Local Trainer Hoping to Revitalize Racing in Antigua, Build a New Track

There has not been any racing in Antigua since June, 2019, and when it does return it will be contested at a bare-bones track that is too small, too narrow and doesn’t drain properly. There’s no certainty that racing in Antigua can survive, which is why a local horseman named Hansen Richards is behind an ambitious plan to build a new track on the Caribbean island.

“After all the work I have done, I cannot sit back and do nothing,” the trainer said. “I want to put horse racing in Antigua on the map.”

That won’t be easy. Richards is not a wealthy man and racing in his country is overrun with problems. But he believes he can find investors to help him fulfill his dream. He wants a new track to be the centerpiece of a multi-purpose facility that would include restaurants, shops, beach condos, a marina and, eventually, a casino. He has already found the land for the project, 377 acres that is valued at $32 million. The project would be similar to what the China Horse Club did when building a racetrack in Saint Lucia.

All Richards needs now is someone with deep pockets.

“I want to find an investor who can see the vision I have going forward,” he said.

Richards works as a customs inspector and trains as a hobby. He grew up poor and in a neighborhood where crime was a problem. He is inspired by the thought that his project could create jobs for his fellow countrymen.

“I was raised up in the ghetto,” he said. “I look at this as an opportunity to raise standards of living for my community and for my friends. Unfortunately, some of them have lost their lives to violence. I made a vow I would make our society better and provide some jobs and programs out of the horse racing industry.”

He originally wanted to play professional basketball at some level, but reversed course and started training in 2007. In Antigua, it’s not a job where anyone can expect to make a living, but there are people like Richards who are so passionate about the sport that they’ll dedicate many hours a week to training.

He is also working on creating a stud book for horses bred in Antigua. That would allow them to race in other Caribbean countries and, perhaps, in the U.S.

They’ve been racing at Cassada Gardens Race Track since 1964, running anywhere from 12 to 20 dates a year. Richards’ father was an owner, trainer and breeder and he brought his son to the track a time when he racing was a popular pastime on the island.

“The tradition is that it was a family affair to go to the races,” Richards said. “You’d get an average of 6,500 to 7,000 people at the races in the ’80s and ’90s. The people in Antigua love horse racing.”

Richards said that since racing reached its peak in Antigua, interest in the sport has dwindled and now a typical crowd might be 2,500. He said that one of the reasons is that little has been spent on upkeep or improvements and fans don’t want to spend the afternoon in what he says is a rundown Cassada Gardens facility.

The problem has only been compounded since June, 2019, when the final leg in the Antigua Triple Crown series was run. A spate of wet weather that began last summer caused racing to be canceled for the remainder of 2019 because the track was not fit for training. COVID-19 has kept the track closed this year. A possible re-opening in December has been mentioned by officials of the Antigua Turf Club.

But Richards doesn’t see Cassada Gardens as the future of Antiguan racing. It is lacking in many basic amenities and the racetrack itself is a 5 1/2-furlong track that is just 40 feet across and can’t handle a lot of rain.

“Our major issue of concern is the racing surface,” he said. “It has always been an issue and when you have inclement weather the horses cannot exercise.”

Another issue is the purses. They are so small that owners have little incentive to invest in horses. Richards said an average purse would be in the neighborhood of $800 U.S. Normally, Antigua gets most of its horses from places like Puerto Rico and Florida.

“It cost $6,000 U.S. to fly horses here from Miami,” he said. “That is a lot of money when you look at the purses. I do not encourage anyone to purchase horses to run here. I do it because I love it and I know what I am getting into.”

With a new racetrack, he sees Antigua simulcasting its product to other countries, picking up additional sponsors and increasing the amount of money brought in by gate receipts. There’s also the possibility of having a casino help fund purses.

Richards has created the company Mecke Development Corporation and has given himself the title of Managing Director. For now, it is little more than a concept. But its head executive is enthusiastic, driven and has a plan. He sees great potential for horse racing in his country and says he will do what it takes to ensure its future.

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Proven Strategies: If You are an Independent Contractor, What Tax Deductions Are You Entitled to?

