Who decides what horses we’ll buy, who will train them, when they race and all that expert stuff?
Steve Zorn is the founder of Castle Village Farm and manages all its partnerships. He is now known throughout the industry as an expert at buying young horses that will out-perform their purchase prices, and also at claiming horses that can then be raced at higher levels. He buys frugally, with an eye towards horses that will have long and successful careers. Several Castle Village Farm horses – including Flippy Diane, Introspect, Angel Dancer, Raf and Ready, Seaside Salute, Fighting Speedy and Diligent Gambler – have earned far more than they cost. Most of our horses are New York-breds, so they can compete in restricted races, which gives them a better chance of being in the money. Also, when New York-breds do compete against open-company horses, they qualify for lucrative New York bonuses. (For more information on our current horses’ earnings, see Our Results. For information on Castle Village Farm’s horses, see Our Horses.)
Together with Castle Village Farm’s primary trainers, Triple Crown winner Bill Turner and Leah Gyarmati, Steve is ultimately responsible for making the tough decisions about when and where to race our horses. He is often at the barns, and he consults with the trainers daily, sometimes – depending on what is going on – several times in a day. (For more about Steve and Castle Village Farm’s trainers, see Our Humans.)
Unlike most other managing partners, Steve encourages partners to communicate not only with him, but also with one another. He welcomes suggestions, thoughts, questions and input into his decision-making from all of the partners. As a partner in a Castle Village Farm partnership, you’ll be a member of that partnership’s internet group, where you and your fellow partners may engage in discussions about your horse with each other and with Steve. That’s also the forum Steve uses to let you know how your horse is doing and when it’s being entered in a race.
What are the special benefits of Castle Village Farm partnership?
As a Castle Village Farm partner, no matter the size of your share, you are welcome in the paddock and the winners’ circle for your horse’s races. You will stay on top of your horse’s progress, and share your own opinions about racing with the other partners, through the Castle Village Farm internet group for your horse. You’ll also participate in the Castle Village Farm Info internet group, where we post general news of interest to all partners. The internet groups are also used for sending out notifications of our horses’ workouts, entries and results as soon as those become available.
Partners who own 3% or more of a horse can (and must, if the horse is racing in New York) be licensed as thoroughbred owners. With that licensing comes a badge for backstretch (stable area and training track) access, where you’ll be able to visit our trainer’s barn and see your horse on the track during morning work outs. If you are a licensed owner, you’ll also get free parking in the owners’ lot and free clubhouse admission for yourself and your immediate family. If you own less than 3% and do not have an owner’s license, you can still easily make arrangements with us to meet on the backstretch, visit the barns and see your horse work out.
All partners are also welcome at the annual Castle Village Farm party in Saratoga, which features great food, great company (your fellow partners), and music by Sam the Bugler of NYRA and his very talented friends.
When I join a Castle Village Farm partnership, what exactly am I paying for, and what financial obligations will I have?
The initial partnership capital will cover the actual price of the horse(s). Your initial capital investment will also cover (a) the expenses we incurred in buying your horse (vet exams, travel expenses to attend the sale, etc.), (b) the costs to us of setting up the partnership and selling interests in it and other up-front expenses, and (c) a reasonable percentage, disclosed in the business plan of each new partnership, for Steve’s expertise in choosing your horse. We also collect a reserve for training expenses, usually for a three-to-six-months’ period, as part of your initial investment. That way, you can be sure that, barring unforeseen risks, you won’t be called upon for additional payments for at least that length of time.
After that training reserve has been used up, you will be responsible for your percentage share of ongoing expenses. Typically, these expenses run on the order of $3,500 per month, in total, for a horse in training at the race track in New York. So, if you own 1 percent of a horse, you can expect your share to be on the order of $35 per month, or $105 in each quarterly billing period. Of course, we hope that the amount of money you actually will have to pay will be less than that. We hope that your horse will be contributing to its own upkeep as well, or even earning a profit. But, again, we have to warn you: while Castle Village Farm horses generally do very well on that score, racing is full of unexpected risks, so you should expect some cash calls.
How do I know what my money is going for?
