JC / Railbird - Egos Legends Launch Fund

Egos Legends Launch Fund

Nick Zito, Bob Baffert, and D. Wayne Lukas are teaming up to launch the Thoroughbred Racing Legends Fund, which plans to raise more than $75 million by late August and create a 100-horse stable within three years. Partnerships are nothing new in racing, reports the Wall Street Journal:

But while most partnerships buy established horses with some track record of success, the Legends fund plans to acquire mostly unproven — and cheaper — thoroughbreds and utilize Messrs. Lukas, Baffert and Zito to scout and develop them. Investors must commit a minimum of $3 million over three years to participate in the fund, which will charge a 2% management fee and keep 20% of profits from racing and sales.

Sounds like the three were inspired by plans for a certain other racing hedge fund recently in the news.

Posted by JC in Owners/Owning on 06/09/2008 @ 9:55 am / Follow @railbird on Twitter

9 Comments

I don’t get how this will work at all. If I have $3-million to invest, why would I give up 20% in profits?
At that price point, I could buy ten $100,000 yearlings and keep all the profits myself (and likely roll them back into the game).
The article doesn’t mention who’s putting this together, either. Is it all based on a comment Lukas made at some dinner?
I look forward to getting answers!

Posted by EJXD2 on June 9, 2008 @ 11:32 am

This seems pretty odd to me. These are three guys who I would associate more with “inheriting” expensive bluebloods rather than developing cheaper horses. And – the Da’Tara fluke notwithstanding – they’re also three guys who have been conspicuously left behind on the Derby Trail over the last few years. Also, at least two of them are leaders of the Anti-Synthetics gang.

Posted by alan on June 9, 2008 @ 12:20 pm

Why would they do it? For access. You pay high %’s in hedge funds because you believe those people have more access (not necessarily the smarts) than you. They can trade 24hrs a day, they can trade Crude Oil, etc. With horses, not sure this will fly, as access is rarely limited. but a fool and his money is always separated, and usually easily.

Posted by Patrick on June 9, 2008 @ 12:36 pm

When it was explained to me by Iavarone on Derby week, he compared the 20% fee to stable fees that you would pay a trainer.
Right or wrong, that was his 1:1 comparison.

Posted by Michael on June 9, 2008 @ 12:55 pm

Wait, I went back to my notes. The 2% management fee was what he compared to the trainer fee — the 20% performance bonus was compared to the trainer’s cut of the purse.

Posted by Michael on June 9, 2008 @ 12:59 pm

This is another scam. Not surprising with these 3. I pity the poor fools who pony up 3M. Nice if you are the 3 Egos, grabbing 20% and the operating cash.

Posted by Y Woodeye on June 9, 2008 @ 1:14 pm

Blood-Horse, following up on the WSJ story, tracks down more details on the venture:
http://news.bloodhorse.com/article/45660.htm
Still doesn’t really answer the question of why, if you had $3 million for horses, you’d give it to these guys … although, if I were set on going into such a scheme, I’d probably prefer Z/B/L over IEAH.

Posted by Jessica on June 9, 2008 @ 3:33 pm

If you have the money, any accountant with a base knowledge of the horse racing game will tell you it is a bad deal to go with this type of plan.

Posted by robert on June 9, 2008 @ 4:54 pm

Alan may want to rethink his assertion that these three guys don’t develop horses.
Bob Baffert paid $17,000 for Real Quiet. He’s gotten some high-priced bloodstock, too, of course, but the guy gets the most out of his horses.
Zito often gets horses who RNA at sales because a couple of his clients are also pinhookers, so he’s dealing with some horses that others didn’t want (although he told LaPenta to keep Da’ Tara).

Posted by EJXD2 on June 10, 2008 @ 9:02 pm

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