The RSACA was formerly known as the Racing Syndicates And Clubs Association. It is now wholly dedicated to offering advice to those considering joining or forming a racehorse syndicate or racing club.
A racehorse syndicator is a person or business entity who has chosen to either buy or lease a racehorse and then sell shares to consumers on a profit or non-profit basis.
A syndicatee is a person who has chosen to purchase a share in accordance with the terms and conditions prescribed by the syndicator.
A racing club is normally an entity operating on a non-profit or commercial basis. The general principle is that a racing club invites people to join the fun and excitement of being associated with one or more racehorses, for a fixed period of time. The club member does not normally own or lease any part of the racehorse but may possibly share some of the prize money won by the horse(s).
Because racehorses are not machines, there is no guarantee that even if a horse has already entered training, that it will actually make it to the races, let alone win a race or any place prize money.In other words it is essential that a syndicatee measures his/her expectations from the outset.
If you are buying a share in the ownership of a horse, (as opposed to a leasing arrangement) it means that you are becoming a part owner in the horse. The syndicator may have already speculatively purchased the horse prior to syndication. The syndicator is at liberty to attach whatever value they wish to the capital purchase price. For example, they may have purchased the horse at Tattersalls Sale for £20,000 and then attached a capital value of £40,000. Alternatively, they may have bought the horse privately or bred the horse. Whatever the scenario, you need to satisfy yourself that the cost of joining the syndicate is reasonable. Some syndicators management fees are considerably more than others. For example, a syndicate business with 40 members of staff is quite likely to have a higher management fee than a syndicator with no staff, particularly if he administers the syndicate from his home. Furthermore the service and professionalism is likely to vary between syndicates, therefore price comparisons are often of little use unless they are like-for-like.
Note: where a horse has been bred by the syndicator, his valuation of the horse should, ideally, have some form of documentary evidence to support an attached value. An unconnected registered bloodstock agent could be contacted to provide an idea of a fair market value.
Some syndicators do not purchase a racehorse, instead they merely lease it from the legal owner, for a period of time. The syndicator then splits the lease arrangement into shares. You need to be sure that you are not merely funding the racing career of a racehorse (particularly a filly) for the legal owner. Or merely subsidising a syndicator's hobby. If you are hoping to get some of your costs back from a share of prize money won by the horse, you need to be aware of the actual or likely BHA rating of the racehorse. For example, the average Flat racehorse will have a rating of about 70. A below average racehorse is less likely to run at prestigious race meetings and less likely to win even a small percentage of the costs back, that's assuming it actually gets to the races.
The BHA (British Horseracing Authority) are the body responsible for overseeing fair trading practices within the industry.
All offers to consumers in websites, advertisements etc. are bound by law to comply with The Consumer Protection from Unfair Trading, Regulations 2008. Compliance with these Regulations not only offers consumers protection but also ensures a level playing field for all those trading in the racehorse syndicate business. As the governing body of the racing industry, The BHA actively investigates any potentially misleading business practices that are brought to their attention.
Rule 30 of the BHA Rules of Racing states:
- 30. Conduct prejudicial to horseracing
- 30.1 A Person must not act in any manner which the Authority considers to be prejudicial to the integrity, proper conduct or good reputation of horseracing in Great Britain.
Alternatively, you can contact your local TRADING STANDARDS office.
WHAT TO LOOK FOR WHEN CHOOSING A SYNDICATE OR CLUB
- Joining a racing syndicate or club should be treated as an entertainment. The syndicator should not imply that the purchase of a share is an investment.
- Check that the offer is unambiguous. Is the difference between ownership, leasing and club, clearly defined? If for example; the headline text is "JOIN XYZ RACEHORSE OWNERSHIP SYNDICATE" and the small print further on, states something like "the syndicatee is not acquiring any equity (ownership) in the horse" alarm bells could start ringing.
- If the syndicator is a member of any racing industry body, this does not infer protection against being misled. No organisation within British Horseracing ensures/guarantees that a syndicate or club is being run in accordance with the principles of consumer legislation. Albeit understandable, even the BHA do not have a compensation scheme for losses arising as a result of their failure to address any anomalies prior to the BHA registration process.It is therefore a case of caveat emptor (buyer beware).
- Apart from being good business practice, every syndicator should have a set of terms and conditions and these should be available in a written format to a potential buyer BEFORE joining. This avoids any misunderstanding arising from discussion over the telephone (for example).If the full set of terms and conditions cannot be easily found, on the syndicate/club website, this could potentially be considered a 'lack of transparency'.