COVID-19 has changed the way we go about our daily lives. It has also increased the number of individuals who are self-employed and have no other employees, also known as independent contractors.

The formal definition of an independent contractor is a person or entity contracted to perform work for, or provide services to another entity as a nonemployee (meaning that the employee is “at will” and not eligible for an employer’s health or retirement benefits). The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to self-employment tax.

Self-employed professions such as jockeys, jockey agents, confirmation videographers, bloodstock agents, blacksmiths, veterinarians, exercise riders, equine chiropractors, bid spotters/auctioneers, sales short listers, etc. are all possible examples of horse-related independent contractors.

Prior to the enactment of the new tax act in 2017, if you operated your business as a sole proprietor, you could still take advantage of many of the tax deductions that you incurred. With the adoption of the new Tax Act came a limitation on the deductibility of state income taxes, real estate taxes and the elimination of all personal business-related expenses.

Expenses that Could Become Tax Deductible

There are a number of expenses, if you are in the above categories, that can be tax deductible such as the following:

a. Training–training expense whether for racing, shows or for sales become deductible
b. Professional fees
c. Veterinary fees
d. Vanning and other transportation expenses–if you own racehorses and/or consign horses at sales, you should be sure to include all transportation expenses
e. Work clothing–all of you involved in the training side of the business, including jockeys, should deduct any garments/outfits that are primarily worn while riding, breaking or training horses
f. Barn and stable supplies
g. Feed and shavings; as well as removal expenses
h. Books, magazines, online subscriptions and/or sales analysis reference guides
i. Breeding fees
j. Broodmare leases
k. Meals for employees who were taking care of the horses
l. Equine therapy
m. Depreciation (including bonus depreciation)

In order to ensure that you are maximizing the above deductions, be sure to communicate with your tax provider. Have your accountant confirm your status as an independent contractor and indicate that status on your tax returns. If you want additional legal protection, you may want to either form an LLC which provides you with additional liability protection or a Subchapter S Corporation.

Important Additional Fact

The deductions listed above are, in most cases, equally tax deductible for partners in an LLC or shareholders in Sub Chapter S corporations.

Increasing Your Retirement Contributions

Most independent contractors can make retirement contributions into an IRA. The annual contribution limit for 2020 is $6,000 or $7,000 if you are age 50 or older. If you have a Roth IRA, the 2020 contributions may also be limited based on your filing status and income.

However, there is a plan that will allow you to greatly increase your retirement contributions and simultaneously reduce your taxable income. A Solo 401(k), also known as a Self-Employed 401(k) or Individual 401(k) is a 401(k) qualified retirement plan that was designed specifically for employers with no full-time employees. The Solo 401(k) is unique because it only covers the business owner(s) and their spouse(s), thus, not subjecting the 401(k) plan to the complex ERISA (Employee Retirement Income Security Act of 1974) Rules which sets minimum standards for employer pension plans with non-owner employees. Independent contractors who qualify for the Solo 401(k) can receive the same tax benefits as in a general 401(k) plan but without the employer being subject to the complexities of ERISA.

The contribution limits for the Solo 401(k) are the same as a standard 401(k). They are broken down into a profit-sharing contribution, which comes from the employer and a salary deferral contribution which comes from the employee. However, due to the fact that in a Solo 401(k) the plan holder is acting both as employer and employee, the actual percentages assume a more meaningful role. If the plan holder is filing as a Sole Proprietor or Single Member LLC, which is true in most cases, then the limit is capped at 20% of the self-employed income, plus $19,000 for 2020. IRC Section 401(a)(3) states that the amount of employer contributions is limited to 25% of the entity’s income subject to self-employment tax. Schedule C sole proprietors must do an added calculation starting with earned income to determine their maximum contribution which, in effect, brings the maximum 25% of compensation limit down to 20% of earned income.

In both cases, the IRS has declared an upper limit for total employer and employee contributions to a plan, the IRS Section 415(c) limit which may not be exceeded. As of 2020, this upper limit is $56,000 for those under 50 and $62,000 for those 50 and older.

Other contribution limits may apply so we highly recommend that you discuss your options with your tax professional and/or investment advisor.

