Frequently Asked Questions
Are there risks associated with Thoroughbred Ownership?
Yes. Thoroughbred horse racing is a risky venture. Approximately 60% of the horses born every year reach the track. About 45% of the horses born every year are winners. 8% are stakes winners, .07% are Graded Stakes winners and .01% (or 1 in every 1,000) are Grade 1 Stakes winners. While these are long odds, we would like to point out that they are much better odds than – say – The Lottery! Please review the section below labeled CONSIDERATIONS before deciding to buy into a racing partnership.
Are there tax advantages to Thoroughbred Ownership?
Yes. Recent changes to the tax code have greatly increased the tax benefit to Thoroughbred owners. Consult your tax advisor for more details.
Is the Thoroughbred Insured?
Pocket Aces Racing does carry mortality insurance on our thoroughbreds.
How are purses (see thoroughbred definitions) distributed?
All purses are initially held to cover future expenses. At the end of each year, if cash assets in the partnership exceed the expected expenses for the upcoming two quarters ($18,000), the surplus is distributed according to each member’s ownership. Purse money may also be distributed throughout the year at the discretion of the managers.
Why did you start Pocket Aces Racing?
We created our first partnership in 2005 by bringing together several of our friends and acquaintances to purchase a filly by Victory Gallop at the Keeneland Yearling sale. We were surprised at the enthusiastic reaction our idea received and decided to create similar opportunities for other Thoroughbred racing enthusiasts.
Is there any preference to the type of horse we will purchase?
Yes. All of our horses undergo a rigorous selection process. They must meet very specific pedigree, conformation, and vet parameters. A brief description of our SELECTION PROCESS is outlined below.
Why is the partnership set up as Limited Liability Company?
A Limited Liability Company limits its members from liability. Only the assets of the company are subject to liability should a situation arise.
How are the Members kept informed about the Thoroughbred?
Pocket Aces Racing LLC makes communications with the Members a top priority. Members will receive quarterly financial reports and weekly updates on the condition of the Thoroughbred via email. The managers will periodically send pictures and videos of the Thoroughbred as well. Should anything “out of the ordinary” occur, the members would be notified immediately. In addition, members are more than welcome to schedule appointments to see the Thoroughbred at the farm, training center, or track.
How often does the Thoroughbred race?
It is not possible to say with 100% accuracy how often a horse might race in any one year or over the course of its career. However, it is hoped that each Thoroughbred will begin its racing career by late summer of its two-year old year. As a three-year old, four-year old, and five-year old it is possible for a horse to run 8-10 times in a year.
How are partnerships concluded?
Partnerships are concluded in a variety of ways. At some point in their careers, many horses end up in claiming races. If a horse is claimed, the partnership is concluded. Though it is not the aim of Pocket Aces Racing to sell horses off the track, it is a possibility. Horses may also be sold privately, or at auction at the conclusion of the racing career. At such time, all outstanding debts will be paid, and the cash assets will be divided according to each member’s ownership interest.
Do members have input into the racing campaign of the Thoroughbred?
Yes and No. Members are always welcome to share their input, and the managers will take such input into consideration. However, the ultimate decisions regarding the racing career are up to the managers.
Do members have any input into decisions about the Thoroughbred?
Yes. Members will vote on any extraordinary capital expenditures.
Where does Pocket Aces race their horses?
Pocket Aces Racing primarily races on the Kentucky circuit which consists of Keeneland, Churchill Downs, Turfway Park, Ellis Park, and Kentucky Downs. We also race in Pennsylvania, Indiana, Illinois, West Virginia, Louisiana and Arkansas. In essence, we try to provide our horses with the best opportunity to compete and win races.
Who will train the horse(s)?
Steve Margolis and Susan Anderson train our horses. Steve is based at Churchill Downs from April through November and at the Fair Grounds from December through March. Susan is based at Turfway Park throughout the year.
So, you are thinking about purchasing a share(s) in a thoroughbred racing prospect. No doubt you have already taken in to account the many benefits, excitement and entertainment value your purchase can bring you. However we feel that it is our duty, as responsible managers, to inform you of some of the disappointments and negative aspects that can also arise from thoroughbred ownership as well. Listed below are several bullet points that we hope you will consider before you make your purchase.
