I sent this admittedly smart-assy note to the 'Managing Partner' of the Partnership-Who-Must-Not-Be-Named on July 1:
It's July 1. Any word on that L.O.C. yet? My guess is that I'll be sending this note again on August 1 or until I get the notice of default in the mail, but I'm ever the optimist. Seriously, I know the credit markets are tight, but they aren't so tight that an LOC can't be had in almost eight months of trying.
Congrads on the latest wins. I understand that there is some skepticism from some of the partners if they'll ever see the money, but so far you all have done nothing to assuage that skepticism. I'd be thrilled to crow to the world that you all have lived up to your commitments, but so far that light you keep promising at the end of the tunnel appears to be a train...
Best of luck,
Ted
I've sent similar notes on the first of each month for three months now. This time I got no response at all. None. He owes me money - again, not much money, but at this point it's the principle of the thing - and he chooses to just ignore his responsibilities. Not soon after that, I get this forwarded to me from a friend. He received this from the PWMNBN (I edited to make sure the name of the PWMNBN is concealed, but that's it. The rest is his):
Hello Partners,
We are announcing a new claiming partnership, we will start looking right away for a claimer at Del Mar in the 32K to 40K claiming price. Included in the price are the usual rights and privileges, 3 months fee (vet, training, transportation etc). With a claiming horse we get the instant gratification of a horse that will be ready race again right away, is competitive for purse money and, of course, the excitement of racing with a chance of getting in the Winners Circle.
We will be looking for a horse at the $40,000.00 claiming level with an eye on value and a horse we can move up. If we see the right horse for $32K of course, we have to take a good look at him. Del Mar is a good place to take claims. As you know everyone wants to win at Del Mar even if it means dropping a horse below its value to do so. Owners will put their horses in lower claiming events just to get that picture at Del Mar; the opportunities are greater with some of our best claimers coming out of the Del Mar meet for this reason.
From you emails and phone calls the interest is high and we plan to fill and close this partnership quickly. Get into the fun, the excitement and thrill of horse racing!
Priced at $650.00 a share
If nothing else, let's look at the math. At 100 shares he is raising $65,000 and wants to claim at $40,000. That leaves $25,000 for three month's expenses and mark-up. I have nothing against marking up a horse to compensate for time, legal fees, etc. Generally speaking you see a 10% mark-up, though I have seen some as high as 15%. Factoring in $3500 a month in expenses (admittedly on the high side - even for Southern Cal), the total is $50,500 for the horse leaving $14,500 for the mark-up or just over 28%!!! All this plus he charges 10% of each purse (again, in and of itself not exorbitant) AND $5 per share monthly management fee (or $500 a month if the groups is 100% owned by them). This monthly fee is indeed high from what I've seen out there and well in excess of what I charge. With all these charges and mark-ups, how in the world is a partner supposed to make any money? Even if the horse does well, the partner is starting 30% in the hole plus expenses. It would take an extra-ordinary horse for anyone to make their money back.
The managing partner once tried to explain this away by emphasizing the joy of thoroughbred racing and the chance to own a part of your own sports franchise, etc. I don't disagree with that in the least. Any of us that have been in this business for a while do it for love. That being said, we do TRY and make money. On the track. Not by taking advantage of people. My feeling is that this guy loves being the big shot and wants to make it the easy way. There is a lot of work involved in making something like this work. The odds are already stacked against us - why would you put your clients in an even deeper hole? There is no indication that this overcharging is going to be used to pay off what debt they owe to former partners or to the trainers that they currently are in arrears to. Rumor has it that a trainer is about to finally turn them in to the California Horse Racing Board. I hope he does and that something is done. I tried that tact, but was told that because I'm not a licensee that there is nothing they can do. Keep that in mind if you ever intend to be in a partnership in California - get yourself licensed or you can get legally screwed and have no recourse. Of course I could go to court, but the filing fees alone would eat up what he owes me and then add up expenses for traveling to California, well, it just doesn't make sense.
So I'll continue to apply as much pressure I can from the outside looking in. My hope is that folks will see what they are up to and not buy into the false promises and shoddy management. On their website, they even show an offering that includes a horse that had to be put down a few weeks ago because of colic. I also KNOW it was specifically brought to their attention, yet it's still up there. I also think they should have to prove that they can close at least one of the groups they are in arrears to before they are allowed to open another one. Thus far we are all left holding the bag while others are recruited into this Ponzi-esque scheme.
3 comments:
As a managing partner of a different group, I'm both appalled and relieved to read your comments. Some, I'll take issue with. For example, a markup of 15% is by no means the high side; Some of the big partnership groups mark their horses up by 50%, 100% or more. Just look at the auction records to see what Dogwood and Centennial pay for the horse, then see what their partners pay for a 23.75% interest. At least, though, at that high end, there's a chance you'll get a stakes horse with stallion possibilities.
And, having been in that same difficult place of having to pay off partners at the end of a partnership, I do feel for your MPWMNBN, but you HAVE to make those payments, even if you use your own credit card to do it.
As for whether you can make money in a partnership that runs mid-level claimers, probably not. I'm working on an analysis of partnership economics for my own blog, The Business of Racing, but if you start from the rule of thumb that most horses earn less than it costs for the basic training and vet bills, then the added layer of costs which is absolutely necessary in a partnership -- someone has to incur the expense of running it, and either that person eats the cost him/herself or it's passed on to the partners -- makes it even harder to see a profit.
So, yes, I agree with your MP that you should be in it for the thrills and excitement. But when he does owe you money, he should pay up.
Oh, Steve, the entire history of the PWMNBN is horrifying. When the original managing partner died, the integrity of this group went to hell. The 'new' guy's lying has been ongoing since day 1 over a year ago. I won't bore folks here with the litany of trangressions that I've detailed already in this blog from time to time, but I'd be happy to fill you in off-line. You could even hit the archives if you wanted to take the time. Most of my posts on the subject can be identified in the title.
This guy is no Cot Campbell by any means...
steve, i know the group ted's talking about because i was in it. quite a sham, gives partnerships a bad name. current group i'm in only marks up a horse by $500. get a detailed account of all expenses and earnings every month. very few groups out there that are worthwhile to me. from knowing ted, i know he cares because he saw how people got taken. groups like the one i'm in and ted's are far and few in between. mike stroh[upstate ny]
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