Cost Saving Measure
Updated: Tuesday, February 13, 2001 11:21 AM
By Barry Irwin
Posted: Tuesday, February 13, 2001 11:21 AM
-- Everybody in California -- the tracks, the bettors, the trainers -- is complaining about short fields. The problem is not a lack of horses, but a lack of owners willing to pay the bills to train the horses.
Question: What can be done to reverse the trend of short fields? Answer: Try making it less costly to keep horses in training.
Two major steps can be taken to resuscitate the burned-out California owner.
First, a change in the California sales/use tax codes should be sought to eliminate the levy, so that every time a California owner reaches beyond the Golden State's borders to replenish his stable he is not penalized.
Secondly, co-ops should be formed for certain goods and services in order to lower the daily nut faced by owners for the care, training, and feeding of horses.
It's too damned expensive to race a horse in California.
Let's talk taxes. Every time a Californian brings a horse bought elsewhere into the state he is subject to 8.25% sales or use tax on the purchase price, unless the horse can qualify for an exemption. If you buy a horse for $200,000, you owe the state $16,500 for the privilege of racing him.
On a horse owned less than 90 days, owners can avoid the hefty taxes if the horse was bought from somebody deemed under California law to be an "occasional seller" or if they paid sales tax somewhere else. In the case of previously paid sales taxes, the amount owed to California would be the difference between the taxes paid and 8.25%.
The current tax law alters the way some owners conduct their buying. When Charles Cella bought Northern Spur, instead of bringing him straight to California, the colt was taken to Texas during the 90-day holding period to avoid use taxes.
When Team Valor buys a horse abroad, it only sends to California horses that are exempt from use tax under California law. Its other imports are sent to New York, which a few years ago stopped penalizing owners by eliminating sales and use tax on racehorses.
California, in essence, is shaping how owners acquire, train, and race their horses. The state is telling owners how to run their stables.
A lot of owners who import horses are not aware of the tax code or choose to ignore it. Once these ostriches have been audited, they too will be unwilling to incur this cost, merely for the thrill of having a horse race in California.
Horses imported from out of state add spice, class, and depth to the California racing scene. The state of California should encourage owners to bring in new horses, not penalize them for improving local racing.
California suffers from its isolation. It lacks the population of horses to draw from that is available in the Northeast and Midwest. Horses invading from Turf Paradise, Emerald Downs, or the bushes cannot ignite the imagination of horseplayers like fresh faces from the United Kingdom, Europe, or the East Coast.
The late Eddie Gregson proposed co-ops for goods and services to lower expenses incurred by owners. Although Gregson was an active advocate of co-ops, his many pleas fell on deaf ears.
A successful trainer charges about $75 a day to train a horse in California. This figure does not include vet bills, which have become a large item impacting the bottom line, with the introduction of medical treatments that quiet ulcers, lubricate joints, ease breathing, and promote cartilage growth. Vet bills alone can increase the cost of having a horse in training by $25 to $65 a day.
Co-ops, initially set up by a combination of funding from loans backed by racing associations, owners, and horsemen's groups, could be set up to buy products in bulk, eliminate middle men, and pass savings directly to owners. Feed, tack, and medication could be bought and sold in this manner.
Worker's compensation is another costly item that trainers pass through to their owners. A larger, all-inclusive, more competitive co-op for this type of insurance is another method that could be used to save money for owners.
A better bottom line for owners would find them encouraged to pay training bills on more horses. Cut the costs of owning a racehorse by a third and see how fast those fields start filling up again.
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