- We highly recommend that Partners do not invest in our horses solely for financial gain. While it is possible your investment could realize anywhere from modest to significant returns the volatile nature of the business makes that likelihood almost impossible to predict. It has been our experience that the Partners who receive the greatest satisfaction from participating in our horses are the one’s whose primary goal is to enjoy the thrill of competition and the access afforded to the sport by being an owner.
- When we purchase colt’s as racing prospects it may become necessary, as we develop them over time, to geld them. This decision never comes lightly and is most likely not what we had in mind when we purchased them. However, if it becomes apparent that gelding is in the horse’s best interest, as it pertains to racing, then we will opt to geld them.
- Our overriding philosophy for race management is to place horses in races that they will be competitive in regardless of share price. This means horses may be running in claiming races. When we purchase our horses we envision great things for them and hope they are able to start out in the Maiden Special Weight ranks, then graduate to the allowance level. However, as we develop them, we may discover that they do not have the talent required to compete at the upper levels so we would start them at the claiming level. We have had horses that began their careers at the Maiden Special Weight level, try allowance racing and then move to claiming races as well.
- If a Pocket Aces Racing horse were to start in a claiming race a Partner in that horse is not allowed to claim the horse. In every jurisdiction that we are aware of owners may not claim a horse they already own in whole or partnership.
- We allow horses to develop at their own pace. We never push horses to run at 2 so they can start earning purse money sooner. We let the horse tell us when they are ready to run whether it’s the spring of their 2-year-old season or at 3.
- Statistics show that 50% of all thoroughbreds born make it to the races. Of the 50% that make it to the races only 50% actually win a race. When you get down to the number of repeat winners, stakes winners and graded stakes winners the percentages get even lower. These are random odds, Pocket Aces Racing’s horses actually perform much better, however, we believe this is important data to know when entering a thoroughbred racing partnership.
- While we do our best to accurately predict a horse’s talent level before it runs it is not an exact science. In the majority of instances we have been able to accurately access a young horse’s ability level and pass that along to the Partners, however, the fact remains that some horses train better than they run and vice versa.
- If you are considering purchasing multiple shares we highly recommend buying into multiple horses. Just like your financial portfolio, your equine portfolio will benefit from diversification.
In the typical Keeneland September yearling sale, we will identify approximately 800 horses to inspect based strictly on pedigree…around 350 for our select partnerships and 450 for our traditional partnerships.
Here’s a very brief description of what we are looking for when we physically inspect each horse...
Conformation – correct through the knees and ankles, proper hock placement, strong feet that match, good shoulder and hip angles, strong top line, etc.;
Tracking – we want to make sure the limbs are all going forward in a straight line. No winging or paddling in the front or back; Strength – well defined, strong gaskins. Sturdy limbs and a muscular rear end.
Athleticism – a powerful mover with good reflexes and coordination that extends his reach with fore and hind limbs.
The Total Package – we call this the process of looking at nothing but seeing everything. If a horse gets this far along with us physically we know we like his parts so we don’t want to focus on any one particular thing. By this point we’re more interested in knowing if all the parts work together; and lastly
The Intangibles – Is the horse always moving forward or does he have to be dragged everywhere he goes? Does he have an intelligent eye? What’s his attitude like? Is he calm, cool and collected or is he nervous, scared or sour, etc.?
Depending on the quality of the sale we usually keep around 10%-15% of the horses we look at on the pedigree list based on physical so we should be able to get the list down to 80 – 120, from 800, after we’ve looked at them all. Of those, about a third of them will have vet problems (fractures, large OCD’s, chips, bad airways, etc.) that we can’t live with, which will get the list of horses we will consider purchasing down to about 50 – 80 horses. This is a very brief description of our process – which we apply to every horse that runs in the Pocket Aces silks, whether they cost $100,000 or $10,000 – so if anyone would like more details feel free to give us a call or come out to the sales to take in all the action.