Interested in becoming a racehorse owner but don’t know where to start?
Well, here’s how you can start horse racing syndicates with family & friends to get you on your way.
First thing’s first, while it’s a simple process to create a syndicate, there are a few important things to consider before you embark down the ownership road.
Once you get into a partnership with like-minded racing enthusiasts, you’ll soon find out about the highs and lows of owning a racehorse.
We’ve created a checklist to help you work out the best path to take.
1. Define your Syndicate
2. Pick your Members wisely
3. Set up a Management Plan
4. Ensure Everyone is On Board
5. Make it Happen
Racing promoters buy unraced or tried horses at the sales and then syndicate them out to the public for racing.
Common share offerings are 5% and 10% and these are available to buy outright or divided up between the group until the horse is 100% sold.
A syndicate allows multiple people to purchase equal shares in a horse which cuts ownership costs, allowing more people to take part in the ownership.
For example, five people decide to form a group to purchase 5% in a racehorse.
Each member owns 1% of the horse and also 1% of the horse’s upkeep during its career.
A 5-member syndicate owning 5% in a racehorse is the perfect way to race thoroughbreds, and we’ll soon explain why.
As with everything, preparation is key!
The first thing you need to ask yourself is why are you starting a syndicate.
Is it to have fun? To make money? To own a champion racehorse?
All three perhaps?
Well, we can guarantee you one thing, if you do it the right way, you’ll have fun!
As for making money or owning a champion racehorse, most have gone broke trying.
So, if you’re in it to enjoy good times, let’s move along shall we?
We’ve raced many horses over the years and in our experience the best way to run a horse racing syndicate is to have five people involved and sharing all the costs.
The positives are many and the negatives rarely raise their ugly head.
Everything splits five ways and makes running the syndicate a breeze.
When buying shares in a horse, the initial outlay always splits five ways, as are all ongoing bills along the way.
Say a promoter offers a yearling syndication for $100,000 and advertises 5% shares for $5,000 and 10% shares for $10,000.
If you choose the 5% option, then each member is up for $1,000 each to complete the $5,000 purchase.
It’s $2,000 each if you take the 10% option.
Which option is better, 5% or 10%?
A 5% share is ideal because it gets the group’s name in the racebook and it’s the most affordable option to own a horse with a group of family or friends.
It’s an option, but that’s twice the cost and twice the bills, and the latter all come at once.
Consider a 5% share in two horses instead, as it allows you to own two horses instead of one, with the bonus of separate bills.
It’s twice the enjoyment!
If you had 10 people in your syndicate, then a 10% would be preferable.
Once created, your syndicate is always available for future ventures.
This is convenient if you’re lucky enough to taste success and want to add to your stable.
If all members are 100% invested for the long term, then it should run smoothly at all times.
It’s important to have the right people along for the ride.
For a partnership to work it’s essential to gather trustworthy people in it for the long haul.
Here’s a tip to save you time, money and frustration down the track.
If you ask someone to join a syndicate with you and they hesitate, or say “maybe”, or are not one-hundred percent committed, find someone else.
When unexpected bills pop up along the journey you don’t want hesitation, “maybes”, or less than one-hundred percent responses.
Money can ruin friendships and you’re in it to have fun, not lose friends.
One thing’s for sure though, if people don’t pull their weight, you’ll be the one left carrying it.
It also creates external problems if people go missing when bills arrive.
Syndicators, trainers, vets and whoever else need to get paid for their services.
If you’re the manager of the syndicate, it falls back on you, although most bills get sent direct to separate members these days.
You don’t want one of your members being late to pay, as it gives your syndicate a bad name.
Once you get your most reliable family and friends together to go racing, you need to manage them.
Buying shares in a racehorse requires an initial purchase cost along with ongoing monthly bills, so a good management plan is essential.
Everyone should know how much money’s required up front, plus how much to put away each month for bills.
If all members agree, open a bank account in the syndicate’s name where everyone can transfer money each month to pay for their share of the bills.
This ensures that money is always available when accounts are incoming.
