Before investing a lot of money buying horses, owners should understand that an expensive, royally bred and physically perfect horse is not a guaranteed race winner. Also, if an expensive, royally bred and physically perfect horse is not able to win a race, and if that horse is part of a "mega-stable" that makes an individualized program for one horse difficult or impossible, you might want to try a different trainer for a few months before giving up on your horse's racing career.
Of course all this assumes that an owner who buys an expensive horse can afford the huge ongoing expense of maintaining a horse. It's always good to remember that the maintenance cost of a horse is almost always more than the purchase price.
On the subject of how much to spend on buying a racing prospect - if you are buying a horse that is currently racing and ready to run, your best chance for success, in my opinion, is with a horse that can be purchased in the price range of $10,000-$100,000. In other words, please don't buy a horse for $1000 and please don't buy one for $1,000,000.