Kentucky Derby's $5 Million Purse: Survive the Track, Conquer Your Finances!

The Thrill of the Chase: More Than Just a Race

This weekend the 151st Kentucky Derby is upon us! $5 million is up for grabs and the winner gallops away with a cool $3.1 million. Bank of America's Steven Mason will be there hobnobbing with the big spenders. Remember folks whether it's the Derby or the jungle it's all about survival… and a bit of luck! You gotta ask yourself are you betting on a winner or are you just horsing around? Sometimes you need to drink your own urine if you want to survive the financial outback! Not the horse's yours. Unless... no don't do that.

Horses: Lifestyle or Liability?

Mason a private banker specializing in equestrian clients says "Horses are a lifestyle." He's right! It's a lifestyle of early mornings mucking stalls and hoping your investment doesn't decide to become a very expensive lawn ornament. These folks see horses as investments others just see them as extensions of themselves like a really fast four legged ego boost. Remember though: these investments are as illiquid as a frozen bog in Siberia! You might not get the return you expect but hey at least you’ll have a cracking story to tell at the next cocktail party. It's all about 'Improvising Adapting and Overcoming!' even if that means selling your prized stallion to buy a slightly less prized yacht.

From Hedge Funds to Hay Bales

More and more entrepreneurs are diving into the horse owning game especially after a 'liquidity event'—fancy talk for cashing out big time. Even former hedge fund managers like Jack Wolf are getting in on the action. These guys trade spreadsheets for stables algorithms for apples. It's a wild world where the stakes are high and the turf is always greener… or at least well fertilized. But when the market goes belly up you can’t just eat your shares. Sometimes you need to eat a worm! (Probably don’t eat the worms though.)

The Taxman Cometh (and the Horse Loaneth)

Mason's clients are savvy—they borrow to buy horses instead of selling assets and getting hammered by capital gains taxes. Smart move! However Bank of America won't let you use the horse as collateral. Why? Because banks aren't keen on owning a 'breathing living animal.' Imagine foreclosing on a horse! The paperwork alone would be a nightmare. Plus what if the horse decides it prefers oats to office work? I wouldn't bet against it. If it all goes South you'll need to remember my motto "If you aren't living on the edge you're taking up too much space!"

Stud Fees and Yearling Mania

For the truly successful stud fees are where the real money is. Top horses can command over $300,000 per breeding session! That's more than most people earn in a year...for a 15 minute date! Even with declining popularity of horse racing demand for young horses especially yearlings is through the roof. Auction houses are raking in the dough thanks to the rise of horse racing syndicates. It's a frenzy! But remember even a champion thoroughbred is only one bad step away from a broken leg and a one way trip to the glue factory. Life is fragile so don't waste it.

The High Cost of Hooves

Owning a thoroughbred isn't cheap costing up to $60,000 a year! That's more than my yearly supply of freeze dried rations and parachute repairs! Mason suggests setting up a trust to care for the horse after you're gone so your kids don't end up selling Dobbin for scrap metal. Ultimately for Mason it's about building relationships. As he says standing 'shoulder to shoulder with a client' on a farm is special. I know what he means...I have to stand shoulder to shoulder with dangerous bears when I'm out in the wild! Anyway Remember folks whether you're navigating Wall Street or the wilderness it's all about surviving and living to tell the tale. Now who wants a sip of this… horse flavored energy drink? (Just kidding!)