Mojo Racing Partners


	Frequently Asked Questions (FAQs) Since many of the prospective Partners are new to the business of owning a thoroughbred racehorse, friendly and easy-to-read reference material was prepared to help explain the way the Mojo Partnership works. The following Q&A is part of this material, and it was developed to share information about the Partnership’s makeup as well as the governing contract. In addition to the relevant legal documents included in this brochure that make up the Mojo Partnership, there is a Memorandum that summarizes the Terms of the Contract, as well as supplemental information about the Thoroughbred Industry and other racing partnerships. So, what makes becoming a Mojo Partner so attractive? Mojo Racing Partners share one common goal: We want to have fun! Everything we do is designed to maximize every Partner’s participation and enjoyment. Otherwise, there is no point. Of course, we want our horse to be the first to cross the wire; but only one can win. Since it only takes about two minutes for the horses to go around the track, Mojo Racing Partners will try to stretch the excitement of watching a race over the life of the Partnership by hosting events every month to celebrate the Partnership, the sport, and each other’s company. Unlike other racing partnerships that are formed to play the horseracing game like the stock market, Mojo Racing Partners seeks to enhance our Partners’ experience by making participation more fun than financial. Just because some people get a big kick out of running down the middle of the street naked when they are drunk, others prefer just walking around their house that way. In the same regard, each person’s definition of "fun" is different, and so Mojo Racing Partners intends to provide different forms of entertainment. That is why, in addition to the do’s and don’ts spelled out in the stuffy legal documents, as a Partner you’ll have the opportunity to enjoy (among other things): 1. The chance to have a lot of fun with your friends and associates, while at the same time, meet new people who come from a variety of diverse professional backgrounds inside and outside of the thoroughbred industry. 2. The thrill and excitement of first-hand participation in the sport of thoroughbred racing and the industry that supports it. 3. For a fraction of the total cost to a sole owner, the prospect to enjoy behind-the-scenes aspects of the game in person. 4. The opportunity to learn about what goes on at the farm; on the backside; and in the clubhouse. Let’s face it. You wouldn’t be reading this information if you weren’t interested. You and the person that keeps the checkbook deserve the best insight on what you’re about to get into. This is an important decision, and though you won’t be guaranteed to make your accountant happy, you do want to make your friends and family proud of the decision that you make. TOP What’s the difference between the Mojo Racing Partners and other racing partnerships? In addition to making new friends and creating great memories that will last a lifetime, there are key differences: Joining Mojo Racing Partners is very affordable. The initial Investment is approximately one tenth of what you would have to pay to join a larger racing syndicate. Most of the Partnership’s activities will take place locally, and every Partner will have the opportunity to learn about and participate in all aspects of owning a thoroughbred racehorse. In order to minimize disagreements about the Partnership's business practices and Partners' commitments, a clearly-defined, written agreement has been prepared and every word is available for any potential Partner to review at his or her convenience. Why does the Partnership need a contract just to have fun? (Ain’t my word good enough?) In many cases, your word is just fine. However, without out a valid or "binding" contract (i.e. Offer, Acceptance, and Consideration), the rights and obligations of each Partner and the Partnership are about as beneficial as a horse that doesn't leave the starting gate. Fine; but is it legit? Yes. The Terms of the Partnership follow the state and federal laws that govern general partnerships. The supporting documents fulfill the essential elements necessary to have a "binding" contract. Far out; but that sounds like a lot of legal double talk? Along with this Q&A, an easy-to-read Memorandum and supplemental documents are also available so any person can interpret and understand all of the legalese that goes along with the Terms of the Partnership. Because most racehorses lose money for their owners, and big victories receive more publicity than typical losses, risk and obligations can get overlooked. The "Statutes of Fraud" (the laws related to contracts that protect one person from being tricked and another person from being held accountable for an unintentional mistake) also state, among other things, that agreements for goods and services that are (a) priced higher than $500 and (b) make guaranties of another person’s obligations need to be "spelled out" in writing. That means, the more horse $#!