The price of a Thoroughbred horse is dependent on a number of factors. The age of the horse comes into play, as does its pedigree conformation, and so do other specific market factors that are determined at the time of the sale. Even the needs of the person wanting to purchase a Thoroughbred is weighed with the scarcity of horses that meet their expectation to create a final price.
Fusaichi Pegasus is believed to be the most expensive Thoroughbred horse ever sold. This stallion was initially purchased as a yearling for $4 million, but then was sold in 2000 to an Irish breeder for a reported price of more than $60 million.
From 2007 data that is provided by Keeneland Sales, a total of more than 9,000 Thoroughbred horses were sold for a total value of more than $814 million. How much is a Thoroughbred horse on average from this data? About $90,000.
Here are some of the additional ownership factors which must also be taken into consideration when looking at the final cost of a Thoroughbred.
#1. You can often buy partial shares in a Thoroughbred.
Maybe owning a horse outright isn’t for you. Maybe you’d just like to own a percentage of a racehorse instead as a unique way to invest your money. Many stables which breed and train Thoroughbreds will allow you to do so if you meet certain financial standards. In the case of West Point Thoroughbreds in Saratoga Springs, NY, a 5% ownership stake in a horse can typically be purchased for around $10,000.
If you don’t want to spend the $90,000 average price to get your Thoroughbred, this is an easy way to get involved without necessarily getting involved with the daily care aspects of ownership.
#2. There are commission fees that must be paid.
If you are purchasing a Thoroughbred horse through a broker or at an auction house, you may be asked to add 5-10% to the final price of the horse. That means your new Thoroughbred will now cost $4,500-$9,000 more on average. These commission fees are sometimes built into the final price of the horse and sometimes may be as low as 2-3%, depending on where you purchase the horse.
The first thoroughbred horse farm in Florida was created by Carl G. Rose in 1943. pic.twitter.com/eYGuiHHV8F— TheWillistonMile (@WillistonMile) November 18, 2016
#3. Let’s not forget about the sales tax you need to pay.
Horses are not part of the US food chain for ethical reasons. Despite this fact, the law still treats the horse as if it were an item or commodity. In most jurisdictions in the US and around the world, if there is a sales tax that applies to the purchase of goods, then it will apply to the purchase of a Thoroughbred.
In the United States, the current highest average combined state/local sales tax is located in Tennessee, which is at 9.46 percent. This means an owner in Tennessee would potentially need to pay another $9,000 on the top of the purchasing price.
In a state like Washington, the commission would also be potentially subjected to the sales tax. Using the scenario above, that would mean an 8.9% sales tax would be charged to the $99,000 price of the Thoroughbred with a 10% commission.
#4. You will likely have legal fees.
The purchase of a Thoroughbred is typically a legally binding contract. Informal sales might be done with a handshake, but most folks who pay $90k for a horse want to have a formal written contract in case something goes wrong. There may also be stipulations for future stud fees, royalties, and other ongoing costs that go with the sale.
It’s a safe bet that you’ll need to add between $3,000-$5,000 to cover this cost in owning a Thoroughbred horse.
#5. Then there is the issue of mortality insurance.
If you’re paying a ton of cash to purchase a high quality Thoroughbred horse with a proven lineage, the last thing you want to do is have something happen to the animal before you can recover some of your investment. The way to do that is to purchase mortality insurance. If the horse dies because of a covered reason, then you will be able to claim the value of that insurance policy.
thoroughbred horse pic.twitter.com/BpfwO6ovN0— Kelly Maude (@Nwesterncats) September 28, 2016
Most mortality insurance policies are generally about 4.5% of the purchase or auction value spent for the Thoroughbred horse. Using the example above, you’re going to pay around $4,000 per year in order to protect your investment.
Now imagine the insurance policy on a horse like Fusaichi Pegasus: 4.5% on $60 million is more cash that a lot of households see in a lifetime.
#6. Every Thoroughbred horse has ongoing costs that must be paid.
Once you’ve gone through the process of purchasing a horse and paid all of the fees, you’ve still got monthly maintenance costs which must be met. If you are purchasing a Thoroughbred that is intended to race at top-level tracks during the year, then the annual maintenance costs could be $60,000 or more per year.
If you aren’t keeping the Thoroughbred in your own stable, then you’ll also have administrative and care costs that could easily top $1,000 per month.
If the horse is racing, some or all of these costs can be offset by the purse earnings the Thoroughbred is able to earn. Otherwise you’re stuck paying the cost of this hot-blooded breed out of your own pocket. Even if you’ve only purchased a share of a racehorse, you’ll still be charged a maintenance fee in most circumstances which is equal to your percentage share.
Are There Any Ways to Reduce These Costs?
The only real way to reduce cost is to create your own breeding program. Purchasing a Thoroughbred horse from someone else, even if the horse is only a yearling, is going to set your budget back by five figures at the very minimum.
On the other hand, if you are breeding Thoroughbreds on your own property, then you can potentially save tens of thousands of dollars. Here’s why.
The stud fee for a winning horse like American Pharoah could one day easily be near the North American record-holder Tapit, whose fee came out to $300,000 eventually. That kind of lineage is in great demand. On the other hand, a provider who offers frozen samples for artificial insemination may cost less than $1,000. Even the most expensive frozen samples are less than $7,000 each.
Thoroughbreds are one of the most expensive horses to purchase and then maintain. When all of the costs add up, even the average purchasing price can easily exceed $150,000 during the first year of ownership. Ongoing costs may range from $10,000-$60,000 annually, depending on training, transportation, and other care needs.
It isn’t a breed of horse that everyone can own, but if you can, then becoming friends with a Thoroughbred is one of the best experiences which life has to offer.