There may be alternative retirement plans such as SEP which you may be eligible for.

Bottom Line

The Thoroughbred horse business is like no other business when it comes to its complexity, challenges and strategies.

The same can be said as to how to maximize your tax deductions.

If you have any questions, please contact Len Green lgreen@greenco.com or Jim Benkoil jbenkoil@greenco.com at The Green Group or call us at 732.634.5100.

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The Week in Review: After Guilty Pleas, Will More Trainers Be Charged?

The next chapter in the scandal that has rocked Thoroughbred racing played out last week when Scott Robinson and Sarah Izhaki both pled guilty to charges relating to the sale and distribution of performance-enhancing drugs used to dope race horses. It was an important development, but the bigger story is this: will it lead to a new and extensive list of indictments against trainers and others who so far have not been charged? That possibility certainly exists.

For now, everything is speculation and the Department of Justice has not said whether or not Izhaki and Robinson are cooperating in the probe, but it’s not hard to connect the dots and by doing so you come up with a scenario whereby the two are in fact cooperating with authorities and are ready to name names.

That’s the most obvious explanation for why they were given a deal by the Department of Justice. In the original indictments, which were announced in March and included 27 individuals, including high-profile trainers Jason Servis and Jorge Navarro, Robinson was charged with three counts of drug adulteration and misbranding conspiracy. The maximum sentence for each count is set at five years. A superceding indictment was released last week in which Robinson is now charged with just one count. Izhaki was originally charged with one count of drug adulteration and misbranding conspiracy, plus a charge of smuggling, which carries a maximum sentence of 20 years. In the superceding indictment, the smuggling charge has been dropped.

“It’s a very logical assumption that they are cooperating and that’s why they have accepted the plea they did,” said former Meadowlands and Monmouth executive Hal Handel, who once served as a deputy attorney general in New Jersey. “It looks like they have thrown themselves on the mercy of the justice department. That seems to be where these two are.”

Izhaki will be sentenced Dec. 2 and Robinson will be sentenced Jan. 15. Should one or the other be hit with something considerably less than five years, that will be another indication that they are cooperating with authorities.

Another story to watch is what happens with Ashley Lebowitz, who was among the 27 indicted in March. She is Izhaki’s daughter and that may mean that she, too, will make a deal.

According to owner and attorney Maggi Moss, who once served as the chief prosecutor of Polk County, Iowa, the give-and-take at the federal level often involves plaintiffs who are happy to implicate others if that means a reduced sentence for them.

“In federal court, the bigger names you get, the more names you get, the more reliable the information is, you continue to decrease your sentence,” said Moss.

If there was ever going to be more dominos to fall after the original 27 indictments, it always stood to reason that more charges would come as a result of drug suppliers cooperating with authorities. Much more so than anyone else, they know who was using what.

“Scott Robinson and Sarah Izhaki represent the supply side of a market of greed that continues to endanger racehorses through the sale of performance-enhancing drugs,” Acting U.S. Attorney Audrey Strauss said last week in a statement. “Each of these defendants provided the raw materials for fraud and animal abuse through the sale of unregulated and dangerous substances.”

It appears that Robinson is the bigger fish of the two.

“From at least in or about 2011 through at least in or about March 2020, Robinson conspired with others to manufacture, sell, and ship millions of dollars worth of adulterated and misbranded equine drugs…” read the statement from Strauss.

Robinson’s business was apparently so lucrative that he has been ordered to pay the government $3,832,318.90 as part of an order of forfeiture/money judgment. A forfeiture is the involuntary relinquishment of money as a legal obligation for the commission of crime.

So far, less is known about Izhaki’s business According to the Department of Justice’s statement, between February 2018 and November 2019, Izhaki sold and delivered “tens of thousands of dollars of erythropoietin,” which is a blood builder drug. She was bringing the drug in from Mexico, thus the smuggling charge.

“These two people appear to be important defendants,” Moss said. “They were the ones where people were getting the drugs from. They are important links and it would appear to me that they obviously have lists of who they sent drugs to. You wouldn’t think they’d be doing what they were doing and only selling their drugs to two or three people. There has to be a list of who bought this.”

