- Singletary fans celebrate after the Oak Tree Mile
Is this a tax “write-off?”
Please check with your tax advisor. For many investors, an investment loss is a 100% “write-off” against any personal income.
Can you please explain “Mark Ups”?
On average, the LRF management fee or “mark up” is $50,000 per partnership regardless of the initial horse purchase price. It is counter intuitive to base any “mark up” on purchase price since there is no incentive to keep prices down. LRF actively seeks to buy championship horses for as little as possible in order to pass the savings on to our partners.
If I can buy horses on my own, why invest in a partnership group?
Full service management of your horse and partnership. From almost daily updates on your horse including everything from video workouts to live race day feeds to your computer or smartphone. LRF provides first class owner box seats on race day and all access to the backstretch so you can visit your horse 24/7. It is our job to make 5% partners feel as if they own 100% – without having to do any of the work!
Do I have to sign a contract?
Yes. Each Little Red Feather partnership is formed under an LLC in which you will need to subscribe. This is a high risk/high reward investment. We have certain financial criteria required from an investor before he invests. Our agreements discuss in great detail the risks associated with the investment and all details of the applicable offering. Any prospectus or executive summary are for information purposes only.
What are the monthly expenses of owning a horse?
The actual amount varies from month to month. However, based on our experience, we can anticipate the monthly figures as listed below:
|Medical (Vet, Vitamins, etc.)||$500|
|Training and Boarding||$2,600|
|Total Estimated Monthly Expenses||$3,335|
LRF does not “mark-up” any expenses
How much does it cost to enter a race?
Most races are free to enter. The only costs are jockey fees (avg. $55) and the pony to post (avg. $15). Some stakes races do have entry fees which are based on a percentage of the purse size.
How does a Little Red Feather Racing partnership earn money?
LRF partnerships will earn money two ways. First, any time a horse races, the partnership earns a percentage of the purse. Listed below is an estimated breakdown of the purse money for a $100,000 race:
|Purse (value of race)||$ 100,000|
|1st Place (60%)||$ 60,000|
|2nd Place (20%)||$ 20,000|
|3rd Place (10%)||$ 10,000|
|4th Place (5%)||$ 5,000|
|5th Place* (3%)||$ 3,000|
|LRF Financial Race Summary (1st Place)|
|Jockey Fee (10%)||$ 6,000|
|Trainer Fee (10%)||$ 6,000|
|Barn Fee** (2%)||$ 1,200|
|LRF Partnership (78%)||$ 46,800|
Remaining 2% to be split between the rest of the horses.
Barn percentage is usually only paid when horses win.
Two, in addition to purse earnings, a partnership may earn additional funds if we were to sell a horse privately, in an auction/sale or if a horse is claimed.
When will the earnings be distributed?
Depending on the success of the horse, purse earnings will either be distributed within two weeks of the race, or put towards future expenses.
Who names the horses?
All horses are named democratically by the partnership. However, If we purchase a horse that has already raced, we cannot change the name.
Who is responsible for making the racing decisions?
All partners participate in the management of the LLC. As manager partner, LRF and the applicable trainer are responsible for racing decisions.
What are the risks associated with this investment?
The risks, obligations, and information regarding any offering are as indicated in the Personal Placement Memorandum, Subscription Agreement and LLC Operating Agreement of each offering. Please be advised the horse(s) being offered have either been purchased by LRF or are at an LRF option to purchase. For qualified and/or accredited investors interested in an offering, a copy of such agreements will be provided upon request.
What if I want out of the partnership?
In the past, we have had success facilitating private transfers of shares to another partnership member or third party. The value of the horse(s) will be determined by their current racing level or by a consensus from multiple bloodstock agents.
What if I can’t really afford to do this?
If you are asking that question, you should not get involved. This is a high risk/high reward investment for qualified investors only.
Are the horses insured?
Some partnerships take out mortality insurance. Notwithstanding, any individual partner may insure his/her interest with an equine insurance company. We are happy to provide referrals. Please remember, horses may only be insured in the event of an untimely death, not untimely injuries.
How will I know when the horses are running?
LRF prides itself on our communication with our partners. You will receive notices regarding works, races and general information on a regular basis.
What if I want to bring a group of people to the track with me?
We have access at virtually every track in the country. Extra tickets have never been a problem. We want all of your friends and family to attend the races and experience the thrill with you!
Will I receive financial statements?
LRF has a professional outside accounting team that takes care of all billing and invoicing. Three times a year you will receive a financial statement detailing all revenue and expenses. You may also request a copy of the financial statements at any time. We have an “open book” policy. We believe we are, by far, the most professional partnership in the business.
What kind of tax information will I receive?
Generally, by March 15 of the calendar year, you will receive a K1 from the partnership. Your tax accountant should know what to do with the K1. If you need further assistance, our legal team will be happy to help.
Will I have fun?
Although, we can’t guarantee our investors will earn a profit, this will most likely be the most exciting investment you will ever make. There is no greater experience than screaming at the top of your lungs as you watch your very own thoroughbred in the stretch trying to win a race — just ask any of our owners who were with us in Texas.
What are the exact LRF Fees?
1. Initial Sales Commission
2. 10% “Back End” Commission on any Subsequent Sale
The Little Red Feather sales commission is determined by risk and service. In many instances, Little Red Feather bears risk of ownership, training and boarding until each share is sold. The Little Red Feather service includes, among other things, partnering you with other valuable equity investors and full track management.
Other racing partnerships mark their horses up between 75% and 125%. Some retain large percentages of ownership in the horses in return for the initial capital. LRF’s approach is to more directly align its interest and success with all of its investors.
We encourage you to ask around about Little Red Feather, our business model, and our commitment to the thoroughbred racing industry. Becoming a partner in a racehorse should be the most exciting investment you’ll ever make.
If you have any questions regarding this document, or you are interested in investing with Little Red Feather Racing, please contact us.
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