Breeders’ Cup Presents Connections: An ‘Experiential Investment’ In Horse Racing

by | 08.02.2019 | 2:17pm
MyRacehorse.com founder Michael Behrens and his three children at Santa Anita Park

Cot Campbell changed the face of horse racing ownership when he introduced the public partnership in 1969. His ground-breaking ideas sparked the development of thousands of ownership syndicates and introduced Thoroughbred ownership to an entirely new demographic.

Michael Behrens is taking Campbell's idea a step farther, launching racehorse ownership into the 21st century. He is the founder of MyRacehorse.com, a platform selling micro-shares as small as 0.01 percent in Thoroughbreds. A one-time fee of as little as $100 grants an investment in a real racehorse, with ownership benefits like the chance to share in that horse's earnings as well as barn tours, paddock passes, and (hopefully) trips to the winner's circle.

“I call it an experiential investment,” said Behrens. “I use the analogy of investing in a share of Google all the time. Now, I'm not suggesting you drop your all Google shares and buy into racehorses instead, because they're still horses and there's a lot more risk involved. But the racehorse shares are a lot more fun to follow and root for, in my opinion, at least.”

Unlike Google stock, which does not pay investors a dividend, micro-shares with MyRacehorse do have the potential to pay “dividends” if the horse finds success on the racetrack and its earnings surpass its expenses.

As if that weren't enough to attract potential investors, a new partnership with Spendthrift's B. Wayne Hughes has built a whole new level of incentive into the MyRacehorse marketplace.

The “Future Stallion Challenge” and $6 million bonus drew the attention of Thoroughbred aftercare executive Kim Smith, the founder of Kentucky-based Second Stride, Inc. She was intrigued by the idea, and subsequently purchased her first share of an “on-the-track” racehorse.

With a buy-in price of $95 for a 0.01 percent share, 2-year-old colt Wayne O (Into Mischief) was offered on MyRacehorse to a select number of investors. A $750,000 yearling at the Fasig-Tipton Saratoga Select Sale, Wayne O is now in training with Steve Asmussen at Saratoga. Spendthrift retained 40 percent of the colt, and the bonus money (representative of his future stallion value) will be paid out to investors immediately if Wayne O wins a Grade 1 stake.

Wayne O will debut for Spendthrift and MyRacehorse.com on Saturday at Saratoga

“He was well put-together, has a great pedigree, and he's in training with Asmussen,” Smith said when she mentioned the colt at a recent BBQ event. “For less than $100, it feels like I can't lose.”

It doesn't hurt that MyRacehorse donates to the Thoroughbred Aftercare Alliance (the organization by which Second Stride is accredited) for every share sold on its website and mobile app.

The initial shares in Wayne O have been sold out, according to the website, but there are still a small number of 0.1 percent shares available to accredited investors.

“Wayne is such a fan of the idea, and his faith in selecting such a nice colt for us is a really big step forward,” said Behrens. “He had been looking for more ways to bring racing to the everyman, and he has really latched on to what we are trying to accomplish.”

The goal, Behrens said, is not only to sell more people on racehorse ownership. Becoming a micro-share owner not only provides perks, but it also gives people a “vested interest” and a reason to watch, and perhaps to attend and to wager, on the races.

“There is nothing like watching 'your' racehorse thunder down the stretch and battle to the wire,” Behrens said. “The sport needs to find a way to connect average fans to that experience, to make them a part of the action.”

Starting MyRacehorse wasn't as easy as just building a website, however. Behrens is the former Chief Marketing Officer for the Casper Mattress company, which was one of the original bed-in-a-box online retailers and is now valued at over $1 billion. He left in late 2017 because the company is based in New York, and Behrens' three kids and wife live in California.

Always a fan of horse racing, Behrens enjoyed spending the occasional Saturday afternoon at the racetrack and wondered if he could find a way to incorporate his “entrepreneurial itch” with horse racing. He went through three different lawyers and sorted through the investing red tape to officially launch the platform in June of 2018.

The issue, Behrens explained, was that companies cannot just sell shares to unaccredited investors. The difference between an accredited investor and an unaccredited one is based on one simple factor: whether their net worth is over $1 million. Hence, Behrens had to find a different work-around to be able to sell shares to the “average Joe.”

Registration with individual states was the answer, and MyRacehorse now has the legal ability to sell shares in 43 states in the U.S. Since the intent is to make these shares as affordable as possible while maintaining the chance for profitability, the share's owner will be sent a 1099 if dividends are paid out in order to ease the tax filing burden.

“It was complicated to get off the ground, but we've made it as easy as we possibly can to participate,” said Behrens. “People can buy and manage their shares from both the website and the app, and we've found that some investors have been using us to diversify their holdings instead of buying just one horse at the sales.”

In a time in which the sport is under intense scrutiny, educating the public about how well racehorses are cared for and the dedication that goes into each animal is more important than ever. Behrens has brought in “owner concierges” at every track at which MyRacehorse-owned horses are based to lead tours and add to owner education. He incorporates full transparency into every horse the platform represents, from share pricing information to regular updates and videos.

The management and day-to-day decisions about the horses are left up to the majority partners, however, and MyRacehorse never owns 100 percent of a horse it represents.

“We take advantage of their name recognition and experience in the industry,” Behrens explained. “Why would people want to own part of a horse I'm managing? I'm just a marketing guy!”

The platform's most successful horse, to date, is Indiana Oaks winner Street Band. Behrens made the deal with her ownership group before the filly started in the Kentucky Oaks, and he describes the trip to Churchill Downs as absolutely “magical” for many of the owners.

“Larry Jones and Sophie Doyle (trainer and jockey) have been so wonderful with us, accommodating stable tours and answering owners' questions,” he said. “It was so special to be a part of racing's biggest stage, and we can't wait to see what she does next!”

Street Band is aiming for the G1 Alabama at Saratoga as her next start. Tizamagician, another horse MyRacehorse has in partnership with Spendthrift, ran second in his debut at Del Mar last weekend, and Wayne O is scheduled to make his first start on Saturday at Saratoga.

As for Behrens, he is thrilled at the success he's found in just over a year of operation and thanked the racetracks especially for being willing to work with the large numbers of new owners wanting to come out and support their horses.

Personally, he hopes that the MyRacehorse model will help reinvigorate the horse racing industry. Perhaps, down the road, other sports will even look to emulate his model as a way of increasing fan engagement.

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