LRF Thoroughbred Fund, LLC
LRF Thoroughbred Fund (“Company”) provides the opportunity to own a thoroughbred racehorse inside a partnership managed by Little Red Feather Racing.
For the first time in thoroughbred racing history, the Little Red Feather Racing Club will create a Racing Partnership through crowdfunding equity under the new Title III laws.
The LRF Thoroughbred Fund (“Fund”) provides the opportunity for anyone to pursue racehorse ownership!
The Fund will be managed by one of America’s largest thoroughbred racing clubs – Little Red Feather Racing (“LRF”). LRF burst onto the national scene in 2004 when its horse Singletary captured the $1,500,000 Breeders’ Cup Mile. In 15 years, LRF horses have won 192 races from 1,063 starts (18%) and grossed $10,735,470 in purses (through June 30, 2016).
Recently, LRF has enjoyed the best 18 months in its history with 43 wins from 192 starts and over $3,000,000 in gross purses. LRF currently manages stakes winners Midnight Storm, Chati’s on Top, Bellamentary, Sheer Pleasure, and Midnight Miley.
To crowdfund the first ever thoroughbred racing partnership where the participant receives real equity in each racehorse.
LRF will manage the Fund and use the final raise to buy up to six (6) thoroughbred racehorses with the intent of racing at Santa Anita Park and Del Mar. Each investor will own a pro-rata percentage of the Fund.
Here’s an Example:
If the Fund raises $100,000:
LRF will use the proceeds to purchase up to three racehorses (and more if the final raise is higher). LRF will also set aside a suitable reserve to pay expenses and operational costs. LRF will purchase the racehorses through traditional industry means. For example, the horses will be purchased:
At public auction
Via a claiming race; or
Through a private purchase.
With 15 years experience, LRF has the industry networking ability to purchase almost any racehorse that is for sale.
Once purchased, the horses will be trained by one of LRF’s trainers and prepare for its first race for the Fund. Investors will be kept intimately abreast of the racing careers of the Fund horses. The hallmark of LRF is its ability to communicate the horse’s journey with its investors. This “inside the locker room” communication provides a wealth of knowledge to both people new to ownership and those that have owned before.
LRF will also provide an accounting summary of all activity and, if applicable, make a distribution of available proceeds to the investors.
The Fund initially plans to dissolve by December 31, 2017. However, if the Fund is financially viable, LRF, at its election, may continue the fund into 2018 and beyond.
Owning a thoroughbred in the “Sport of Kings” is like an admission to an exclusive club. Besides the pro-rata equity in the Fund, investors will also receive the following perks:
The gross proceeds of the Offering to the Company will be $100,000 if the Minimum Offering Amount is raised and $1,000,000 is the Maximum Offering Amount is raised. The net proceeds of the Offering, after deduction of expenses of the Offering, including but not limited to the intermediary’s fees, escrow fees, legal fees, accounting fees and management fees will be used by the Company as working capital to purchase, and maintain thoroughbred racehorses for racing at Santa Anita Park, Del Mar and other top racetracks. The following table lists the estimated use of proceeds of the Offering if the Minimum Offering Amount and the Maximum Offering Amount are raised.
The estimated use of proceeds set forth below illustrate the present expectation of the Company. LRF Thoroughbred Fund, LLC will have discretion to alter the use of proceeds as set forth below as Company determines how to best accomplish its objectives.
Established in 2002.
California’s largest Racing Club, with over 300 active partners.
Over 50% of LRF syndicates are made up of previous partners.
Captured the GI Breeders’ Cup Mile with Singletary in 2004.
Sold GI winner Egg Drop for $1,900,000 at 2014 Keeneland November sale.
LRF Horses have finished in the money in 36 Stakes races including wins in the: Breeders’ Cup Mile (G1); Matriarch (G1); Shoemaker Mile (G1); Oak Tree Mile (G2); Arcadia Handicap (G2); Yellow Ribbon (G2); Goldikova (G2); La Jolla Handicap (G2); Honeymoon (G2); Senorita (G3); SF Breeders’ Cup Mile (G3); Irish O’Brien; Solana Beach; Thunder Road; Academy Road; Mademoiselle; Dream of Summer, and the Time to Leave Stakes.
Offering Size: Minimum $100,000; Maximum $1,000,000
Manager: Little Red Feather Racing Management
Min Investment: $500
Subscriptions Closed: September 15, 2016
Fees: 10% initial raise; 10% gross purses or revenue received; 10% subsequent asset sales fee.
Term: Manager will wind-up and liquidate the Fund as soon as practical, but preferably by the end of 2017.
Targeted Return: $0 – $1,000
Reports Annual: K-1
Main Rules: Once an asset is sold or purse monies are earned, funds will be distributed to Fund partners and/or used to acquire additional horses. On or around December 1, 2017, Manager will determine which horses will be sold or kept in racing.
Are there any other management fees or additional compensation paid to the manager?
LRF Thoroughbred Fund, LLC will pay the manager LRF’s standard 10%/ 10%/ 10% fee:
10% of the initial raise
10% of all gross purses earned by the racehorses
10% “off the top” of the sale of any racehorse.
How much does it cost the investor per month in expenses?
LRF Thoroughbred Fund, LLC will build in a suitable reserve for each racehorse to pay training and operational costs for a dedicated period. In the event the racehorses do not earn enough to maintain future expenses, the manager has the authority to raise funds by issuing new shares (and diluting current members) to pay further expenses and operational costs. A typical horse costs $50,000 per year in expenses.
Can I make money?
This is a high risk high reward investment. LRF sold a horse at auction for $1,900,000 that originally cost its partners $95,000. LRF has also purchased a horse that unfortunately never ran. With over 150 horses managed the only honest thing we can tell you is your investment will probably fall in between those two scenarios… and you may have the time of your life regardless of the ultimate financial result.
How does the Fund Earn Revenue?
Earning purse money by finishing in the top five of a race*; or
Being sold (hopefully as a stallion or broodmare).
All purses will be deposited into the Fund bank account and used to pay Fund expenses.
* The breakdown of a purse can be different for each race (and placing in the race). Typically, for a horse that wins a race, the owner will net 48% from the purse. For example, if your horse wins a $100,000 race, the net proceeds to the owner is $48,000.
What race tracks will you run at?
LRF Thoroughbred Fund, LLC horses will likely initially only race in California at Santa Anita Park or Del Mar. Notwithstanding, your horses may run in Kentucky, New York, Florida and other circuits.
How often and what kind of information will I receive about my racehorse?
As mentioned earlier, if you are kept in the dark about what is going on with your horse, how can you enjoy the journey?
Communication is key to a successful ownership experience.
LRF Thoroughbred Club, LLC will email (as often as daily or weekly) pertinent information about the Fund horses and partnership. The hallmark of LRF is its ability to communicate the events of each horse’s career with its partners.
What if my Horse Gets Hurt?
Each horse will carry standard equine mortality insurance. Most, if not all, injuries in thoroughbred horse racing that occur do not result in death or cost the owner an amount over $5,000 in added veterinarian expenses. Career ending injuries do happen. However, in most instances the injury only prevents the horse from competing as a thoroughbred racehorse. Many horses go on to second careers as a broodmare or hunter/jumper etc. The manager has extensive experience trying to palce retired horses where they can maintain secondary careers.
Will I Receive Financial Statements?
Of course. The Fund will provide regulatory accounting statements as well as informal income/expense reports showing detailed transactions the Fund.