Buying a race horse: A safe bet?

Story highlights

  • Buying a race horse is risky business, so why are more people doing it?
  • No longer exclusive hobby of the wealthy, thoroughbred racing is more accessible
  • Rise of syndicates means people can pool money with friends
  • Offers excitement and status -- just don't expect to make money from it

What do Britain's Queen Elizabeth, soccer star Wayne Rooney and Hollywood director Steven Spielberg all have in common?

Each is the proud owner of that ultimate status symbol of the wealthy -- a race horse.

Along with wine, art and gold, thoroughbreds have long been the luxury investment of choice for the mega rich.

But the industry appears to be taking a new direction as an increasing number of "Average Joes" pool their money and head to the sales.

"Owning a race horse is more accessible than ever before," says Richard Wayman, chief executive of the Racehorse Owners' Association.

Transforming the desert into a racetrack
Transforming the desert into a racetrack

    JUST WATCHED

    Transforming the desert into a racetrack

MUST WATCH

Transforming the desert into a racetrack 02:23
PLAY VIDEO
Life as an expat jockey in Doha
Life as an expat jockey in Doha

    JUST WATCHED

    Life as an expat jockey in Doha

MUST WATCH

Life as an expat jockey in Doha 02:30
PLAY VIDEO
6 star luxury for Qatar race horses
6 star luxury for Qatar race horses

    JUST WATCHED

    6 star luxury for Qatar race horses

MUST WATCH

6 star luxury for Qatar race horses 02:29
PLAY VIDEO

"At the top end, you've got huge international buyers paying millions of pounds for the best bloodstock.

"But in recent years, lower down, there's been a proliferation of people becoming part of a syndicate."

Read: Qatar's six-star hotel...for horses

A fairytale buy

For Australian lawyer Colin Madden, buying a thoroughbred with his friends six years ago was the most extraordinary -- and profitable -- decision of his life.

The 54-year-old had known nothing about horse racing, describing himself as an Aussie Rules Football man, when his mates suggested buying a horse.

"We saw it as an excuse to have a laugh," Madden told CNN. "For us it was a shared experience with people we liked spending time with -- we never really expected to make any money from it."

The five friends, some who had known each other since kindergarten, pooled their money and bought a thoroughbred worth $315,000.

Little did they know, the mare, Black Caviar, would become the most successful sprinter in the world, unbeaten in a staggering 23 consecutive races to date and winning more than $7 million in prize money.

The six-year-old celebrity horse has not only earned big money on the track, she's become a lucrative brand -- appearing on the cover of Vogue, launching a range of grooming products and publishing a best-selling biography.

Man + horse + skis = ??
Man + horse + skis = ??

    JUST WATCHED

    Man + horse + skis = ??

MUST WATCH

Man + horse + skis = ?? 03:03
PLAY VIDEO
Staying safe when competing on ice
Staying safe when competing on ice

    JUST WATCHED

    Staying safe when competing on ice

MUST WATCH

Staying safe when competing on ice 02:32
PLAY VIDEO
Swiss town with need for speed
Swiss town with need for speed

    JUST WATCHED

    Swiss town with need for speed

MUST WATCH

Swiss town with need for speed 02:18
PLAY VIDEO

Risky business

But despite his spectacularly lucky investment, Madden had a word of warning for those considering purchasing a thoroughbred: "Never buy a horse thinking you'll make money."

"Success is 10% bloodline, jockey and trainer," he said. "The remaining 90% is good fortune."

Owning a race horse offers prestige, excitement, and a unique insight into the industry. But if you're looking for a guaranteed return on your investment, think again.

"Putting money into buying a horse is a risky proposition -- you never know how good it's going to be," Wayman told CNN.

"There's always the hope as an owner that you get a horse that can compete at that top level. But I think that's more of a dream than reality."

Read: Whodunnit? Shergar's kidnapping 30 years on

Thoroughbreds range from $1,300 ("You're very lucky if you buy one at that price and it wins any race. It's a bit like buying a used car," said Wayman) to more than $3 million.

