Odds look better for investing in horses

Recent changes in the horse industry mean that on paper at least, the chances of having a win have never been better.

“The return equation is improving,” Inglis Bloodstock managing director Mark Webster says. “We’ve seen an increase in prize money, fewer races run and a smaller crop of horses competing for that money.”

The Australian Racing Board compiles extensive statistics on the number of horses born, named and raced each year, in addition to detailed information on total prize money and breakdown across races.

Webster is right. The numbers show that the odds of an owner striking a win today are far more favourable than they were 10 years ago.

There were 15,893 foals born in 2011, which is 13 per cent down on the 15 year average.

The smaller foal crop in turn affects the number of horses starting each race. In 2010-2011, 190,258 horses raced, which was down 7 per cent from the start of the decade.

But at the same time, the prize money is increasing. The total prize pool for the 2010-2011 racing season amounted to $428 million, an increase of 34 per cent from 2001.

And there are fewer races being run each year. There were 18,888 races run in 2010-2011, an 11 per cent drop from 2001.

A shrinking foal crop means there are fewer horses competing in fewer races for more money.

Some members of the industry reckon that every horse has a 70 per cent chance of winning some cash, provided they can get to the races in the first place.

Keeper of the Stud Book Michael Ford completed a study of 256,000 horses over 14 foal crops. The results show that the horses that make it to the start line have a 70 per cent chance of winning some prize money and a 56 per chance of striking a win.

But getting it to the start line can be a tough slog. Of the average foal crop of 18,300, 75 per cent are “named” or earmarked to race, with the rest going into breeding or other uses. And due to a combination of injury, bad temperament, or plain old unsuitability, only half of the horses named ever make it to the start line.

The growing industry of horse syndication is giving the amateur investor a shot at horse ownership with a manageable level of financial risk.

Shelley Hancox is a respected syndicator who offers shares in horses in the low to medium price range. She offers 1/20 shares in horses for as little as $1000 and then a monthly payment of $150.

The monthly price covers everything including training, vet fees, feed and boarding. There are some additional incidental costs such as group race entry and logistics fees to travel interstate but Hancox says these usually are covered by prize money.

“About $36,000 per year [split between a syndicate of 10 or 20] will cover the horse and get you a nice trainer,” she says.

Inglis Bloodstock general manager Mark Webster sold a hairy gelding at one of the company’s Classic Sales four years ago.

“He was hairy and long bodied and was walking around like he was asleep,” Webster says.

Under the watch of provincial trainer Stephen Farley, Sincerro as the horse came to be named, was transformed from “a piece of rock into a diamond”, winning at group one level and earning more than $1 million.

“And the horse was owned by 10 people who bought shares in it for $800 each,” Webster says. “That’s not a bad return on investment.”

BRW’s cover story on investing in horses will be out this week.

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