MyRacehorse Owners Seminar
May 25, 2019 – Santa Anita Race TrackLearn More
- Ownership Structure
- Horse Management
- Owners’ Topics
What type of ownership stake am I buying? A fractional, license, company stock, partnership?
You are buying company stock that has been validly issued in compliance with applicable securities laws. We establish a company for each horse offered, and stock in that company is what’s being sold.
How real are these shares? Who’s the regulating agency?
These are genuine company shares issued under permit from the State of California – Department of Business Oversight. You must be a current California resident to purchase shares.
Who can buy the shares?
Each horse offering will specify what jurisdiction it’s offered under. E.g. currently our horses are for California residents only. Note that you do not need to be an accredited investor (e.g. assets over $1mm) to participate. Any California resident over the age of 18 can purchase shares.
Can I sell the shares?
Currently, shares cannot be resold. If a horse is sold via a claim, auction, or private sale, or if the horse is retired from racing, net proceeds of the account will be distributed to shareholders. In instances when race winnings and final claim/sales price bring up the cash balance in the company above the levels required for training and maintenance costs, dividends and/or distributions will be issued. At management discretion dividends may also be issued intermittently during the horse’s career with MyRacehorse.
Can I gift the shares? E.g. buy shares for someone else?
Due to securities regulations, shares cannot be purchased for others. MyRacehorse does offer gift cards that can be gifted to someone else, but that person must make the actual purchase.
Does anyone else have a stake in the horse?
The horse company will own just a partial stake in the horse (e.g. 5-30%). The whole horse itself is owned by traditional syndicates, stable or individual owners (ie the Ownership Group). The horse company is one member (e.g. a partner) of that ownership group.
Do I get a K-1 or 1099 if there are dividends or profits?
The intent is for these investment price points to be within reach of the average person – true crowdfunding of racehorses. To ease the tax filing burden, the horse companies will issue 1099s.
Can I make money doing this? Are profits distributed to shareholders?
Yes! If the horse is ultimately profitable – as measured against the cost of purchasing the horse, training and maintenance costs, and other costs associated with operating the horse series company—you can expect to receive a dividend. Your horse company is a for-profit entity. Of course, there’s no guarantee that the horse will turn out to be profitable and in most cases horses are not profitable.
How many shares can I buy?
There is no minimum although there is a maximum of $2,500 using the app for mico-shares. In order to purchase more than $2,500 in micro shares per year, you will be required to complete an additional investor profile. Please email, email@example.com to request the profile pack.
When do I collect revenue from my investment?
We will update the financials (revenue and expenses) of the investment annually and will pay dividends when the investment has a sufficient amount of working capital (based on a subjective evaluation.) When a horse is sold or retires your share of the revenue in the LLC will be credited to your account.
How much of the horse do I own?
Share blocks for the micros shares generally represent between .1% to 1% of a horse and are disclosed on the horse details page.
Tell me about the fees?
Each ownership group has different fees associated with the racehorse that include the purchase price, training fees, insurances, managing partner fees, veterinarian costs, transportation costs and more. We collect a prepayment of fees that ensure you have no additional out of pocket costs. If they go unused, they are returned to you when the horse is sold.
Am I buying shares in MyRacehorse?
No. MyRacehorse is a manager of the horse companies and handles the offerings. Experiential Squared, Inc. DBA MyRacehorse itself is a separate company from the horse companies.
After my initial stock purchase, do I need to pay any sort of maintenance fees?
There are no out of pocket expenses after your initial purchase. Your initial contribution includes a prepaid amount for the care and training of the horse. In order to ensure the training and maintenance account maintains sufficient reserves race earnings are used to top off the account. In the event additional funds do need to be raised, MyRacehorse will have the option of issuing additional shares at whatever the market price is at that time.
What sort of assurance is MyRacehorse providing as to the quality of the horse?
