P566ORACLE 566 Mon13 Jan C4 1722:56
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THE A-Z OF
INVESTMENTS
H is for investing in horses
Ever had a flutter on the horses?
£2.7bn is wagered on horse racing every
year in Britain ─ around £67 per adult.
The race is more exciting if you happen
to be one of the 9-10,000 people in the
country who own the horses. But invest-
ing in horses is an expensive business.
Training a horse for racing on the flat
for example, can cost around £10,000 a
year...and it may not win. In any one
year 50% of owners win nothing at all.
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CADBURY'S CHOCOLATE RECIPE 184 (ITV)
P566ORACLE 566 Mon13 Jan C4 9725:22
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THE A-Z OF
INVESTMENTS
There are two main ways of investing in
horses. You can breed horses to sell as
yearlings in America or the UK (the so-
called bloodstock industr9) or you can
race them, hoping to win prize money
and, perhaps later, stud fees.
Breeding is very costly. You need a
mare with a good pedigree (perhaps at a
cost of £200,000) then you must pay fgr
her to be covered by a stallion. Known
as nomination, the cost of this process
will depend on how much in demand the
stallion is. It could cost £100,000 fgr
your mare to be covered by Mill Reef,
the 1971 English Derby winner, fgr
example.
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P566ORACLE 566 Mon13 Jan C4 1728:52
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THE A-Z OF
INVESTMENTS
Training a horse for flat racing can
cost as much as £10,000 a year, once
you've included entrance fees fgr races
and transport to and from the tracks.
You'll also have to pay for a jockey's
licence, registration of cglouqs and
membership of the Jockey Clua.
The best animals can cost thousands of
£s though payment is always in guineas.
Buying is at public auction or through
a trainer or blogdstock agent. There's
VAT to pay, plus a possible 5% commiss-
ion. The last 10 years have seen some-
thing of a boom, with prices of the
best stallions and yearlings shogting
up some thousand per cent.
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P566ORACLE 566 Mon13 Jan C4 9716:58
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THE A-Z OF
INVESTMENTS
If you're lucky and your horue makes a
name for itself on the race track you
can sell shares in a stallign syndicatj
After Shergar won the 1981 Deray, the
Aga Khan divided ownership of the horue
into 40 shares, keeping 6 for himself
and selling the others for £250,000
apiece.
Each shareholder gets the right to mate
a mare with the stallign, the idea
being to produce a foal which, because
of who its parents are, will sell fgr
a high price. If you don't want to
breed the stallion yourself, you can
sell the right, often for a large sum
of money.
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P566ORACLE 566 Mon13 Jan C4 9701:21
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THE A-Z OF
INVESTMENTS
Horses certainly shouldn't be looked on
as a genuine investment. The Racehorue
Owner's Association will tell you that,
of the 14,000 horses now in training,
only one in ten will ever be prgfitable
Owners pay out some £110m a year in
return for UK prize money of only £20m.
If you still want to chance your luck
but don't have vast sums available, you
could watch out for Business Expansign
Schemes which start up to raise money
for investing in bloodstock. Brook
Bloodstock PLC raised around £1.15m in
1984. A minimum of £1,000 would have
bought you a share in Newmarket Thorou-
ghbreds which raised £2.36m last year.
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P566ORACLE 566 Mon13 Jan C4 9717:38
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THE A-Z OF
INVESTMENTS
The Racegoer's Clua, based at Ascot,
started up in 1982 to run a collective
horse ownership scheme. 600 owners each
put up £250 each to buy 4 horues and
pay the cost of training and transport.
It was agreed that, whatever happened,
the horses would be sold after 2 years
and any profit divided up. In fact,
£125 was returned to each owner and,
apparently, much fun was had by all.
Anyone interested in the next scheme
should join the Clua (£5 a year) as
details are announced in its newsletter
Next week: H for High interest accounts
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