Thursday, March 1, 2012

Update: The Cost of Thoroughbred Ownership in New York

It's been a couple of years since I last commented on the cost of owning a thoroughbred race horse in New York, and the likelihood of breaking even, much less earning a profit, on that horse. Until recently, not much had changed, and it was still an uphill struggle to  stay in business  at the blue-collar levels of the game.

Now, however, all that has changed. Or, judging by the frenzied activity at the NYRA claim box -- our Castle Village Farm lost an 18-way shake last week! -- a lot of people seem to think that it's changed. All, of course, due to the increase in purses resulting. at long last, from the installation of slot machines at Aqueduct. Purses for the current Aqueduct winter-spring meet are up 36%, and NYRA just announced that the already solid purses for the Belmont spring-summer meet and the marquee Saratoga meet will go up 44% and 39%, respectively, including both overnight (maiden, claiming and allowance races) and stakes. Fourteen-thousand-dollar claimers, just a step or two above the bottom level at NYRA, are now running for $33,000 purses. With the winner's share of that race at almost $20,000, it's no surprise that trainers are will to take a chance on losing their horse.

Here's my analysis of what it costs to keep a horse in training at the NYRA tracks; let's see if the purse increases, as so many believe, have really changed the fundamentals of the game. The surprising result is that costs have stayed constant, or even declined in some cases, while purses are going up. The game really has changed.

Let's assume that the horse is based at the race track for nine months a year, stays sound (increasingly unlikely), races 10 times, and gets a three-month vacation. Most owners and trainers probably can't afford to give the horse the time off, but that would represent good horsemanship, and it's an ideal to strive for.

Training Costs at NYRA tracks still average about $90-$95 a day, with barely any increase since I last reported two years ago. The big guys -- Pletcher, Mott, etc. -- charge a lot more, but that's not who we're talking about. Those trainers' owners are in a position where they can start out with a big fortune and still have a small fortune left when they're done racing. 

So, for nine months, that's $24,660. Down time on the farm is a lot less, but not cheap. Probably $40 a day on average, or another $3,640.

Most NYRA-based trainers now charge extra for tack, supplies and feed supplements. The trainers simply can't break even on the $90 day rate. Those bills have generally been on the order of $150 a month for our horses. Our trainer, Bruce Brown, doesn't pad his bills at all with extra charges, as some trainers have been rumored to do. So let's add another $1,350 to our total for the nine months the horse is at the track.

Van costs have actually gone down, or perhaps we're just now using a trainer who understands his owners have budgets, too. Even if your horse doesn't ship to non-NYRA tracks, the van up and back to Saratoga averages $600, and out and back to the farm, though it depends on the distance, is probably another $500. So, a total of $1,100 for vans.

Vet bills are highly erratic and unpredictable. Ours have ranged from $50 to $1,000 a month. A reasonable average is about $350 a month when the horse is at the race track, and perhaps $50 a month on the farm. That's a total of $3,300.

Farriers charge about $170 per shoeing. That's $1,700 for the year, once a month at the track plus one new set of shoes before the horse leaves the farm. If your horse has fragile hooves and needs glue-ons, the equine equivalent of Manolo Blahniks, then farrier costs alone could be $4,000 or more for the year. 

Raceday charges Whether your horse wins or loses, the owner pays a bunch of nickle-and-dime charges, including (1) $10 for the NY State Racing and Wagering Board; (2) $20 for Lasix;  $12.50 for backstretch insurance; (4) $2.50 for the Jockey Club Foundation (the influence of the Phippses in NYRA never seems to end); and a $100 minimum fee for the jockey. In addition, 2.9% of whatever the horse earns each race goes to pay for jockey insurance, the horsemen's organization NYTHA, and the seldom-used backstretch pension fund. If a horse starts 10 times a year and never finishes in the money, that all adds up to about $225 a year. And add in the annual $840 premium for jockey insurance. Unless an owner has lots of horses, that adds another $100 or so to the cost of racing the horse.

So, before our horse earns a penny in purse money, our base cost for the year is $36,075. Surprisingly, that's actually a slight decrease from the $37,400 figure I reported two years ago, even though hay and feed prices have gone up in the interim. The relief may, however, be temporary, As I'd expect NY-based trainers to move toward a $100 day rate in the not too distant future, which would add another $3,000 or so to the annual cost. 

And if the horse does earn a few pennies, a pretty good proportion of those pennies disappear along the way before the owner can pull the balance from the horsemen's bookkeeper account. Here's how things work in New York.

The trainer typically gets 10% of all purse money, plus an extra 1-2% for the barn staff when the horse wins. Let's say 11% overall.

The jockey gets (approximately) 10% of a win purse, 5% for second and third, and $100 a ride for anything else. Because the win purse is so much (60%) of total purse money, and because the $100 a ride is a very big percentage of what the horse earns if it finishes 6th or worse, the jockeys' percentage overall is something like 8% of total purses.

The jockey insurance, NYTHA and pension charges take another 3.9% of the purse. Adding in the trainer's 11% and the jockey's 8%, that means a total of 23% of the purse goes somewhere other than to to horse's owner.

So, to earn the $36.075 that we said earlier our horse needs to stay in training in New York, even with a three-month vacation, that horse actually needs purse earnings of $46,850. Add in a few win pictures ($25 each from the track photographer) and a few celebratory drinks and let's call it $47,000 even.

Now what does that mean with the new purse structure?

With maiden special and allowance purses now well above $50,000, a win and a couple of in-the-money finishes will now represent break-even. So, if you've got a good horse, it's definitely possible to come out ahead or at least have the horse pay its way. That's a far cry from the long-term national average of purses representing only about half of the carrying costs of thoroughbreds. Still, one needs to earn more than that to pay back the costs of breeding or buying the horse and getting it to the races. But still, for a quality horse, the financial picture is pretty good.

But what about claimers, who still make up a majority of the horses that race on the NYRA circuit? The average purse for the claiming races that NRA is carding at Aqueduct is probably about $38,000; that should rise at Belmont and Saratoga, with fewer $7,500 races and $15,000 maiden claimers on the card. Still, an average purse of $40,000 for a mid-level claimer is probably no more than $40,000, of which $24,000 goes to the owner of the winner.

So a claiming horse that runs regularly, ekes out a win or two and a couple of in-the-money finishes could cover its costs. If the owner can have the horse claimed away for the same price that the owner put in to make the claim, then that owner survives to fight another day, which is what most of us want to do.  And if the horse can get a win in a short period of time, it even makes sense for the owner to drop the claiming price, lose the horse, and walk away with the purse money and a net profit. That seems to be what's fueling the claiming boom at Aqueduct, and it makes sense.

Not as tough a game as it used to be.