- Once you have purchased your share, the syndicator will normally issue a receipt or a share certificate. This should confirm the exact percentage/proportion you have purchased. For example,if you were originally informed that the ownership or lease was being split into 20 x 5% shares, the share number on your receipt or certificate should be any number between 1 and 20 out of 20. For example 4/20. If the syndicate was then registered with BHA as 'XYZ Syndicates and John Smith', you would expect John Smith to own at least one of the 20 shares and that he is not taking advantage of a disproportionate percentage of prize money etc. If you later discovered that a fellow syndicatee had been allocated the same numbered share as you, in the same syndicate period, you could have grounds to immediately refer the matter to BHA for investigation.
- Just as you would possibly not entertain purchasing a motor vehicle that had failed its MOT test, you need to be satisfied that the horse(s) in question are fit for training. If you have any doubts, you can request a vet examination (otherwise known as 'vetting') or you can view a recently issued vet certificate, before you agree to purchase a share. Vetting costs vary, but a reasonable pricing expectation could be £100 for a Stages 1 and 2 examination OR £300 for Stages 1 - 5 examination.
- Stage 1 - full clinical evaluation at rest including evaluation of conformation, palpation of whole body and limbs as well as evaluation of the horse's eyes and heart. Breathing rate and heartbeat are listened to. Toe pointing. Limbs, skin and teeth are examined. Evidence of old injuries should become apparent. The skin (including underbelly) is checked for abnormalities. Conformational defects should be noted.
- Stage 2 - the horse is walked and trotted in a straight line on a hard surface and flexion tests are undertaken which are “stress tests” to identify low grade lameness. If there are no signs of lameness, the horse is then reined back and turned tightly on a circle around the handler, these are additional “stress tests” to identify any lameness not detected by standard tests.
- Stage 3 - the horse is examined under exercise which will vary but ideally replicates full gallops work. The stage is concluded with a heart and wind examination.
- Stage 4 - following a period of rest, the horse is observed for any stereotypes (vices) and identified against its passport.
- Stage 5 - the horse is then re-evaluated at trot up and flexions may be repeated. A blood sample is taken.
- Note: just as a vehicle MOT pass certificate applies to the point of examination with no guarantee whatsoever of the roadworthiness of the vehicle a day later, so also, a veterinary pass certificate is no guarantee that defects checked for in the examination, may arise in the horse at a later time.
Further tests can be carried out beyond Stage 5, such as endoscopy of the upper respiratory tract to detect “wind” problems, radiographs to evaluate bony abnormalities or ultrasound examination to review the soft tissue anomalies. These can be added to the standard examination for additional information and is more normal if the horse is of a higher value or intended for export.
Most racehorse syndicators run their businesses fairly and honestly, therefore hopefully you should enjoy a hassle free service and enjoy participating in the syndicate and enjoy your foray into the exciting world of British Horseracing.
There are a number of Syndicate formats. One such option is an all-inclusive arrangement. This is where the Syndicator sets a fixed fee to cover all (or the majority of) costs arising for a set period of time. Essentially, this is where the Syndicator takes a commercial risk, hoping that costs and overheads will be less than the sum collected. Profit or loss arising, is entirely the Syndicator's business and Syndicatees should not expect to receive a set of the Syndicator's trading accounts at the end of the syndicate term (save where the Syndicator chooses to do so). However, even though a syndicate may be all-inclusive, there are certain accounting requirements that are required. If VAT is charged on any item by a VAT registered Syndicator, a VAT invoice, carrying the relevant VAT registration number, should be supplied by the Syndicator to the syndicate as a whole. Secondly, all income derived from the activities of the racehorse, particularly race prize money, needs to be properly itemised, to enable the Syndicatee to clearly identify that he/she has received the due amount, relating to the share percentage held. These amounts should also help demonstrate that the Syndicator has paid over any VAT due to HMRC, on behalf of the Syndicatee, arising from race prize money etc...
A Syndicate can involve the ownership of a racehorse or a leasing arrangement. The difference between the two is significant and should therefore be very clearly defined by the Syndicator from the outset.
A Syndicate may involve more than one racehorse.
If you are interested in joining the RSACA Consultative Group, please send an email. We are particularly looking for people with a legal or political background and/or a passion for the furtherance of racehorse ownership. firstname.lastname@example.org
Whilst we are unable to engage in any correspondence or offer any individual advice relating to any complaint you may have against a racing syndicate or club, we are keen to learn of any practices that you believe may contravene BHA rules or consumer legislation. Also we would like to hear from you with any suggestions for additions or amendments to the content of this website. Please email: email@example.com