Winning Rides
Those who invest with at least some notion of turning a profit are advised to trot before they gallop. Cutting-horse investments are as risky and unpredictable as bets on any other living creature—livestock or human. Investors must be prepared to devote ample amounts of time toward this avocation. Even expert horsemen must often wait years before being able to gauge a young horse’s potential. And if the beast shows promise, investors must nurture the talented youngster’s bankable skills, a process that takes still longer. Cutting is also a slow-growth business from a tax perspective. Horses must be owned two years before a seller qualifies for the lower capital gains tax rate on any profits, unlike stocks or real estate, which require a one-year holding period, according to Bill Stewart of the accounting firm Stewart, Catlin and Lillard in Weatherford.

Some investors purchase mares exclusively, then show and sell their offspring. Others, usually those more experienced with horses, also keep stallions for stud services. Stud fees of $10,000 and up for a fine stallion are not uncommon. “The percentage of investors who want to get involved with a stallion is quite small,” Emison explains. “Many times it’s because stallions are quite pricey, and it takes a lot of promotional work to keep that program going.”

Cutting-horse breeders can also offer partial ownership of a stallion through a syndicate that guarantees a certain number of breedings per share per year. These breedings can be resold or the shares themselves can be resold later. Horse owners and syndicate investors reap a profit if the horse’s value increases. National Cowgirls Hall of Fame member Lindy Burch, a professional cutting-horse trainer who has earned more than $2.4 million in competition, and her partner, Dan Lufkin, opted to syndicate a stallion called Bet On Me 498. The roan cutting horse, nicknamed Romeo, comes from a line of exceptional mares, with a powerful build and show performance that suggest a great future for his offspring.

Burch made strategic choices to maximize her return on investment. First, she limited the quantity of his breedings to a modest 60 per year. Second, she handpicked investors who already owned exemplary cutting programs, so that when Romeo’s foals arrived, these owners would campaign the animals in shows. The better his offspring performed, the more his value would rise.

Three years ago, the syndicate sold its first 20 shares at $50,000 each, with Burch and Lufkin keeping 20 shares themselves. As the horse’s progeny come of age, the strategy appears to be paying off. One of Romeo’s colts, still too young to be shown, sold for $180,000. Based on this early success, Burch recently released five more syndicate shares, this time at $75,000 each.

For those cutting-horse aficionados who possess an appreciation for the sport that goes beyond the dollars and cents of investments and the appeal of family camaraderie, there is the competition. For some, the lure supersedes their everyday life.

Julie Ann Wrigley of Idaho, chief executive of Wrigley Investments, a director of E.W. Scripps and ex-wife of the late gum magnate William Wrigley Jr., scaled back her obligations in 2002 to compete full-throttle in cutting-horse competitions. She and her horses took to the road and entered more than 20 weekend events. The effort paid off: Wrigley won a world championship and other top awards in her class. Her lifetime winnings now total $99,000. “Cutting is a great way to exercise your competitive spirit,” she says. “I find if I do it with the horses, I tend to do it less with my business and personal life, and it’s very healthy.”

Radio entrepreneur Kingsley agrees. Ten years after his move to Weatherford, he remains more passionate than ever about his chosen sport. “The athleticism of these horses is truly astounding. You drop your hand and the horse goes to work,” he says. “It’s a rush like I’ve never experienced.” 

Wendy Lyons Sunshine is a freelance writer based in Texas.