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Purchase Agreement for Horses


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									Louisiana Racehorse
    Ownership Seminar
            Today’s Card
 LRP Introduction
 So You Want to Buy A Racehorse!
 Cost of Ownership
 Partnership Facts and Figures
 The Starting Gate
Frank Francois:
Over 20 years in law
Marine Corps veteran
Farm Manager (The Braun)
Sunny Francois:
20 years in Fortune 500 and Federal
   Government Financial Systems
B.S Accounting 1995
Business Manager (The Brains)
              Together we are
  Louisiana Racehorse Partnerships.
Married 20 years with three children, we are
  embedded in our community and share a
    love of horses and a passion for horse
 racing. We do this not to make a living, but
 because we LOVE it and believe 100% that
      homework and hard work pay off.
            Why do we syndicate?
Breeder’s Rewards! The state of Louisiana compensates breeders of
   Louisiana Thoroughbreds at a rate of 22% of the horse’s earnings, no
   matter who owns the horse during it’s racing career. That’s an attractive
   incentive to breed winners! While pedigree is important, well bred horses
   don’t always win – they also need the correct balance of nutrition, training
   and care to be successful. We feel that by managing the nutrition, training
   and care of our stock, we have a better chance of creating winners. They
   go from our good hands to the best training hands we can afford. As
   breeders we can either sell our stock at public auction and hope for the
   best, or cultivate an owners group to give our babies the best possible
   start. Cultivating an owners group takes much more effort on our part, but
   we believe the payoff will be worthwhile.

Entertainment! What better way to enjoy the success of our Thoroughbred
   offspring than to gather a group of racing enthusiasts together and share in
   the excitement? We love this game and hope to share it with people who
   never dreamed they could own a racehorse.

                         LRP Goals
     Bring new fans to Horse Racing in Louisiana
     Bring Racehorse Ownership to everyday people
     Provide the very best start for our Thoroughbreds
     Take lots of photos in the Winners Circle with our Thoroughbreds
      and friends!

    We hope you will love your LRP experience so much that you’ll be
      hooked on racing! So many people jump in with two feet and lose
       fortunes in horses. That’s not good for the industry – we want
        people to know upfront what they are getting into. We want
       people to have a positive experience and come back for more.
So You Want To
     Own A
            Ownership as a Hobby
  LRP members buy not only an interest in a racehorse, but a ticket to
      entertainment for the duration of that horse’s career. Here’s a sample
      year of Ownership entertainment:
     November- Partnership dinner meeting to discuss fall racing plans
     December – LTBA Holiday Banquet/Champions Day Celebration
     January – Meet the trainer
     February-Trip to racetrack to watch your racehorse work
     March – Trip to the races to view his first race
     April –LRP Spring BBQ/Meet the newborn foals!
     May-Educational seminar on conformation/pedigree
     June-Visit to Evangeline Downs
     July-Evangeline Downs Night in the Clubhouse
     August-LRP Fall Planning Dinner
     September-Yearling Sales
     October-LRP Ownership Seminar
              Ownership as a Hobby
  In addition to ownership events, you will be invited to attend educational seminars to
       develop your industry knowledge. Sample seminars include:
      Veterinary open house
      Pedigree seminar
      Taxation seminar
      How to read a sales page

You will also be invited to breeder events including:
     Mixed, yearling and two year old in training sales
     Pre sales parties
     Stallion parades
          Ownership as a Hobby
What hobbies do you currently have that offer:
              Entertainment
            Social networking
           Thrill of competition
       Education in a new industry
   Opportunity to get your money back!

Consider your annual outlay for such hobbies as golf memberships, rarely used health club
       memberships, hunting leases, boating/fishing trips, Mardi Gras clubs etc. Racehorse
  ownership with LRP offers you the entertainment and camaraderie of a social club, the thrill of
 a competitive sport AND the opportunity to get your money back and more! Not many hobbies
                                    can make a similar claim.
         Ownership as a Business
  Be wary of people who use the words ‘horse’ and ‘investment’ in the
      same sentence. You shouldn’t expect to become wealthy by way
                of racing horses, though some have done so.
As we will demonstrate today, horse racing is a costly undertaking and
        the stakes are high. By entering the business of horse racing
         through a partnership you have many financial advantages
    Tax Benefits
    Limited Risk
    Diversification
    Industry Knowledge
    Shared Overhead
      How many business ventures have the same selling points?
                              Our motto:
                    LIMITED RISK, UNLIMITED FUN!
                   Cost of Full Ownership
      Expense Description      Yearling Year   2 Year Old Year      3 Year Old Year
Purchase Price – September    $ 8,500.00
Misc Transport                    500.00         1,000.00          1,000.00
Farm Board (Layup)                350.00         1,050.00          1,050.00
Training                         4,050.00      27,000.00         27,000.00
Veterinary Expenses               800.00         2,000.00          2,000.00
Farrier Expenses                  300.00         1,200.00          1,200.00
Insurance                        1,000.00        1,500.00          1,500.00
Annual Outlay                 $15,600.00       $33,750.00        $33,750.00
Grand Total                                                      $83,100.00

