by Trey Nosrac
When it comes to recruiting new participants to join us in harness racing, my record is spotless. In 15 years, using a dozen different schemes across several platforms, to my knowledge, few passionate fans blossomed in the ownership or gambling ranks. Even after dragging a few folks along for a few seasons of ownership, they never caught the fever and drifted away.
No matter my potential recruit’s demographics or income level, the sport we find so addictive remains a tougher sell than a bricks and mortar Blockbuster Video franchise in a streaming world. Harness racing ownership requires spending time and money for what is often a disappointment.
One of the folks I tried to nudge in our direction by taking him on a few trips to horse barns and racetracks wrote me this email:
Just read your column, and it gave me an idea for a slightly different approach that maybe you have written about before, but maybe not.
Many people have financial advisors.
They meet with them, provide all their information, and the advisor develops a plan for their investments. I think most people are like me in that they rely on their advisor to evaluate the funds that their money is placed into. Once that is done, I really don’t go back and try to analyze the fund. I rely on rating agencies and my advisor to make sure investments are in line with my goals and risk tolerance levels.
I think it is a very uphill battle for you to find people who are not into your sport and expect them to develop the expertise needed to make wise decisions at auctions — at least in the short run. Maybe your approach should be telling a group of people that you and your partner will do all the heavy lifting and decision-making.
They will invest alongside you, so they know you have skin in the game and are not just taking a flyer with their money. You and your partner would own at least 50 per cent. They would get a pro-rata piece of ownership, expenses, and winnings. Point out possible tax advantages. Maybe it is only one partner per horse or it could be multiple. That would be up to the investors. In so doing, you could go after some horses at auction for higher amounts than you are used to.
Of course, showing investors your track record (no pun intended) would be part of the process. They would need to know you have been at it for years and have a good understanding of what is going on. Naturally, you would be looking for people with discretionary amounts to invest without worrying about loss potential of part of it. Still, some might welcome the excitement rather than just having the stock markets dictate their results.
What do you think?
Sorry that it took so long to respond to your email. I got sidetracked by the pandemic and a few strange projects. I know the hurricane blew past the shores of South Carolina, and you didn’t join Dorothy and Toto because just after Ian roared, I saw a post on Facebook and listened to you on your Internet show.
Regarding your email, I think you have a good idea. Yearling ownership as an investment has possibilities.
The problem I foresee is that after a person runs the numbers, as I’m sure you would, they will demonstrate young racehorses are terrible investments, among the worst ever, maybe even worse than time-share condominiums in Haiti. Showing a potential investor my “track record” would terrify rational people. Any legitimate financial advisor will advise against this move. It would be like taking your funds from Warren Buffet and handing them over to Johnny Depp for reallocation. Your ROI will most likely be DOA.
Folks like you who are good with money will have difficulty justifying the investment in a young horse. Folks like me are less fiscally sensible, and our affliction for raising and racing harness horses is difficult to explain to the outside world. The money is not the endgame for us. The sport is more like a complicated quest.
Ordinary people asked to invest 20K in my new yearling, Running Scared, will cringe when they understand they have a 10 per cent chance of making money and a solid chance to lose almost all of it. For new people, involvement in my strange little world requires the ability to set fire to relatively large amounts of money and laugh as you dance around the flames. I can talk all night about how much fun the dance is for us, but traditional financial investors will not hear the music.
However, a few parts of your note appealed to me.
Yes, horse investments should involve discretionary assets. From my point of view, the inability to blow discretionary funds is a problem in America. Far too many folks cross into the great beyond with piles of money in banks or wherever wealthy people keep their money. I can quickly think of six people who could not burn through their stashed cash without help. For them, investing in harness horse yearlings could be helpful and fun.
Perhaps wealthy people can find some tax advantages, but tax shelters or discretionary funds are obviously areas where I have zero experience or knowledge.
A one-time, upfront investment is the way to go. A new person will never appreciate monthly bills for the many costs involved in this sport. New people should write the check, consider it has gone, and sort of rip off the bandage with one quick tug.
For the sporting type, as I know you are, allow me to suggest that investment in a yearling is much like an inexpensive, high-risk, professional sports franchise. Perhaps, we could stretch your investment theory by reframing the investment as purchasing other high-risk franchises, such as investing in a teenage golfer to make the PGA, the rebirth of Frisby Golf, or the National Quidditch League.
The bottom line is that raising, owning, and racing harness horses is a swell idea that brings me joy, but the pastime does not bring me income. We who participate in the sport do a magnificent job of annually deluding ourselves that we are truly investing.
On the other hand, investing in a yearling racehorse is way more FUN than investing in Apple Stock or pork bellies. If someone like you is okay with hilarious sporting money investing, you have my number, and I can hook you up.
Take care, my friend.