Wanna buy a horse?

Tweet If you want to be a horse owner, but not deal with all of the logistics that go along with it, maybe a syndicate is for you. There are all kinds out there if you look in the right places. Remember, Sackatoga Stables was formed by a bunch of friends in Sacketts Harbor, NY that got together to start a “syndicate” that included the classic horse Funny Cide and look what happened?

The United Thoroughbred Racing Syndicate will be run out of Woodbine in Toronto. The advantages for joining a syndicate such as the United Syndicate, is that the cost per share is not too expensive for the racing enthusiast at $1,000/share. In addition to the share, they charge a monthly fee of $160 plus applicable taxes (GST, PST), and promise not to come back to the shareholders asking for additional money. I clarified that the monthly fees do not represent capital contributions, but are treated an expense of the shareholder and revenue for the syndicate in order to cover training and veterinary costs. The initial syndicate is seeking $25K to buy a yearling at a 2008 sale. The first syndicate will not charge a fee, per the founder, as the proceeds will all be spent on the horse. The only profit UTS will make will be a 5% cut of any winnings. If the horse doesn't win, nothing goes to the syndicate. The founder will also be purchasing at least one share in the syndicate as well to demonstrate his commitment to the horse. He also stated that they are “currently working on a program to take a percentage of the winnings out of United’s Share to donate directly to a local thoroughbred retirement facility and our commitment to the well being of the horse will ALWAYS come first, even if we have to sell.”

I asked the founder, David Godin, several questions in an interview after understanding the initial concept:

EquiSpace: Why the trailing monthly fees ($160/mo) for a minimum of 2 years? Why not one price for a share all in so you don't have to chase the money?
UTS: Breaking up the fees quarterly will reduce the initial amount of money someone would need to take out of their pocket. The option is available to pay all the fees in advance if one wishes. I would like to bring new people into the sport at a reasonable cost, requiring it all to be paid in advance may "scare" people away from the idea.

EquiSpace: If the money runs out after two years (the minimum for trailing fees), where will it come from if you say you don't go back to the well...won't you have to make a capital call at that point?
UTS: United Thoroughbreds will be required to cover any fees over and above during the course of the two years. At the end of the two years the syndicate will have the option to renew or sell the horse and/or their shares. If the horse is to be sold it is our obligation to get a "fair market price" for the horse. That being said if the horse is of considerable value the syndicate would be highly likely to renew for another two year term. If not the horse would have either been claimed in a claiming race or it will be retired and sold "off" the racetrack. We have a firm stance regarding the well being of our horses. It is of the utmost concern that none of our horses get sold to an auction or sold for slaughter.

EquiSpace: If a shareholder defaults on the monthly fee, what happens?
UTS: That shareholder will be given every resonable opportunity to make good on his/her dues. If that does not occur their share will be sold for $1 or to the highest bidder already in the syndicate.

EquiSpace: Will your annual financial statements be audited by a CA or CPA?
UTS: Annual reports will be audited by a CA.

EquiSpace: Will there be minimum shares that will be sold per syndicate?
UTS: We will be looking to completely sell all 25 shares. If it does not sell out I will offer the opportunity to the current shareholders with the purchase of a less expensive yearling. However our best efforts are in place to sell all 25 shares.

EquiSpace: How many syndicates do you anticipate in year one?
UTS: Year one will consist of a yearling syndicate and very shortly we will be adding a claiming syndicate. These will more than likely be the only two available in our first year.

EquiSpace: How many horses will be housed in each syndicate?
UTS: One horse per syndicate however I will be looking to manage as many as possible.

Horse ownership is a risky endeavor all on its own. Sharing that risk by joining a syndicate, reduces that risk somewhat and this syndicate appears to be in the modest fan’s wheel house. Their own website comments on risk as follows: “Owning a race horse is a "risky" investment, with many horses racing at a claiming level or yearlings that never make a race at all. Dividing the "risk" will ensure owning a racehorse is a manageable expense that will allow you to learn the ropes before risking it all.”