That much seems certain as it’s hard to imagine that the only clients of Robinson and Izhaki were Servis and Navarro and a handful of other Standardbred and Thoroughbred trainers already indicted. If other trainers were buying from them, there should be a paper trail that amounts to a lot of smoking guns. That’s particularly the case with Robinson, who was using a website to sell his drugs to trainers. That would mean a record of the transactions and credit card receipts.

Does that mean they sold their goods to hundreds of trainers, dozens of trainers or just a handful? For now, that is anyone’s guess. But their plea deals have raised the possibility that the Servis and Navarro indictments will turn out to be just the beginning in what is already one of the ugliest stories in the sport’s history.

“If I were someone who was buying drugs from these guys, I’d be very afraid right now,” said Jeff Gural, the Meadowlands owner who worked behind the scenes with The Jockey Club to build a case against the cheaters. “There’s no doubt in my mind that these two (Robinson and Izhaki) are talking.”

 

Starship Jubilee Does It Again

Starship Jubilee (Indy Wind) continues to be one of racing’s best stories. Claimed for just $16,000 (off of Jorge Navarro) in 2017, she picked up the biggest purse of her life when beating the boys Saturday’s GI Woodbine Mile S. It was her 12th stakes win, her 19th overall win and pushed her career earnings over $2 million.

Trainer Kevin Attard now faces a tough decision concerning where she should run in the Breeders’ Cup, with the choices being the GI Breeders’ Cup Mile or the GI Breeders’ Cup Filly & Mare Turf. The Woodbine Mile was a “Win and You’re In” race for the Mile. That means Starship Jubilee is guaranteed a spot in that race and the $60,000 entry fee will be waived. Though it’s hard to imagine any scenario where she wouldn’t get into the Filly & Mare Turf, she is not guaranteed a spot, but the entry fee would also be waived for that race.

“Which race we go in is up in the air,” Attard said. “Obviously, we are excited because she ran a big race Saturday. She came out of the race in great shape. We’ll see how things transpire over the next little bit and try to decipher how the two races shape up and decide what direction we will go in.”

Starship Jubilee is the best horse based in Canada and was the 2019 Canadian Horse of the Year. This year, she won’t be eligible for that title. The Woodbine Mile was her first race this year in Canada and for a horse to be eligible for the Canadian Horse of the Year title, they must run at least three times north of the border.

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Keeneland Grads Making Presence Felt in Russia

While the marquee horses and seven-figure fireworks are long since in the rear-view mirror when the Keeneland September Sale–the largest of its kind in the world–reaches its later books, there are still horses to be sold, even as the demand for those youngsters could begin to wane. Several years ago, in an effort to drum up interest in the latter stages of the sale, officials at the Lexington auction house began mining smaller, off-the-beaten-path markets, and those efforts have borne fruit in places like Russia, where Lyudovik (Constitution) became the fourth Keeneland graduate since 2014 to prevail in the $55,000 Russian Derby (RUS-G1, 2400m) at the historic Central Moscow Hippodrome last month.

“Dating back to long before I was here, we have made a concerted effort to find owners and trainers in emerging markets to get them to come and buy their Thoroughbreds here at Keeneland,” said Chip McGaughey, son of Hall of Fame trainer Shug McGaughey, who joined Keeneland in 2015 and acts as a liaison to these smaller racing jurisdictions. “Obviously you can see that it’s had dividends with the success we’ve had in certain of those markets.”

Lyudovik, who became his sire’s second winner overall when graduating at first asking in domestic Group 3 company at Moscow last May, was bred by Pope McLean, Marc McLean, Pope McLean, Jr. and Phil Hager and was purchased out of the 2018 September sale for $40,000 by Marc-Antoine Berghracht’s M.A.B. Agency on behalf of his client Edward Mordukovich.

“Mr. Mordukovich is very keen on pedigrees and especially stallions and he follows American racing much more than I do,” the French agent explained. “The Constitutions are pretty special-looking horses and I said to him, ‘We must buy one.’ He quite liked that horse too, so we decided to go for one.”