* that there is to consider, the more the Partnership’s Offer has to be spelled out. Once you decide (okay, your significant other gives you permission to invest) to become a Partner, you’ll be asked to sign a document that basically says, "I understand the risk and agree to the terms." Doing so fulfills the second essential element of a binding contract: Acceptance. You’ll be asked to sign the "Subscription Agreement" so there aren’t any inferences; counter offers; misunderstandings about assignment; implications about each Partner’s risk; secret deals or silent handshakes. The last thing that’s needed to make the contract binding (and really gets the horse out of the barn and on the racetrack) is: Consideration. In the world of contracts, "consideration" is something of value (namely money) that is exchanged for a product, service, or both. In the case of this Partnership, in order to become a Partner, each Investor is asked to exchange an Initial Investment (with the understanding he/she will need to pay more as the horse progresses or "graduates" from it training/racing levels) knowing that there may be no monetary return on your Investment. I know. That doesn’t sound very attractive at first. Please read on. The bottomline reason for having a written Agreement: It would be shifty and irresponsible not to provide each Partner with an explanation in writing "up front" about what is expected between the Partner and the Partnership. TOP Is there a limit to the number of Partners that can Participate? Yes. For each Runner Partnership, the number of Partners needed to proceed, as well as the "cut off" of the number of Interests made available will be "spelled out" in the subscription document for each particular Partnership offering. Will I get to know the other Partners in the Partnership? Absolutely. One of the primary goals during the Partnership’s Term is to get together and enjoy each other’s company in as many Thoroughbred racing environments as reasonably possible. Mojo Racing Partners is privileged to have an event planner who’s sole purpose is to help arrange social events for the Partnership’s racing activities. How much does my Initial Investment cover? This is contingent upon the individual Offering. Depending upon the way the Partnership is structured, the Initial Investment is budgeted and expected to be sufficient to pay the purchase price of the horse (if there is one) and a set number of months for racing preparation expenses. The coverage differs based on the stage of the horse's development and the costs associated to keep a Thoroughbred in race training. If additional funds are needed for operation of the Partnership’s business, the Partners may be assessed and required to pay additional Capital Contributions in accordance with each Partner’s interest percentage. This will be "spelled out" in the Partnership's Terms and Subscription Document. Can you be more specific about the costs to manage a racehorse in training? Turn out fees (the horse is not in training) typically cost about $25 to $30 a day depending on the farm/location (or around $900 a month). Racing acclamation or “break in” expenses - the cost is about $45 a day, plus vet and grooming expenses (and that’s about $1,800 a month total). Training fees cost is $75 a day, plus vet, stabling, grooming, and other administrative expenses by the Trainer (and that’s about $3,000 a month). The health, maintenance, and administrative costs are: Vet evaluations ($120 to $200 each); Medications and Vitamins ($50 - $300 a month); Farrier fees ($80); X-rays ($260); Dental care ($75), Haircuts ($100). All of these costs have been factored to determine the number of shares (and price for each), as well as the term of the respective Partnership. TOP What's a typical timeline from purchase to the track? If the Partnership purchases Runner (Yearling) in September, then the horse will be shipped to the training facility and will start learning racing fundamentals in October or November. The initial training lasts 90 days. After that, the horse will be x-rayed to determine its soundness, and the Runner's racing ability will be determined. The horse will be given 30 to 90 days off for R&R to allow its bones, joints, and muscles to rebuild. Depending on the horse's talent, the Runner could be sent to the track as early as June (of its two-year-old year) to begin its racing campaign. Based on the horse's breeding and training results, it may be determined that the horse is better served to begin its racing campaign later in its two-year-old season or perhaps as a three-year-old. If the horse is bought as a two-year-old in training, then the "turn time" is usually faster, provided the horse remains fit and sound. Typically, trained two-year-old should be ready to race in the late Spring or early Summer. What are some examples of expenses not covered by the Partners’ Initial Investment? Owners' licenses ($75 each in TX), a Partner's personal transportation, accommodations, meals, and any entertainment expenses. TOP Will the Partnership carry insurance to protect the Partner’s Investments? Like homeowners and auto insurance, there are different types and costs for coverage. In fact, insurance can be the one of most expensive monthly costs to the Partnership. Arguments for and against carrying insurance can be made, and based on the different types of insurance available, the Partners will discuss the type of coverage they want after the Partnership is formed. The cost of insurance is based on a percentage of the horse’s “value” and the Partnership’s “worth”. The initial value of the horse is set at the auction, and the worth of a Partnership is based upon the combined/total Investment. There are two main types of equine insurance coverage: Mortality and Liability. Mortality coverage reimburses the owners the full value of the horse should it die or be euthanized. Liability coverage pays claims brought against the owners should the horse damage or injure someone or someone else’s