And that's just buying the horse. By the time you pay for stables, feed, trainers and jockeys, the net return is around 21% -- meaning for every $100 you spend, you get just $21 back.

Read: Painting by muscles -- The art of equine massage

What to look for

"Always look for a thoroughbred with a good bloodline," said Madden. "That way, even if the horse can't run, you can always breed them or sell them off. It's a type of insurance."

And if champion British thoroughbred Frankel is any indication, sometimes the biggest money can be made off the track.

The highest-rated race horse in the world retired last year after an unbeaten 14-win record, earning Saudi owner Prince Khalid Abdullah more than $4 million in prize money.

But even greater returns await Frankel in his new life as a breeding stallion. The four-year-old super colt, who sired his first foal last month, commands a fee of $188,000 each time he produces offspring.

With an expected annual roster of 100 mares, Frankel is expected to generate more than $18 million in his first year and more than $150 million overall during his stud career.

Read: Tall, dark and handsome muse...is a horse

Emotional investment

World-renowned Black Caviar will likely earn similar fees as a breeding mare. But for Madden, one of the greatest benefits of owning a thoroughbred isn't the money -- it's the thrill of the game.

"Every time I see Black Caviar at the starting gate, my heart is pounding. No matter what you do, you can't control the outcome. And how often in life do you get an adrenalin rush like that?"

Win or lose, owning a race horse may not be a watertight investment. But it still offers a priceless experience.

      Winning Post

    •  Bode Miller (L) and Morgan Miller attend 140th Kentucky Derby at Churchill Downs on May 3, 2014 in Louisville, Kentucky. (Photo by Mike Coppola/Getty Images)

      Ski star Miller plans new 'voodoo'

      He's won six Olympic medals on two legs, but Bode Miller's future will ride on four -- can he replicate his skiing success in the "Sport of Kings"?
    • Flanders Mud

      Ex-jockey molds new career

      As a jockey, Philip Blacker lived for the thrills and spills of horse racing. As a sculptor, his work captures the horror of World War I.
    • Zebra Mombassa in the English countryside, 1980s.

      Queen's 'horseman' tames zebras

      Ever thought zebras couldn't be tamed? Think again. Gary Witheford has a remarkable way with wild animals -- which he proved after a pub boast.
    • The ancient art of horse taming

      The internet went wild for so-called "horse yoga" -- but there was something deeper going on that reconnects humans with the animal world.
    • Runners canter before racing during the Laytown race meeting run on the beach on September 08, 2011 in Laytown, Ireland. (Photo by Alan Crowhurst/Getty Images)

      Quick sand: A race like no other

      The going is always soft and the only permanent building is a toilet block. It's the antithesis to the pomp of Royal Ascot ... welcome to Irish beach racing.
    • The Crow Fair and Rodeo takes place in Montana each summer.

      World's largest teepee city

      Each August, over a thousand tents and hundreds of horses converge on Little Big Horn River in Montana for the Crow Fair and Rodeo.
    • Rider Jon Marc goes for victory in the Indian Relay

      America's best sporting secret?

      Little-known outside the tribes of the Rocky Mountains in the American northwest, Indian Relay is a "magical" horse-racing relay.
    • Jockey Gary Stevens looks on after a race prior to the 139th running of the Kentucky Derby at Churchill Downs on May 4, 2013 in Louisville, Kentucky. (Photo by Rob Carr/Getty Images)

      'This is middle-aged crazy'

      Now in his 50s, one of the world's most successful jockeys explains why he gave up acting to return to the sport that nearly crippled him.
    •  An infrared camera was used to create this image.) A horse and exercise rider head to the main track for morning training at Belmont Park on June 4, 2014 in Elmont, New York.

      More rare than a moonwalk

      More people have walked on the moon than have won the fabled Triple Crown of U.S. horse racing. California Chrome is seeking to square that score.