Racing Toward Scholarships

By Staff

Athletic Management, 16.3, April/May 2004,

Last fall, while Seabiscuit was stealing the nation’s heart, a small group of people in California were falling in love with a racehorse drama of their own. At Sonoma State University, a fund-raising effort made racehorse owners out of athletic department donors, netting hundreds of thousands of dollars for scholarships in the process.

The plan to sell shares in Thoroughbred racers as a fund-raiser was the brainchild of Russ Gardiner, Assistant Athletic Director for Marketing at Sonoma State, an NCAA Division II school. The impetus was a new NCAA rule, effective in August 2005, that establishes financial aid minimums for Division II institutions. Schools can comply in three different ways: by offering at least 50 percent of the maximum allowable equivalencies in four sports; by offering 20 full equivalency grants; or by offering at least $250,000 in athletics-related financial aid. Sonoma State was focused on the third option, which meant coming up with $100,000 in new scholarship funding.

"We’ve historically achieved a lot of athletic success without a lot of scholarship money," Gardiner says. "Last year, we had four teams make it to the NCAA regionals, and our men’s soccer team won the national championship. We felt it was extremely important to keep our Division II status, so we decided to take on the challenge of raising the money we needed."

The former CEO of an advertising-marketing firm, Gardiner tapped into his experience to try to come up with a way to raise $100,000 on a tight timeline. "We had to raise the money quickly in an economic climate that has companies reducing their advertising budgets," he says, "so I felt that going the corporate partner route would not be as successful as coming up with something that involved the public. The racehorse idea just kind of hit me one morning."

The concept: Sell 100 shares at $1,000 each to would-be racehorse owners, garnering $100,000. Split the money 50/50, using $50,000 to purchase, board, and train a horse, and putting $50,000 toward athletic scholarships. Only it didn’t quite work out that way. Gardiner’s idea raised $400,000, quadrupling their expectations. Half of that, $200,000, has gone into the athletic scholarship program.

Gardiner’s publicity campaign involved one story in the local Santa Rosa Press Democrat and one interview with KNBR, a Bay Area sports and news talk station. "The radio station interviewed me on a sports show for the Thoroughbred racing industry," he says. "The phones started ringing off the hook, and we sold 100 shares. The calls kept coming, and now we’ve purchased four racehorses."

All of the donors are from Sonoma County or close by, and no out-of-state buyers are allowed. The majority of the donors aren’t alumni and have never had any association with Sonoma State before, Gardiner says. He believes two factors were responsible for the huge response. First, donors were able to claim $500 of the $1,000 share price as a tax deduction. And second is the romance of horse racing itself.

"There are a tremendous number of people out there who have always dreamed of owning a racehorse," Gardiner says. "There is something magical and surreal about it—the chance to be in the winner’s circle, the potential of winning the Kentucky Derby, the dream of the Triple Crown. But in most racehorse syndicates, you need $50,000 or $100,000 to get involved. Here was a chance to have all of that for only $1,000."

Sonoma State purchased its first two horses in October 2003, spending $34,000. Two more have since been added to the string, named Seawolf Stables after the school’s athletic teams. The stable’s silks—royal blue, Columbia blue, black, and white—mirror the school’s colors.

To handle the logistics of racehorse ownership, Gardiner turned to the expertise of local stable owner Tom Bachman. "I did some research and found out he’s one of the most respected people in the Thoroughbred industry, and he is right here in our backyard," Gardiner says. Sonoma State’s four horses, purchased as yearlings from a local auction company, live at Bachman’s Pegasus Ranch, a few miles from the university, where it costs about $2,000 a month to keep each horse in training. Bachman is responsible for hiring trainers and jockeys and making decisions about when and where the horses will run. He aims to have the first of the horses ready to compete in late July.

For the 400 shareholders, the benefits of ownership include horseracing-related events every three months planned just for them. The first involved an afternoon at Pegasus Ranch, where owners met one another, watched the horses in training, and had the opportunity to have their picture taken with their Thoroughbred, while being treated to food and drinks. Next on the agenda is a trip to the stable where Seabiscuit lived. After that, the owners will visit two local racetracks and be granted "backstage" passes to a look at the inner workings of a track that are normally off-limits to the public. "They’re being treated like they are the major owner of a racehorse," Gardiner says.

To keep in touch with the owners and promote the project, Sonoma State launched, where it has pictures and bios of all four horses. Trainers post monthly updates, and if a new horse becomes available, Gardiner will post information so current owners get first dibs.

And what if the horses start winning? "Ten percent goes to the jockey, 10 percent to the trainer, and the remaining 80 percent will be split between the athletic scholarship fund and the owners," Gardiner says. "If the horses go out to stud or are sold, the owners will get the full profits."

By next year, there may be as many as 10 horses running under Seawolf Stable colors, and some consulting money to add to the coffers. "We’ve gotten about 20 calls so far from other athletic departments wanting to know how we did this," Gardiner says. "So we decided that if any university wanted me to come and consult and help them set up a similar program, we’d charge a fee that would then go into the athletic scholarship fund."