At the end of the two year old year you will need to decide whether to continue
with your venture or retire the horse. You’ve spent $49,350.00 to determine that.
            About the Numbers
              Expense                       Considerations
Purchase Price          This will be the least of your expenses and your worries!
Misc Transport          Typically trainers charge to haul horses to and from the
                        track, boarding facility or vet. Be sure to ask your trainer
                        what items are not included in his day rate.
Farm Board (Layup)      Horses will need time off from training. We used 3
                        months per active year in our estimates. This will vary by
                        horse and trainer.
Training                Day rates for trainers vary dramatically. We use an
                        average of $100.00 per day. You may hear of trainers
                        who’s day rate is as little as $45.00 per day. Evaluate
                        their operation. Trainers who buy good feed, retain good
                        help and have the amenities to train a champion are not
                        cheap. Also, the day rate can exclude many items.
                        $100.00 per day is a good figure to use to cover
                        everything it costs to keep your horse well.
Veterinary Expenses     This varies widely by horse and trainer. We can only
                        estimate what normal vet fees will be.
Farrier Expenses        We estimate $100.00 per month. Some horses will
                        require more, some less.
Insurance               Varies by horse’s performance, age and level of training.
    How LRP Partnerships Work
   For every LRP horse, a new LLC is formed.
   The LLC is named after the horse – for example ‘Undesided
    Owners Group LLC’.
   10 owners each purchase a 10% share in the LLC.
   Proceeds from selling the 10% interest are deposited into the LLC
    checking account to cover future expenses.
   The assets of the LLC include the horse and the balance of the
    LLC checking account.
   All expenses are paid directly from the LLC checking account.
   At any point in time, should the horse stop racing, his residual
    value (if anything), plus the balance in the checking account, is
    split equally between all partners.
   If the horse races beyond it’s 3 year old year, it will either sustain
    itself on purse winnings it previously earned, or the LLC will agree
    to contribute the funds required to continue at that time.
    How LRP Partnerships Work
   If the horse dies, the value of the insurance policy plus the
    balance of the LLC checking account are split between the
   The Horse’s winnings are deposited into the LLC Checking
    Account. It will be the decision of the partners as to whether the
    winnings will be fully distributed to the partners, reserved for
    future racing expenses, or partially distributed and partially
    reserved for future expenses. This decision will depend on the
    timing of the winnings. LRP recommends a 50% split – distribute
    half and reserve half.
   LRP retains no ownership interest in the horse. The horse
    transfers fully to the partners.
   Decisions regarding training and racing are made by the
    management group (LRP) through the horse’s 3 year old racing
    year. The LLC will determine if they wish for this to continue at
    the end of the racing year.
        How LRP Partnerships Work
       There is a management fee included in the partnership pricing.
        This fee covers:
    –      Transport to and from trainer
    –      Communication with trainers, vets, farriers etc
    –      Coordination of social events and meetings
    –      Communication on horse’s status
    –      Preparation of Financial Statements
    –      Preparation of Tax Documents
    –      Record Maintenance (receipts, registrations etc)
       At the conclusion of the horse’s racing career, if the owner group
        is unsuccessful in placing the horse, LRP will take responsibility
        for the horse’s placement.
       At the inception of the LLC, the Horse’s sales price is paid from
        the LLC checking account to LRP. The sales price represent’s the
        breeder’s costs of raising the foal to it’s current age and state.
                     Partnership Savings
      Expense Description        Individuals    LRP Partners     Reason for Savings
                                    Pay             Pay

Purchase Price – September      Varies         Varies          Our horses will cost less
Yearling                                                       because we have not
                                                               incurred the costs of an
                                                               organized sale. We save
                                                               money on consignment
                                                               fees, transport and
                                                               commissions and we
                                                               pass those onto our
Misc Transport                    2,500.00          0.00       We transport all of our
                                                               LRP managed horses
                                                               FREE OF CHARGE. This
                                                               does not include raceday
                                                               transport as the trainer is
                                                               responsible for raceday.
Farm Board (Layup)                2,450.00      1,800.00       We discount board for
                                                               layups for LRP managed
Administration (trips to        Varies         $20.00/month    This is the purpose of the
track/trainer/meet with vets)                  each            management fee
 Partnership Cost - UNDESIDED
Option 1: Paid in Full   $2,950.00
Option 2: Payment Plan   $500.00 down +
                         $245.00 per month for
                         10 months
        What Expenses are Covered?
•Purchase Price

•Management Fee - Through the end of Undesided’s 3 year old racing year.