property. What about taxes? As a general partnership, each Partner will have maximum flexibility for tax purposes provided under the Internal Revenue Code, and will be able to take best advantage as far as the passive activity tax rules for general partnerships are concerned. The Partnership will issue to each Partner a K-1 that should be filed with the Partner’s individual income tax return. How long does the Partnership last? The length the Partnership is spelled out in the Terms and Subscription Agreement for each horse. The Majority of the Partners have the option to extend the Partnership’s term. TOP Who makes the decisions about the Thoroughbred’s racing activities? The Managing Partner makes the final decisions about the Thoroughbred; when it will be purchased; it’s name (if not previously registered); where it will be schooled; who will train it; what races it will be entered; as well as the other business matters of the Partnership. That said, the Managing Partner has a fiduciary responsibility to make decisions based on collective opinion of the Partners, and the Managing Partner is subject to being overruled by 50+% of the Partners. Once a trainer is chosen, he or she will decide how the Thoroughbred is trained and what jockeys will ride it. That being said, the Partnership has the right to pull the Thoroughbred from the Trainer’s care at any time. Mojo Racing Partners is fortunate to be associated with individuals (that have years of experience and enjoyed success in the Thoroughbred Industry) who can provide helpful direction on the business and racing matters of the Partnership. How much participation is expected of me? As much as you like. During the Partnership’s Term, Mojo Racing Partners plan to host many functions at the track, on the farm, and at other Thoroughbred racing-related venues. You’ll be invited to attend every Mojo event, and we certainly hope you’ll be able to make each of them. You are encouraged to attend the Partnership’s meetings because some of the important business decisions about the Partnership will be made at that time. Does the Partnership buy a big barrel of Maker’s Mark bourbon with the winnings? That would be nice; but all money earned by the Thoroughbred will be used to offset the Partnership’s expenses, expenditures, and money that the Partners agree to set aside for reserves. Money not retained by the Partnership to defray operating costs or reserves will be distributed 100 percent to Partners of record (in accordance with their respective Partnership Percentages) during the Partnership’s Anniversary Month. However, if the Partnership has its expenses, costs, and reserves met on July 1, then the Partnership is allowed (should the majority of the Partners agree) to issue a Goodwill Distribution to each Partner. Will I be given updates on the Thoroughbred’s progress? You bet. Mojo Racing Partners will publish weekly updates to report on our Runner's training, racing activity, health, and other pertinent Industry information. These reports will be issued via e-mail. The Mojo web site "News and Notes" is also available around-the-clock for information about the Partnership and general news about our activities is at your convenience. Partners are also encouraged to follow all of the Mojo activity on Facebook and Twitter. TOP Will I be able to visit the horse and stand in the paddock? In addition to watching the Partnership’s Thoroughbred race, Mojo Racing Partners plan to organize visits to the farm, training facility, and backside so the Partners will be able to see its racehorse at the various levels of development. On race day, all Mojo Partners will be invited to the paddock to watch our Thoroughbred as it is saddled up before bugler call’s the horses to the post. What happens if the Partnership’s Thoroughbred doesn’t do very well, or it gets hurt? If the Thoroughbred is injured, a recommendation by the Partnership’s Veterinarian will likely decide the best course of action to take. Some injuries can be career ending and even life threatening. There are many positive avenues for a racehorse once their racing career has ended. The Managing Partner will work with our connections to find a good/productive home that is best suited for the rest of the horse's life. When should I submit my Capital Payment? You are welcome to return your Payment and Subscription Agreement at any time. Your payment and subscription documents need to be received on or before deadline (as stated by the Managing Partner for Partnership Offering) so the Partnership will have an accurate accounting of available funds to cover the costs of the designated Mojo Runner in a reasonable time. Is that it? Pretty much. As you are reading the Memorandum and Terms of the Partnership, try to remember that the laws regarding general partnership contracts are complex because they are created to protect the entity, the person who agrees to join the entity, and the person(s) who manage the entity. Also keep in mind that each law is subject to an exception, and even those exceptions may have exceptions. That being said, as long as the Agreement’s Offer is easy to understand, clearly spells out the Acceptance, and openly defines the Consideration (which, in the opinion of the Managing Partner for Mojo Racing Partners, all three conditions are met), then the Partnership will have favorable odds for lots of fun—and that in itself is a success. Even though any of the Partners may be a legend in his/her own mind, you are urged to seek assistance, when necessary, from a professional. TOP