Authentic breeding question

[TapitsGal]

I've seen tons of people on Facebook posting that they bought shares in Authentic through my racehorse and they expect Authentic to stand for a lucrative fee his entire stud career. Most don't expect to make any money off his racing career, but they are expecting huge checks once a year once he's begun breeding mares. My question is how realistic is that expectation? Or are they being taken for a ride in a way? I can think of a few derby winners who started off standing in Kentucky but are now in regional markets for less than 8k. And chrome can't be the only winner standing for 35k or less can he? Are there going to be a lot of dissatisfied shareholders once authentic breeds?

[Honor Code]

I can’t recall all the details for the stud fee but if I recall correctly those shareholders are going to be deeply disappointed.

They take a huge chunk in “management fees” and other fees. Something like 20-30% all told.

Also, realistically there’s thousands of shareholders. Even if we assume Authentic goes to stud and consistently commands a fee greater than 30k, once you’re divide that up by thousands....I noped out.

[HB1994]

I bought a share. I don’t expect to make a cent back from either his racing or breeding career (unless he’s the next Northern Dancer or Mr. P). I never have to spend another cent, either. I’ve already got what I wanted out of it: I own a piece of a Derby winner. I even got my winner’s circle photo this week. I’ve spent a lot more on much stupider things.

[Flanders]

I've seen tons of people on Facebook posting that they bought shares in Authentic through my racehorse and they expect Authentic to stand for a lucrative fee his entire stud career. Most don't expect to make any money off his racing career, but they are expecting huge checks once a year once he's begun breeding mares. My question is how realistic is that expectation? Or are they being taken for a ride in a way? I can think of a few derby winners who started off standing in Kentucky but are now in regional markets for less than 8k. And chrome can't be the only winner standing for 35k or less can he? Are there going to be a lot of dissatisfied shareholders once authentic breeds?

Its not realistic at all but they aren't being taken for a ride. The webpage is very clear how everything works, if they didn't read or do the math and somehow think they are going to get rich, well that is pretty ridiculous.

I'll do the math here and write it so you can substitute numbers if you want to do it yourself. I randomly picked a stud fee and also I used 200 live foals at the baseline for this. The number of mares covered doesn't matter, its about the live foals produced because stud fees aren't paid otherwise. I also think 200 live foals is way to high but I'll use that.

Stud Fee: 30k (obviously just guessing a fee)
Live Foals: 200 (this is too high but its the number I'm using)
Myracehorse.com owns = 12.5%
Total Shares they sold = 12,500
Management Fee = 25% (Honor Code said it was 20 or 30% so I'll go in the middle)

$30,000 * 200 = $6,000,000 (Stud fee * live foals = total stud fees earned)
$6,000,000 * 12.5% = $750,000 (total stud fees earned * myracehorse.com % ownership = myracehorse.com % earned stud fees)
$750,000 / 12,500 = $60 (myracehorse.com % earned stud fees/shares they sold = stud fee per share)
$60 - 25% = $45 (stud fee per share - management fees = payout per share)
Then they will have to pay taxes out of that $45.

[TapitsGal]

I've seen tons of people on Facebook posting that they bought shares in Authentic through my racehorse and they expect Authentic to stand for a lucrative fee his entire stud career. Most don't expect to make any money off his racing career, but they are expecting huge checks once a year once he's begun breeding mares. My question is how realistic is that expectation? Or are they being taken for a ride in a way? I can think of a few derby winners who started off standing in Kentucky but are now in regional markets for less than 8k. And chrome can't be the only winner standing for 35k or less can he? Are there going to be a lot of dissatisfied shareholders once authentic breeds?

Its not realistic at all but they aren't being taken for a ride. The webpage is very clear how everything works, if they didn't read or do the math and somehow think they are going to get rich, well that is pretty ridiculous.

I'll do the math here and write it so you can substitute numbers if you want to do it yourself. I randomly picked a stud fee and also I used 200 live foals at the baseline for this. The number of mares covered doesn't matter, its about the live foals produced because stud fees aren't paid otherwise. I also think 200 live foals is way to high but I'll use that.

