The high cost of keeping and training racehorses is one of the major factors responsible for the growing popularity of syndicate ownership, which enables these costs to be shared. I make no secret of the fact that it is a very expensive business. This increases when your horse is ready to actually run. The costs involved in training your horse and the expenses the syndicate has to meet do of course vary from month to month and can include the following:
- Training and Keep
- Shoeing and Veterinary Services
- Jockeys and Entries Fees
- Gallop Fees
- Insurance – all our horses are insured for the duration of the partnership
- Management fees and expenses
- Transport to race meetings
- Miscellaneous (stable staff presents, photos, accountancy fees etc)
The partnership clearly needs income for these expenses to be met and the Agreement provides funding from the following:
- Regular monthly payments from each member, normally to be paid on the first of each month by standing order. This figure is currently £290 for each 1/12th share held.
- Prize money and sponsorship. Any income the horse may earn by win or place money and under the terms of a sponsorship agreement from which the horse may benefit.
- Net sale proceeds – when the syndicate is terminated.
Expenses some months may be higher than the members’ contributions. At other times surplus of funds may build up during months when a horse is resting, but the most important assurance is that the members know from the outset what their monthly commitment is maximised at.
Can Members be asked for more funds to meet additional costs?
No, not for at least twelve months, for which period the manager may have to advise the members of any increase in the monthly payment to meet increased overheads which are inevitable over a period of time. However, any increase would be subject to a majority decision by the members and in the past have often been able to keep costs the same over a four to five year period. The Partnership Agreement provides that any deficit when the syndicate is terminated is met by the Syndicate Manager of Shefford Bloodstock Services – the members are not liable for this.
Prize Money Distribution and Returns on Your Investment
As I explained in the section on Syndicate Funding, prize money is added together with members’ payments, and treated as income.
Dividends are paid out as follows:
- At the end of each accounting period when there is a surplus of income over expenditure. The manager will pay out a dividend after allowing for future liabilities or as the members may determine.
- When a syndicate is terminated, all surplus of income, which includes sale proceeds over expenditure, will be paid to the members after accounting for debts and liabilities of the syndicate at that date, in the ratio of the members’ shareholding. An interim dividend may be paid out to members before the accounting date is due but this is to be at the sole discretion of the manager. This is common practice, particularly in relation of VAT which has been refundable since 1993 both on expenditure and costs paid by each member for their share.
When a partnership horse is finally sold (always by a majority vote from the members) at the end of or during its career, the subsequent net sale proceeds are added to the syndicate account. In certain cases the sale proceeds can be far more than what the members originally paid for their horse and the syndicate members benefit accordingly.
RETIRING FROM A SYNDICATE
The procedure for a member to retire or opt out of a syndicate is clearly laid down in the Syndicate Agreement and is as follows:
- A retiring member must inform the manager and offer his share for sale to the other syndicate members.
- Should no syndicate member wish to take over the retiring partner’s share, the member may then sell his share outside the syndicate and find a buyer through the normal channels which is primarily the member’s responsibility although Shefford Bloodstock will be happy to advise.
- In the event that the majority of the members wish to retire from a syndicate, the horse would then be sent to the sales to dissolve
the syndicate or sold privately if the majority agree.