? I'm doing a report on horse racing for a college business class. My question for you is can you make money? I see some horses for sale for $1500, are they competitive? How much money would I need upfront to start? Can I make a living doing this?
- The short answer is it's rare for a $1500 horse to be competitive at a high enough level to make any profit and it's pretty rare that someone can make a living at horse racing alone. The amount of money needed up front is dependent on where you race, costs vary by track and state. One thing is fairly certain, the cost of the horse itself is usually less than the cost of maintaining the horse.
In my area, Kentucky, to be competitive you would need a horse that could compete at about the $10,000 claiming level, and generally you would have to pay at least $10,000 for a horse that is ready immediately to compete at that level. Costs for training and maintenance of the horse could be as much as $2000-$3000 per month. A sound, fit horse could run about every 3-6 weeks and may be able to make back his expenses in purse money in Kentucky if he always finishes 1st-3rd, but a horse that consistent is rare, and he can't run all year long every month, breaks are inevitable.
Owners and trainers who make money race at the highest levels where the purses are highest, $50,000 and up, but it's expensive to acquire a horse that can race at that level. Some owners and trainers who make a profit take the opportunity to sell a horse that they acquired inexpensively and developed into a much more valuable racehorse. For instance if you claim a horse for $5000 and move him up the claiming ranks to the $20,000 level in just a couple starts, then he'll hopefully be claimed from you for $20,000 in a race that you win, so you get a profitable price for your horse plus the winner's share of the purse. This scenario is NOT a common occurance so the opportunity for profit is really pretty rare.
That being said, I believe that a lot of wealthy owners do benefit from some tax advantages when they buy racehorses and end up taking a loss, but there are a lot of rules about what qualifies as a tax deduction or other tax advantage and I am not at all qualified to speak about that.
As far as breeding horses to race or sell as a career, it's very difficult to make a profit. I believe the successful breeders are creative and diversified, and often have capital investment from outside sources to keep the business going.
This also applies to trainers - the profitable ones are creative about their business, for instance not afraid to own a few horses themselves or in partnership with owners, enabling them to earn more purse money when the horse wins and enabling them to sell the horse when it's value is at it's highest level. Many trainers also offer farm lay-up and shipping services in order to make more money themselves rather than using outside services.