He continued, “Most of the racing in Russia is on dirt, and for that reason, I like to buy those horses in America at Keeneland. Conditions [in Russia] can be pretty tough and sometimes it isn’t very easy keeping them sound, so I would not be very keen on those big, scopey kinds of horses. I probably tend to focus more on the European-type horse, but those that have a pedigree for dirt.”

A winner of two of his four starts at two, Lyudovik–a son of Speightlass (Speightstown)–returned from an 11-month absence to finish a strong second in a local Group 2 over 2000 meters July 25 and accounted for fellow KEESEP grad Whiskey Lemon Bars (Lemon Drop Kid–Film Maker {Dynaformer}, $40,000 yearling purchase) by a half-length in the Derby Aug. 16 (see below, SC #4). Other Keeneland-sourced winners on the Derby undercard included General Palace (Palace Malice, $33,000 ’19 KEESEP–video–#8) in the Criterium S. (RUS-G2, 1600m) and Gold Boy (Candy Ride {Arg}, $50,000 ’18 KEEJAN, video–#3) in the City of Moscow S. (RUS-G2, 2400m).

“He’s always complaining about the horses we bought that didn’t turn out, and I say to him, ‘Hang on, what about this one? What about that one? What about Lyudovik?’ and he goes, ‘You’re right,'” Berghracht said of Mordukovich. “And then we won the Derby and everything is fine. He’s a character. He’s a big fan of horses, he loves the game. He also races Standardbreds and Arabians. He’s a great ambassador.”

 

WATCH: Lyudovik winning the 2020 Russian Derby at Moscow

 

Also on behalf of Mordukovich, Berghracht signed a ticket on a son of Commissioner just two hips prior to purchasing Lyudovik during session nine of the 2018 September Sale. Snapped up for just $6,000, Bud’ Geroem broke his maiden in a domestic Group 2 race over the metric mile last September and added the Season Opening S. (RUS-G3) at nine furlongs first off the layoff May 17 (video, #6).

“We have a limited budget for Russia–we’re used to spending between $20,000 and max $70,000 or $80,000,” Berghracht commented. “So Lyudovik was right in the middle of our range.”

In most any line of business, the repeat customer is coveted, and given the success of Keeneland graduates in Russia, the clients are only too happy to return, hoping that lightning will strike twice. In a COVID-abbreviated racing season in 2020, some 32 Keeneland sales graduates have won Russia’s major events–10 at Group 1 level, 15 Group 2 winners and 12 Group 3 winners. And, in what was almost certainly a landmark achievement for the country, Tuz (Oxbow), a $7,000 graduate of the 2018 September sale who won his two starts at Pyatigorsk Racecourse by a combined margin of nearly 40 (yes, 40) lengths, ran a blinder to be second in the Listed Al Bastakiya S. at Meydan in Dubai this past March (video).

“It’s a competitive landscape. Everyone wants to have their market share and American Thoroughbreds have proven to excel on dirt surfaces around the world,” McGaughey said. “If they have success and their industry grows, they may start out just buying $5,000 horses, but that is twenty $5,000 horses that maybe otherwise would not have had a home. As their market continues to grow, they’re going to be inclined to come back to that source of success they had initially.”

Just five years ago, Russian interests acquired 60 horses for gross receipts of $1.7 million ($28,333 average), not an insignificant sum of money deep into the sale. Last year, they purchased no fewer than 112 horses for $4.1 million ($36,607 average). McGaughey is confident the trend will continue in a positive direction.

“The industry over there is definitely growing and they have made strides,” he said. “They’ve been working to try to become part of the IFHA [International Federation of Horseracing Authorities], the French PMU has set up their tote system and simulcasting throughout different regions.”

Foreign participation at this year’s September Sale is likely to be limited by travel restrictions currently in place, but McGaughey expects Russian interests to remain just as active as years past.

“With the pandemic, international sales are going to be down, but optimistically for the Russian market, there are currently no travel restrictions for Russian nationals coming into the United States,” he explained. “The majority of people I’ve spoken to are coming. There are a few exceptions, as the Russian Consulates are closed and are not issuing new visas at the moment, so some of them won’t be able to participate. But 90-95% of those planning to come over are still coming.”

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