|
|
| Memorandum For the Partnership Index Introduction Disclaimer The Basics Business of the Parnership Thoroughbred Racing and Breeding Promotional and Supplemental Literature Access to Information Key Points of the Partnership Glossary |
Thoroughbred Racing and Breeding The Thoroughbred Industry is very competitive; is exclusive in many respects; and involves speculation and risk on every level. Many participants in the Thoroughbred industry have substantially greater resources than will be available to this Partnership. Many business ventures in the Thoroughbred industry do not generate profits. The development and progress of the Partnership’s Thoroughbred cannot be predicted. The Thoroughbred may never be able to withstand the rigors of training, and if it does, may never win any purses. The Partnership’s economic success will also be influenced by factors such as the continued growth of track purses and the attractiveness of Thoroughbreds as an investment medium for a number of investor groups. The health and fertility of the Thoroughbred, which may be affected by many matters including the stress of training and racing, may also affect the Partnership’s economic performance. The Partnership will consider and may purchase insurance coverage on the Thoroughbred to protect all Interests against the uncertain effects of accidents, disease, premature infertility, or death of the Thoroughbred that could substantially affect the Partnership’s economic performance. The Thoroughbred will be transferred to the Partnership on an "as is, where is" basis. The Managing Partner can make no warranties, expressed or implied, with respect to the fitness or condition of the Thoroughbred. Prospective Partners will utilize the professional advisors that the Managing Partner assigns to inspect the Thoroughbred, and the Managing Partner will make arrangements for the results to be shared with each of the Partners. Because Thoroughbred racing is a sport as well as a business, industry practices and structures have been developed which may not be attributable solely to profit-maximizing economic decision making. A particular bloodline could command substantial prices due principally to the interest of a small group of individuals having particular goals. A decline in this interest could be expected to adversely affect the value of the bloodline, and potentially the value of the Partnership’s Thoroughbred with the same bloodline. Inflationary increases in the cost of Thoroughbred maintenance and training also could have a material adverse effect on the Partnership’s business. The relationship between the average price of Thoroughbred yearlings sold at auction and the value of the Partnership’s Thoroughbred cannot be guaranteed. (A current chart that summarizes a ten year study comparing prices of yearlings versus their racing performance is included as Supplemental Information in this Memorandum’s Exhibits section.) A Partnership Thoroughbred that performs successfully at the track can be expected to be perceived as having a higher value than a Thoroughbred that does not run well, but there can be no assurance whatsoever that the value of a successful racing Thoroughbred will enable the Partnership to recover its investment in the Thoroughbred. Similarly, the value of a Thoroughbred may well be affected by a potential buyer’s anticipated use of the Thoroughbred for racing or breeding. In other words, what you may think the horse is worth, may not always be the case (higher or lower). The Partnership intends to race the Thoroughbred with a profit objective, but there can be no assurance whatsoever that the Partnership’s racing program will operate profitably. Racing profits are irregular and elusive. The only assurance that can be made is that it’s possible that the Partnership’s racing program will never generate Net Profits. Thus, it would seem like the only way to go is up! The Partnership also faces business risks due to the presence of substantial competitive forces within the Thoroughbred industry; the potential adverse effect of changes in government regulations currently permitting legalized gambling on Thoroughbred racing; the business risks inherent in an industry characterized by irregular/seasonal revenues, inflation, the necessity of paying operating expenses regardless of the Thoroughbred’s performance; declines or inadequate growth in racetrack attendance, wagering and purses; and the Partnership’s ultimate dependence upon the performance of the individual Thoroughbred at the racetrack as a the source of its profits. The bottomline: There are a lot of things going on inside and outside of the Thoroughbred industry which may or may not have an dramatic impact on the Partnership’s success. |
|||