•Entertainment – There is an annual entertainment budget. This covers an annual BBQ.
Some events will require payment from the owner’s group for participation. An example would
be a trip to the Fairgrounds for the Louisiana Derby. LRP provides a box but each owner is
responsible for their food, drink and gambling.

•Transport to and from trainer/boarding farm

•Mortality Insurance to cover horse’s current value – adjusted throughout career

•Boarding for layups, injuries etc.

•Training including yearling breaking/training and race training through the three year old
racing year

•Estimated Vet and Farrier – We’ve done our homework on estimates but it’s possible that
veterinary expenses due to an unforseen event could exceed the estimate. In this case, the
owner’s group would need to contribute the additional funds unless offset by other
      What Expenses are Not Covered?
Expenses Beyond 3 Year Old Racing Year – It is assumed that if the owner’s group
decides to continue racing the horse beyond it’s 3 year old, the horse must be paying his way.
The owner’s group must at the time of deciding to continue the racing career, agree to the
annual or monthly contribution to continue.

Excess Veterinary – We’ve done our homework on estimates but it’s possible that veterinary
expenses due to an unforseen event could exceed the estimate. In this case, the owner’s
group would need to contribute the additional funds unless offset by other savings/winnings.
    Partnership Account Example
At any point in time, your ownership value is one tenth of the partnership account
balance less any outstanding bills. Should the horse be injured or stop racing, each
partner will be refunded one tenth of the balance of the account less outstanding
       Date           Transaction            Amount               Account
 11/1/2010           Sell 10 Interests      29,500.00          29,500.00

 11/1/2010           Sales Price             (7500.00)         22,000.00

 12/1/2010           Training Bill           (2000.00)         20,000.00

 1/1/2011            Training Bill           (2000.00)         18,000.00

 2/1/2011            Vet Bill and Farrier     (450.00)         17,550.00

 3/1/2011            Entry Fees – first      (500.00)          17,050.00
 3/1/2011            Proceeds from race      6000.00           23,050.00
                 Full Disclosure
As an owner, you will receive:
•Frequent emails describing your horse’s activities and

•A monthly newsletter outlining events and industry news

•Quarterly partnership Financial Statements accounting for all
revenues and expenses

•Copies of bank statements

•Annual K-1 and copy of 1065 Tax Forms filed with the IRS

•Ability to review receipts and invoices pertaining to your
        Frequently Asked Questions
May I sell my partnership interest?                         You may sell your interest at any time. LRP does not
                                                            broker individual shares but should you find a buyer you
                                                            can sell your share.
How do I get out of the partnership agreement?              Once you purchase your share you are in this for the
                                                            duration unless you sell your share. All fees and
                                                            arrangements are hinged on ten partners sharing the cost
                                                            of the horse. To exit the agreement would leave the
                                                            remaining partners at risk. You may try to negotiate the
                                                            sale of your interest to the remaining partners.
What happens to the horse at the end of it’s career?        If the horse needs to be sold or placed LRP will assist in
                                                            doing so. If the owner group is unable to place the horse
                                                            within 6 months of it’s retirement, LRP will assume
                                                            responsibility for the horse.
Can you split a 10% interest?                               Only one legal partner will be named per ten percent
                                                            interest. If you choose to go in shares with someone on
                                                            the ten percent interest, only one of you are a partner
                                                            and only one entitled to the entertainment benefits. The
                                                            other may attend events at their own cost.
Are race winnings dispersed to the owner group or held in   We want you to reep the rewards of your partnership
the partnership account?                                    interest. Race winnings will be distributed to owners as
                                                            long as the training account is in good financial health.
Why shouldn’t I just buy a claimer?                         When you are ready to carry all of a horse’s training
                                                            expenses, a claimer is a great option.
           THE SIRE
             IDE (Forty Niner)
Remarkable 75% WINNERS & 10% STAKES HORSES
               THE SIRE
                IDE (Forty Niner)

   Average 2009 IDE yearlings sold for
   14 progeny earning over 100K
   2009 Louisiana Stallion of the year!
   In 2008 ALONE his progeny earned over
    $2.2M from 102 runners
                THE DAM
              Zarb’s Destiny (Zarbayev)

   A Winner over the mile
   From a Graded Stakes family
   Bred by Foxwood Plantation – the state’s
    leading breeder across several years.
   UNDESIDED is her first foal
                     The Starting Gate
    Now that you’re rearing to go - here’s a
            guide to getting started!
       Today:
    –       Sign partnership agreement and provide either a deposit of $500.00 with remainder due
            in 30 days, or prepay your entire interest. Funds are placed in escrow.
    –       Order your UNDESIDED merchandise (coming soon)!
       Within 30 days from seminar:
    –       LRP forms the LLC, gathering your signatures on articles of incorporation.
    –       LRP establishes checking account exclusively for the new LLC
    –       LRP hosts a planning party for UNDESIDED!

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