Friday, 15 August 2014
The Two Key Decisions for an Owner – Part 2, Moving the Horse On
In the last blog I argued strongly for full transparency on the costs of buying horses, particularly when it is done through commercial syndicates. This certainly struck a chord and I had a number of emails and telephone discussions with owners about it all. Indeed there is quite a strong view that syndication should be more strongly regulated, as it is in some countries such as Australia. Personally I would like to see a syndicate charter which outlaws a number of the shady practices pursued by unscrupulous syndicate managers.
Another area that can cause a lot of problems is how joint owners and syndicate members can actually come out of a horse in which they have invested. It is not unknown for owners to buy into a yearling and still find that it is racing at 10 – albeit with a lowly rating and not many, if any, wins. The problem as always is the preponderance of conflicts of interest. It can be very tempting for some trainers and syndicate managers to hold on to moderate horses purely as a contribution to overheads and profit margins. Quite a few syndicate managers will be making at least £5,000 per year on each horse that they manage, and that is before additional contribution is secured through add-on costs for offices, travel, web sites, staff, hospitality etc. In some of the biggest and best-known syndicates you can be talking about very substantial increases on that figure.
In Owners for Owners, by the way, we have a standard charge of c. £3 per week per owner, or £150 per owner per year, so £900 in total for a horse, with no additional charges whatsoever, not even for VAT reclaim which we do ourselves (rather than using Weatherbys which is c.£160 per quarter).
We believe that owners should not enter into an open-ended commercial relationship, but that there should be proper reviews with the trainer about each horse at the end of the first and second year. If the horse has physical problems and / or is unlikely to win a Class 4 or better, then it is in the interests of the owners to move the horse on. Obviously this rule is not applied inflexibly, but as we say on the Home Page of our web site, we’re determined to avoid keeping horses for too long (“It doesn’t cost any more to train a good horse than a bad one. Realism is necessary. Move on the unsuccessful”) and no proper reviews (“Decisions have to be taken about horses, their performance and their welfare. As co-owners, work closely to make the right ones”).
Therefore it is a strong recommendation for anyone going into a joint ownership or syndicate that they ask specifically about the term of the partnership. All of us as owners go into ownership with optimism and high expectation, but inevitably in our sport there are more disappointments than successes. An important role for anyone involved in organising syndicates is to do everything possible for the horse to realise its potential, but at the same time not to avoid the difficult discussions when it has become clear that the animal is moderate at best. It is just too easy to hold on to a poor horse for too long. Delaying the decision to move the horse on then becomes both very expensive and ultimately demotivating. It is not much fun going racing to support a horse where there is no longer a dream.
And of course there are a number of situations where consensus cannot be achieved, particularly when one or more owner(s) decide they want to throw in the towel. We’ll look at ways of dealing with that in the next blog.