value has shot up in the wake of victory. That is even more the case if they have the ability to be bred from or with.
Prize Money May Only Be A Fraction Of Money Earned
The money earned from stud can be huge, which is why owners of successful horses are able to charge so much for them to do what they do. It’s worth noting, of course, that most male horses are castrated, so the majority of them will never be able to earn their owners money that way. Instead it’s all about the prize money in many cases.
In 2015 the British Horseracing Authority announces that there would be prize money in excess of £130 million for the forthcoming season. That was an increase of over 6% on the previous season. The number of runners decreased over the same period, which would suggest that the winners would have more money to take home.
The amount of money that can be made from prize money differs both in terms of whether an owner has flat racing horses or jump racing horses and based on the races themselves. On top of that there’s also the fact that different amounts of prize money are dished out for first, second and third place finishes for the horses.
The purse of each race will be different, which is why races can become known for their purse alone. The Pegasus World Cup, for example, was the richest race in the world thanks to its prize pot of $16 million. That was until the Saudi Cup came along and offered a $20 million prize pot for its inaugural running in 2020.
Obviously the winning horse doesn’t take home all $20 million of the Saudi Cup’s purse, but they did take home $10 million in 2020. That was then split between the owner of the winning horse, the jockey, the trainer and others. As the BHA points out, prize money is collated from two different sources when it comes to rewarding race winners.
The first place is the stake money put forward by the owners of the various horses that are taking part in the race. The second place is a separate fund assembled by racecourses in order to boost the prize pot, often through advertising and other means. None of this money is the same as a payment owed to the racecourse by owners.
According to Mark Walford Racing, 75% of the prize money is paid out to an owner. Obviously if they own the horse outright then they’ll collect all of that, whereas if they only own part of a share of a horse, say 5%, then they’ll get 5% of that 75% depending on how the syndicate rules are worked out. It will differ from company to company.
As an example, here’s a look at the prize money for the races during the Cheltenham Festival in 2020:
|Prize Money £
|75% In £
|Supreme Novices’ Hurdle
|Arkle Challenge Trophy
|The Ultimate Handicap Chase
|Close Brothers Mares’ Hurdle
|Novices’ Handicap Chase
|National Hunt Steeple Chase Challenge Cup
|Ballymore Novices’ Hurdle
|RSA Insurance Novices’ Chase
|Queen Mother Champion Chase
|Glenfarclas Cross Country Chase
|Juvenile Handicap Hurdle
|Marsh Novices’ Chase
|Pertemps Network Final
|Brown Advisory & Merriebelle Stable Plate
|Festival Mares’ Novices’ Hurdle
|Fulke Walwyn Kim Muir Challenge Cup
|JCB Triumph Hurdle
|Randox Health County Handicap Hurdle
|Albert Bartlett Novices’ Hurdle
|The Gold Cup
|St. James’ Foxhunter Chase
|Johnny Henderson Grand Annual Chase
|Martin Pipe Conditional Jockeys’ Handicap Hurdle
You can see from just this one meeting how vastly the prize money on offer can differ, with the amount available for an owner to take away with them changing accordingly. The amount an owner would take home in the Fulke Walwyn Kim Muir Challenge Cup based on 75% of the winnings, for example, is more than the total prize money for the St. James’ Foxhunter Chase.
Whilst the £625,000 on offer for the Gold Cup might look like an extremely attractive number, there were sixteen entrants into the race in 2019 and most of them wouldn’t have taken home anywhere near that amount, if they were to take home anything at all. Proof, perhaps, that prize money isn’t the be all and end all of an owner’s way of making money.