All prize money earned goes into the same account, and if you’re lucky, you might find a consistent galloper who pays his way to offset the costs.
A 100% syndicated horse at $120,000 means you’re up for $6,000 for a 5% share.
This equates to $1,200 for each member of a 5% syndicate group.
Yearly costs will vary between $40,000 and $60,000 depending on where the horse is based and where it races.
Use the following guide to work out ownership costs per month.
One thing to remember.
Whatever you think it will cost, it always costs more, unless Lady Luck shines on you, and there’s only so much luck to go around.
A management plan is essential, then it’s time to ensure everyone is on board.
One thing that never occurs to excited owners when they first get into a racehorse is when bad luck comes knocking on the door.
Racehorses can get injured anytime, either at home or the racetrack, and sometimes it can be fatal.
Touch wood you’ll never face that in your ownership group, but all owners should be aware.
Injured horses also incur extra bills through treatment and they cannot race during that time.
Most recover in due course, but unexpected vet costs can hurt the bank balance big time.
Another consideration is an exit plan when things go sour for any reason.
It’s not always a bed of roses owning horses and sometimes things crop up that test your mettle.
These include non-performing horses, extra high bills, ownership disputes, disappointment, frustration and more.
Awareness of potential pitfalls as they happen means you can plan for them to achieve the desired result.
If all syndicate members are on board and 100% committed, then now’s the time to make it happen.
To kick things off, you must have a syndicate name.
So put your thinking caps on and select well, because if you win the Melbourne Cup one day, your chosen name might become famous.
It might become famous for all the wrong reasons though if offensive at all.
Choose respectful, humourous or tongue-in-cheek names and you’ll be fine.
It’s not a requirement to be in a horse to create a syndicate, but makes sense to do so.
To start a 5 person syndicate you must complete a Register a Syndicate (To a maximum of 10 members) form from Racing Victoria.
Select the ‘Regular Syndicate’ checkbox and the syndicate manager fills out Member No 1 on the form.
This section includes bank account details for all prizemoney, as it’s paid direct to the Manager of the Syndicate.
The creation cost is $275 in Victoria and they provide fields on the form for payment.
Members two to five fill out the Second (2nd), Third (3rd), Fourth (4th) and Fifth (5th) sections to complete the form.
Once completed, send it off to Racing Victoria and await your successful confirmation in due course.
Owning a racehorse is an expensive endeavour and sharing the costs is the best way to enjoy the experience.
It’s also the most cost effective way.
Things to remember:
Get fully committed people in it for the long haul.
Liabilities create internal and external problems that destroy the group fabric.
Honest folk with a passion for racing are the perfect candidates.
Many horses fail to make the races because of injury or slowness, or some other unforeseen circumstance.
Those that do often under perform. It’s a racehorse jungle out there, so be aware. If you get a fast one, enjoy it!
Some people hit the jackpot in racing. They’re the fortunate ones.
Finding Group 1 winners is a tough proposition, as is winning prestigious races like the Golden Slipper or Cox Plate.
If you’re lucky, your horse will win a race or two and pay its way throughout its career.
It will depend on the trainer, environment, ability, attitude, and much more.
Prize money increases in recent years benefits owners, however, rising ownership costs negate that somewhat.
At some point you will reach a crossroad, as will your fellow owners.
You’ll either get lucky or not, and want to buy more horses, or go your separate ways.
The bonus of having your own syndicate allows you to get 5% in any new horse you fancy.
If someone wants to leave the group, then it requires immediate action.
This all require forms and time. That’s why long haul members are important.
Assess where you are at each new year and plan for the next stage.
Always be ahead of the game.
It’s imperative to buy horses from honest syndicators with integrity.
The hands of time will show those with a proven history of excellence in rewarding ownership experiences.
Do your research and ask around.
The truth is out there, and the best survive the test of time because they value their owners.
Finally, don’t expect too much and disappointment will never find you.
Although, Lady Luck is sure to shine on some of you at some stage.
Enjoy it when she does!