This checklist is designed to be a guide to help anyone setting up a racehorse syndicate. It is not an exhaustive list and legal advice should be sought in the drawing up of an agreement.
Participation in racehorse ownership should never be portrayed as an investment opportunity.
1. Name of the syndicate
(this will often also be the BHA registered owner name. Colours will also need to be registered).
1a. Registered name of the racehorse
(state ‘unnamed’ if yet to be named)
2. Date of birth of the racehorse
5. Overall allocation of shares
For example if it is decided that the division is to be 12 shares, each share represents 8.33%.
6. Limit of quantity of shares to be held by any single syndicatee
Normally syndicates operate on the basis that syndicatees can acquire any quantity of the shares offered with no percentage restriction, however, this is normally a decision that needs to be made at the point the syndicate is set up and not varied.
7. Name and address of the person(s) responsible for organising the syndicate
This person is known as the ‘syndicator’ and will normally be one of the persons required to become registered by BHA via Weatherbys. Sometimes a syndicator may have an ulterior motive in running a syndicate, which could create a conflict of interest – be sure that relevant interests are declared in the agreement. Registration details can be found at www.weatherbys.co.uk or by writing to Weatherbys, Sanders Road, Wellingborough, Northants, NN8 4BX.
8. Start date of the syndicate
This is normally the date that the horse is purchased and, from which point, costs start accruing.
9. End date of the syndicate
To avoid possible disputes arising, it may be highly advisable to consider setting an end date, however, if it is to be an open ended arrangement then state ‘unspecified’.
10. Cost of each share
This will often be a straightforward division of the purchase price plus associated costs.
11. Ongoing minimum cost of each share
Once the horse has been purchased it will need to be kept, trained and hopefully, raced. In addition to these expenses the syndicator may incur management costs. All costs should be defined in advance and separated for accounting purposes – assuming the syndicate is being run as a stand alone entity with syndicatees responsible for any costs arising – and then broken down on a monthly basis and an invoice sent to each syndicatee. It is recommended that the ongoing minimum cost of each share at least covers the trainer’s monthly fee.
12. Invoice settlement period
A recommended time period could be receipt of payment within 30 days from date of invoice.
13. What happens if a syndicatee should fail to pay or decide to leave the syndicate for any reason?
There are many variables and solutions. It is recommended that this possibility should be covered in the agreement. For example, what happens to the share(s) that then become available. How will the shortfall be covered to enable the trainer to be paid promptly. How will the value of each share be determined?
It is important that all syndicatees are made fully aware of the importance of the agreement they are entering into, particularly emphasising the possibility that something could happen to the horse resulting in non-racing. Syndicatees should be reminded that if a vet declares the horse unsuitable for racing, keep costs, vet bills etc… still need to be paid.
14. What will happen to horses when they retire from training?
Welfare of the horse should be a paramount consideration in every syndicate. In most cases this can be taken care of perfectly well using commercial arrangements with them either being sold or given away privately or sold at public auction. There will be cases where this is not possible and the horse will need to go through a charitable retraining/re-homing centre. For example, HEROS (Homing Ex-Racehorses Organisation Scheme) offers an excellent service (www.heroscharity.org). Charities need support and a sum should be set aside from the outset to cover this possibility.
15. How will decisions be made?
It could be that the syndicatees will be allocated one vote per share held. Votes could be on any number of subjects, for example, an expensive race entry, premature closure of the syndicate, change of trainer, entry in a claiming/selling race, removal of the manager etc… Can the horse be moved from trainer to trainer without encumbrance? Will a committee be formed and will there be regular meetings? It is important that a structure is in place to efficiently manage voting.
16. Is the horse insured?
Third party cover is vital. Partial third party cover may not be advisable in case full and equitable liability is deemed to be vested amongst all of the members. Mortality and/or injury/illness insurance should be considered. The insured value should be adjusted whenever appropriate. A bloodstock agent can provide an independent valuation.
17. Are you registered for Data Protection?
All clubs/syndicators who handle personal information about individuals potentially have a number of legal obligations to protect that information under the Data Protection Act 1998. For more information, click here.
Given that the above checklist is far from exhaustive, potential syndicatees will recognise the importance of joining a syndicate that is properly managed. What can start out as a friendly group of like-minded individuals with good intentions, can quickly deteriorate and spoil the enjoyment. Whilst anyone can set up a syndicate, RSACA members are professionals and have all agreed to be bound by a strict set of rules, offering syndicatees a hassle free entertainment. Professional management costs are obviously much higher than the ‘chap in the pub’, however, like many things in life, you get what you pay for. To view the current list of RSACA members click here.
Note: Professional syndicators devise their terms and conditions to suit their various modus operandi, which may sometimes involve a commercial decision to offer ‘peace of mind’ no extra payment deals.