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Mike's Market Review |
History |
Racing
Breeding |
Pinhooking |
Stallions
EVOLUTION OF A BLOODSTOCK AGENCY
When horses are conditioned and doing well, their coats shine and you see the large silver dollar size spots called dapples. That is why I picked the name Dapple for my bloodstock agency, when horses thrive we all prosper.
With 20 years of success, we now offer the unique ability to participate in the many niches that exist within the industry of Thoroughbred breeding and racing, all from home base in Lexington. Dapple clients enjoy the confidence of a balanced investment highlighted with unforgettable experiences and friendships. From this agency they can spread the risk, with pinhooking, breeding, and racing as their budget allows.
Thoroughbred racing is dramatic and exciting. Involvement often is a passionate decision made very quickly. Therefore, a potential investor needs to carefully select an advisor who can create plans, meet goals and accurately project cost and risk. That person needs to be an insider who can host your visits to farms and races, get you into the right places at the right times,
and most importantly predict the market for future investments.
Dapple Bloodstock will continue to cultivate investment strategies that offer return on investment as well as the adventure factor. My invitation to you is the same as that with our 20 year clients, care to join in?
Mike Akers,Inc., dba Dapple Bloodstock is an evolution of my passion for the Thoroughbred. I have known since college that this was my chosen profession and the quest continues today to create a positive cash flow from the thoroughbred Industry. Dapple Companies is the new millennium of Dapple Bloodstock, Dapple Stable, and Dapple Advertising. I will try to briefly narrate the contribution of each to our overall Dapple operation.
The first ten years of my career was dedicated to pedigree and conformation analysis and current values in the market. I was paid on a 5% commission basis and was happy just to be working in the business. Through word of mouth, I developed some very nice clients and I work with many of them today. This area was mainly portfolio management, trying to produce sale horses, develop brood-mares to sell or race out of, and a consultant regarding sale purchases of mares and racing stock. Many personal changes during this period created needs for a bigger revenue stream. A wife and two children changed my focus just a bit. Eventually I realized that I was working solely on the production side of a much larger business.
The second decade of my career coincided with a resurgence in our industry. The 1990's were a solid up-curve in the Thoroughbred markets. During the early 1990's the realization that we are really in the entertainment industry created quite a change in our business focus at Dapple Bloodstock. We have been able to maintain ample portfolio management and service business in mare management and appraisals from the production side. We also have investments in mares that produce sale yearlings. From our production clients, we learned of other areas that we could encourage people to enjoy Thoroughbreds. Our clients demanded racing partnerships so they could compete at the races with nice stock and Dapple Stable is now in its fourth year of buying, syndicating and managing yearlings.
As the third decade of my participation in this industry begins I realize the value of experience and the core principles of good business relationships. I have developed some friendships that will be with me for the rest of my life. Although I am working when many of my friends and clients are being entertained we have never forgotten to stop and smell the roses along the way. I am very bullish on the future of the Thoroughbred Industry. Technology will allow racing to enter the home with wagering already available on line in certain states. The effect on handle will ripple through purses, taxes, yearling prices and all phases of the marketplace. Thoroughbred racing and breeding is very challenging and impossible to dominate for very long. This creates a natural appeal to the American spirit of risk taking that has made our country unique.
The evolution of Dapple Bloodstock continues to move forward in a positive manner over the recent year. We had grown to a point where we needed to bring in someone with the business skills to run a company, while I concentrate; on managing bloodstock. We were very fortunate that Randy Zeller believed in our vision enough to want an equity stake in our future as a company and was willing to come on board as President and CEO. Randy had been in almost every "Dapple deal" over the last seven years so he had a good feel for what we were doing. One of his first objectives has been achieved as we have reworked our business model with a focus on "rate of return" strategies mixed in with opportunities to race. We can now offer our clients the ability to build a Thoroughbred portfolio with a mix of investments that involve selling product into the market place and racing with a purpose to produce breeding animals.
The Thoroughbred industry is unique in that there are numerous opportunities for involvement, and a variety of ownership options. The trick is to select the form of ownership that best suits your interests and goals. At Dapple Bloodstock, we believe that any prospect of owning Thoroughbreds must be preceded by careful consideration of interests and resources. From there, a realistic business plan needs to be implemented as the basis for all future endeavors.
One of the most important roles of a bloodstock agent is as purchaser of horses for other individuals. These people have varied reasons for employing an agent, such as the privacy and convenience it affords, and the fact that an agent brings years of experience to the table. The extent of the agent's involvement varies with the individual owner's needs. An agent can simply place a bid as the owner's representative, or he can act as an investment counselor. An agent's fee is generally five percent of the horse's purchase price. As in any business endeavor, it is important to investigate the qualifications and reputation of the agent before you engage in his services.
Different forms of ownership offer different levels of risk, different timelines for progress, and different levels of involvement.
Are We Spending Entertainment or Investment Dollars?
Dapple's top portfolio management clients spread their investments over several venues within the Thoroughbred racing and breeding market. The entertainment aspect, the racing stable, is sometimes funded through their investment venues, such as breeding mares with the purpose to sell (commercial production) and purchases made for re-sale (pinhooking).
By now we realize the clear distinction between entertainment and investment dollars, and offer the same choices to our partnership clients on an annual level. Statistically speaking, middle to upper range purchases have greater chances for success, so why not come on board with a partnership operation based in the heart of Kentucky, and get more horses for your money.
Consider a Partnership
Spreading the risk of Thoroughbred ownership over several owners, and several horses (the only way to significantly increase chances for success) is the strength of the partnership concept.
Many owners would like to play at the top level of the industry, but find the resources required to play at that level to be very demanding, and with increased risk. Many first-time owners elect to become involved in partnerships for the proportioned initial investment and the reduced recurring expenses.
Partnerships are formed for all types of investments, and Dapple Bloodstock offers partnerships for racing, pinhooking, and broodmares.
When shopping available partnerships, look for the following features: the ability for an owner to spread the risk over several horses through several small partnerships or one larger one, an accounting of actual costs for purchases and expenses, a reduction or elimination of monthly management fees, and a capital investment in mid- to high-quality stock.
The limited liability company (LLC) is rapidly replacing the general partnership. The popularity of the LLC is derived from a combination of several desirable features:
1. The LLC is treated as a partnership for federal and state tax purposes.
2. The owner's personal assets are shielded from the LLC's liabilities and obligations.
3. The LLC affords its organizers substantial flexibility in structuring the management and profit-sharing.
4. The depreciation and losses typically generated in early years provide large tax savings for the investors.
The first two years the LLC typically will generate tax deductions for the partners, due to allowable depreciation expenses. Those non-cash losses flow through to the partners and help offset income in those early years, creating a significant tax benefit.
Next to partnership tax treatment, the protection the LLC affords its members from personal liability is the LLC's most attractive feature. Members in an LLC have the same protection against the liabilities of the LLC as shareholders have against liabilities of their corporation.
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