Thoroughbreds are luxury items. You need food to survive, but you don’t have to own a racehorse. So, when the economy is down in the dumps, you’re more likely to give up adding a runner to your stable than lunch or dinner.
Given what has been going on lately in America’s stock market, it wouldn’t be surprising to find racing partnerships struggling to find investors. But that hasn’t been the case so far, according Team Valor International’s Barry Irwin and Jack Sadler, the vice president of Dogwood Stable. They’ve both been able to keep their veteran investors on board while attracting new people who are interested in owning a piece of a horse.
Irwin’s Team Valor purchased seven horses for $630,000 at the Fasig-Tipton Kentucky July select yearling auction. Six were placed in one syndicate, and one was put in his own syndicate. When Team Valor offered the horse to investors, Irwin said, it used a list of “350-400 people” generated from visitors to its Web site that had expressed an interest in being involved in Team Valor’s ventures.
To the surprise of Irwin, the offerings attracted 17 first-time investors. In the past, such offerings usually had brought in “one, maybe two, or even none,” he said.
The key to the enthusiasm, Irwin believes, was the “affordability” of the investment opportunities. Many of Team Valor’s offerings in the past usually have been more expensive because there had been more of a focus on racehorses purchased privately. The yearlings Team Valor bought in July had an average purchase price of $90,000, and Team Valor allowed investors to purchase as a little as a 1% interest.
The bottom line, according to Irwin, is this: When the economy is bad and people are less likely to take a risk, investors still can be found if their cost to participate is reasonable.
Sadler said Dogwood has had two offerings so far this year and both were made up of 2-year-olds. Both sold out in a two-week period, which was about the same as it had been for other offerings in recent years, “and we’re getting new people (investors) with each offering,” according to Sadler.
“Historically, it (the stock market) hasn’t really had an effect on us,” Sadler said. “The majority of the people we have don’t say I can or I can’t do it depending on the market.”
The key to partnership appeal in a struggling economy is that “it spreads the risk” while still allowing an investor to be involved in a high-class prospect, Sadler said.