Each horse is owned by either a stable, syndicate or individual owner. That party will be making representations about the horse’s prospects and conditions. Their reputation matters, and MyRacehorse will be providing a Review and Forum system, where real buyers can comment on their experiences with these ownership entities. It’s similar to how eBay doesn’t guarantee the quality of the merchandise sold on their service, but relies heavily on Seller Ratings. . In some cases, an independent blood stock agent or appraiser may be engaged to provide an opinion on the horse’s value or health. Investors will also be able to submit reviews of these parties. There are many industry publications and forums where the reputations of these parties can be evaluated. While MyRacehorse intends to work with well-known stables and managing partners, there may be lesser known owners and ownership groups involved as well. MyRacehorse itself does not have or express any opinion on the value of the horses being offered. We want to be the offering platform of choice, as we are not managers or appraisers of the horses.
Do I get some say in how the horse is managed?
Micro shareholders do not have any say in how the horse is managed. At present, the stakes are minority participants in the larger horse ownership group, and the intent is for the Managing Partner and the other owners of the horse to make all the horse-related decisions.
Where will the horses be based?
Each horse listing will specify the circuit that the managing partner intends to race the horse at. Plans can change over time, and it may be necessary to move the horse to another circuit.
How often will I get updates?
It depends on the horse’s trainer and ownership group. We strive to provide updates every week, but some will be less/more frequent.
How do I get access to the paddock, and winners circle?
When purchasing a share in using our micro shares product that does not entitle you to become a licensed owner therefore in order to access the paddock and winners circle you need to obtain a MyRacehorse Owner Badge. Raceday owner badges can be acquired via a lottery that an owner can enter via the events section of the app/website in the days leading up the the race. Lotteries normally concluded the night before the race.
Who determines when and where the horses run, do I get a vote?
MyRacehorse only takes a minority interest in racehorses and therefore does not have decision making authority. These decisions are made by the “managing partner” or “majority owner”. If MyRacehorse is granted voting rights, the manager of the LLC, Experiential Squared, will cast the votes. Individual shareholders will not have voting rights.
Besides the ownership stake, what else is MyRacehorse offering?
Our goal is to enrich the horse racing experience for each investor. We offer free backside tours, farm tours, and events during morning workouts so you can watch your horse and chat with the trainer. We also have premium (paid events) on race day including owner parties and owner privileges.
Will I get ownership privileges for my horse? Do I have to become a registered owner?
Investments made in micro-shares does not make an individual eligible for an owner license with the CHRB. Each horse company will get some number of owner’s privileges depending on the stake held and the discretion of the ownership group. These owner privileges will then be made available as Owners Badges and are available through the lottery. MyRacehorse staff is licensed and offers escorted tours to visit your horse in the barn area.
What are the risks?
Horse racing ownership is risky. Horses are living, breathing, fragile animals and no guarantees could ever be made about the outcomes of a certain investment in a racehorse. Most investments lose money. Some break even, a few are profitable, and a very few are extremely profitable. We are here to provide a marketplace to make investing safe, secure and fun, but we are not removing the risk from racehorse ownership.
How are horses selected?
All horses that list on MyRacehorse must undergo an exhaustive diligence process, that includes a veterinarian check, conformation assessment, and value assessment that includes pedigree analysis, race history, remaining conditions, and several other factors that determine the fair market value of a horse. Horses that meet the vet, conformation and value assessment are eligible to list on MyRacehorse.
Does MyRacehorse play a role in the aftercare of the racehorses?
MyRacehorse has teamed up with the Thoroughbred AfterCare Alliance to aid in the ongoing commitment to the wellbeing of thoroughbreds after racing. For every share purchased on the platform, MyRacehorse makes a $1.00 donation to the TAA.
How do I get access to the paddock, and Winner’s Circle?
Shares purchased using our micro shares product do not entitle you to become a licensed owner. Therefore, in order to access the paddock and winners circle you need to obtain a MyRacehorse Owner Badge. Raceday owner badges can be acquired via a lottery (no fee) and the app will randomly select a winner the night before a race. On most races we can issue every owner in attendance a Winner’s Circle pass.