We provide detailed quarterly financial statements, which show each and every charge for training and boarding the horses, veterinary work, shoeing, van transportation and all the other costs directly related to the care of the horse. In addition, there is a flat monthly charge, stated in each separate partnership agreement, for all of Castle Village Farm’s out-of-pocket overhead and management expenses; this covers actual expenses only. Yet another important way in which Castle Village Farm differs from other partnerships is that the Managing Partner is not paid a regular monthly fee. Instead, to the extent he gets paid at all, it comes only from your horse’s winnings or from profits on the sale of a horse.
We also contribute 1% of our horses’ purse earnings to race track-related charities, including thoroughbred retirement funds, injured jockeys’ funds, and backstretch benevolence programs. Partners are encouraged to suggest the charity that will be the beneficiary of their horse’s earnings.
You will receive quarterly financial reports, and, in addition to detailing the partnership’s expenses, they’ll also have complete financial details on each start made by a horse: what the purse was, how much the trainer’s and jockey’s share was, and what other deductions the race track might have made from the purse. These reports will generally be distributed by email and posted on each partnership’s internet site; partners without internet access can request hard-copy delivery.
In addition, you will get an IRS form K-1 for each partnership in which you have a share at the end of each year. These are usually ready no later than the end of February, so that you’ll have plenty of time to include them in your personal tax return planning.
If my horse earns money, how soon do I get my share?
We distribute money, and bill for expenses, quarterly. At the end of each quarter, if your horse has made money, and there’s enough left to pay the next quarter’s estimated expenses for your horse, then anything above that will be distributed to the partners. If there isn’t enough to pay the estimated expenses, you will be billed for your pro-rata share of what’s needed.
Some other partnerships distribute purse money a bit faster, but generally that’s because either (a) they automatically bill partners for expenses every month, charging their credit cards, regardless of how the horse is doing, or (b) their partnerships are set up from the beginning with enough money to support the horse for several years – which makes them a lot more expensive up front than ours.
Can I expect to make a profit on my partnership share?
In a word, NO. Despite our expertise.
We have the best possible advice as we make our purchases – and our managing partner Steve Zorn is now known throughout the industry for his excellent eye when it comes either to buying young horses or claiming horses that are already at the track. And, before he buys, he obtains expert pedigree, conformation and veterinary advice.
Nevertheless, there is always a risk in buying thoroughbreds. Roughly one-third of all registered thoroughbreds never even make it to the races, and roughly one-half never win a race. Race horse ownership is a high-risk undertaking. If you are purchasing a partnership interest primarily because you expect to make a profit, don’t. Most horses lose money, some more or less break even, and a few are very successful. We hope to have only the successful ones, but there are no guarantees.
If, on the other hand, you want to join a partnership because you love horses and racing, and want to be a part of the racing world, sharing in the ups and downs of your horse’s career, at a reasonable cost, then you should consider becoming a Castle Village Farm partner. We can guarantee thrills, satisfaction and even the occasional disappointment; we can’t guarantee profits.
How does Castle Village Farm management make money from the partnerships?
Basically, the managers or promoters of a racing partnership can make money in three ways:
(1) They can mark up the price of a horse they buy, when they sell it to the partners (e.g., buy a horse for $25,000 at auction and syndicate it for $100,000);
(2) They can charge a regular monthly management fee, regardless of how well, or how badly, the horse does on the race track; and
(3) The can take a percentage of the horse’s winnings.
The managers of many partnerships do ALL of those. Castle Village Farm does ONLY the first and the last. And we don’t do the first very much. Although Steve does take a small fee to compensate him for sharing his expertise with you, it is usually on the order of 5 percent to 10 percent of the horse’s price, not the 300 percent or higher mark-up that characterize too many partnerships. And Steve doesn’t charge a management fee at all – certainly not one that gets paid every month even if a horse isn’t winning. At Castle Village Farm, the monthly expense fee is for actual, out-of-pocket expenses only. Once Castle Village Farm’s partners own their horse, the only way we get paid is if the horse runs well. We take just 5 percent of purse earnings from all races, and 10 percent once a horse earns over $100,000. At that point, the horse is usually profitable for the partners as well. In addition, we get 10 percent of any profit made on selling a horse (i.e., if we claim a horse for $25,000 and it’s claimed away for $35,000, the managing partner gets $1,000).