Stud Fee: 30k (obviously just guessing a fee)
Live Foals: 200 (this is too high but its the number I'm using)
Myracehorse.com owns = 12.5%
Total Shares they sold = 12,500
Management Fee = 25% (Honor Code said it was 20 or 30% so I'll go in the middle)

$30,000 * 200 = $6,000,000 (Stud fee * live foals = total stud fees earned)
$6,000,000 * 12.5% = $750,000 (total stud fees earned * myracehorse.com % ownership = myracehorse.com % earned stud fees)
$750,000 / 12,500 = $60 (myracehorse.com % earned stud fees/shares they sold = stud fee per share)
$60 - 25% = $45 (stud fee per share - management fees = payout per share)
Then they will have to pay taxes out of that $45.

This sounds sort of realistic. On facebook, my racehorse was commenting using similar math but was using the number 500 mares a year. I know it's just an estimate but I thought it was kind of absurd. No north American thoroughbred breeds 500 mares a year unless they are a coolmore or spendthrift stallion who bred 250 mares in north america then shuttled

[Flanders]

This sounds sort of realistic. On facebook, my racehorse was commenting using similar math but was using the number 500 mares a year. I know it's just an estimate but I thought it was kind of absurd. No north American thoroughbred breeds 500 mares a year unless they are a coolmore or spendthrift stallion who bred 250 mares in north america then shuttled

He is a Spendthrift stallion that was why I used 200 foals at the baseline, hahaha. Even if he did shuttle, stallions stand for a fraction of their US stud fee when going to the Southern Hemisphere and don't cover 200 mares in SH. Spendthrift stallions Omaha Beach (45k US and 22k Australia) and Vino Rosso (30k US, 13.5k Australia) stand for less than half their US fees.

So we say he shuttles, stands for 15k and gets 100 foals. That still only adds $15 to the total before management fees.
Making the total per share like $56.

[Pirateena]

Sounds like the OP's friends bought in without reading the fine print or actually knowing much about horses.

MyRacehorse has also said they paid 9 mil for their small share, and that they're not paying anything to the shareholders until that is fully earned back. So even if he wins the Pegasus and Dubai Cups a few times from now until retirement and has a big stud fee its going to be several years before that any pennies are going to flow to investors. MyRacehorse has changed their distribution schedule so that investors will get money quicker since, but that only applies to the horses offered AFTER Authentic and the other three that had shares offered at the same time.

He's also a horse, and thus could up and suddenly die in the next hour from colic, or breaking a leg while playing, or whatever random happening, and there's no refund that will happen in that event.

I didn't even bother going for Authentic, instead bought three shares in the Into MischiefxLost Empire yearling colt offered at the same time, because they were far, FAR less. That plus the shares in Frosted Oats and the Future Stars bundle I bought later STILL don't add up to what ONE share in Authentic cost.

I am more in it for the 'I OWN HAIRS ON A (well actually 15) RACEHORSE!!!' joy anyway.

--Teena

[Flanders]

Sounds like the OP's friends bought in without reading the fine print or actually knowing much about horses.

MyRacehorse has also said they paid 9 mil for their small share, and that they're not paying anything to the shareholders until that is fully earned back. So even if he wins the Pegasus and Dubai Cups a few times from now until retirement and has a big stud fee its going to be several years before that any pennies are going to flow to investors. MyRacehorse has changed their distribution schedule so that investors will get money quicker since, but that only applies to the horses offered AFTER Authentic and the other three that had shares offered at the same time.

He's also a horse, and thus could up and suddenly die in the next hour from colic, or breaking a leg while playing, or whatever random happening, and there's no refund that will happen in that event.

I didn't even bother going for Authentic, instead bought three shares in the Into MischiefxLost Empire yearling colt offered at the same time, because they were far, FAR less. That plus the shares in Frosted Oats and the Future Stars bundle I bought later STILL don't add up to what ONE share in Authentic cost.

I am more in it for the 'I OWN HAIRS ON A (well actually 15) RACEHORSE!!!' joy anyway.

--Teena

He's retired already and standing for 75k.

[Pirateena]

He's retired already and standing for 75k.

Ah, that's right. Thus it will take a lot longer for buyers to see any money.

--Teena