Sunday 13 September 2015

As We Enter “Syndicate Season”, How Many of Them are Ripping Off the Owner?

A few weeks back I posted a blog on over-charging by agents and trainers. I know from communication that I’ve had with owners in my network that this theme definitely struck a chord. Indeed, as well as the specific examples that I quoted, a clear theme emerged that the “racing mind-set” of those who work in racing just doesn’t seem to understand the need for proper transparency and active management of costs (downwards). In most other walks of life, and particularly in modern companies, this laissez-faire attitude towards over-charging (which is either incompetence, greed or alas on occasions corruption) would be completely unacceptable. In these days of price comparison web sites and consumer guides, customers would just switch allegiance to other suppliers.

Those who have been reading the blog since Owners for Owners was set up will know that I’ve had a particular crusade to reduce the over-charging that takes place in some syndicates. Indeed this message is increasingly being recognised by the racing authorities and it is likely that a code of conduct will emerge fairly soon, which I have personally been making some input into. One of the big problems is that many potential owners have little insight into the costs and practices of syndication. As na├»ve owners they can be lambs to the slaughter in the hands of the less scrupulous syndicators. Look out for these unacceptable practices:

  1. No contract and no cooling-off period. The owner has no real clarity on what is being provided.
  2. Inadequate term definition. You don’t know how long you’re going to be in for.
  3. Unclear and / or no defined exit routes from the syndicate. No annual review process.
  4. No breakdown of the precise horse acquisition cost. The owners end up paying far more than this. So from day one, the value of their investment is reduced by syndicate manager profiteering.
  5. Use of free shares by racing managers, enabling them to participate in the benefits but not the costs.
  6. Undeclared retrospective rebates from trainers retained by the syndicate manager.
  7. Inflated operating costs. No itemised annual estimate of ongoing costs. Inadequate coverage and disclosure of a racing manager’s annual fee vs. additional (hidden) charges for overheads.
  8. Undisclosed supplementary costs.
  9. No service standards and no commitment to provide an enjoyable owner experience.
  10. No communications schedule and therefore no commitment to provide regular information.
  11. Little owner involvement in the key decisions relating to the horse. Limited access to trainer / horse.
  12. Undisclosed, opaque syndicate manager’s expenses e.g. travel, flights, hotels, meals, hospitality, etc.
  13. Back-handers and luck money on horse purchase retained by the syndicate manager.
  14. Expensive phone lines for information on your horse.
  15. Trainer syndicates which end up charging double margins, i.e. on training fees and then syndication.
  16. Offloading of crocked and useless horses to a syndicate. No access to sales vetting or vets’ reports.
  17. Undisclosed conflicts of interest e.g. syndicate manager buying horses from related parties.
  18. Retention of sales money or high percentage deductions by the syndicate manager against sale.
  19. Owner benefits being retained for the syndicate manager e.g. lunches, badges, boxes, car park admission, prizes, prize-money, breeding rights, use of colours, running horse in manager’s name.
  20. No proper dispute resolution process. Only way to exit the syndicate is by abandoning your share. No valuation or buy-out procedures. Syndicate manager has complete control, and a vested interest in prolonging the syndicate for as long as possible in order to maximise fees / overhead contribution.
September is often the start of the “syndicate season”. The yearling Flat sales are under way and the main NH season about to start. Lots of trainers and syndicate managers have bought horses and are desperate for owners to take them over. If any of you are thinking of buying into syndicates this autumn, you would be strongly advised to evaluate their offers in line with this list of 20 practices. If in doubt, ask questions of the syndicator and commit to being “an informed customer”. Don’t join the gullible and be ripped off. There is nothing wrong with a syndicate manager being paid reasonable remuneration for the work done. As always, it is the definition of “reasonable” that matters. Look closely at the actual costs, the syndicator’s total profits and what they are offering you in terms of added value benefits of being an owner with them.

I am always interested to hear your views so please do leave a comment. If you can't see the comment box at the bottom of this post then navigate to the post using the right hand navigation or click here > and scroll to the bottom of the page. Look forward to hearing your views. Thanks very much for sharing them.

Tuesday 1 September 2015

Is York Now the Best Racecourse in the Country? It is Certainly My Favourite.

The recent Ebor festival was an outstanding success, although only a few favourites came in, and even then I studiously managed to avoid backing them. So if I was talking through my pocket I would definitely be critical. But I’m exactly the opposite as far as the Knavesmire is concerned. It really is a super track.

Regular readers of this blog will know that I’m more than prepared to criticise racecourses for their indifferent service and poor facilities – not just for owners but for the general racegoer as well. York, however, seems to get all the basics right, and over the last few years has made significant multi-million pound investments in facilities such as the new pre-parade ring, Champagne bars, restaurants etc. There are always lots of areas to relax, sit down, raise a few glasses of the best value Champagne on race tracks in the country, the walkways actually allow you to get around easily and all the staff are unfailingly polite and appear to be extremely well trained. Even the excellently produced and detailed racecards are free.

This year’s festival also will have pleased owners, with every race worth more than £50,000 in prize-money, and there have been significant boosts for the hugely competitive handicaps as well as the pattern races. Indeed the level of competition is such that to win at York now you need to have a horse who if not already 100+ on official ratings soon will be, after winning any of the races there.

Like all business operations, it is the quality of leadership that really counts, and Lord Grimthorpe and his team, with the hugely talented William Darby, have to be commended for what they have achieved. Indeed I have heard that the members of the board only receive payments to cover expenses, so for many of the top team it is clearly a labour of love, with all profits and surpluses ploughed back into the course in prize-money. This really does set the benchmark in quality, commitment and performance that all racecourses need to strive for.

In terms of the racing itself this year, this brought quite a bit of controversy, most of it on Day 1. Arabian Queen, in the Juddmonte International, turned over the hot Derby-winning favourite Golden Horn. It is just a pity that the winning trainer, David Elsworth, then made a complete fool of himself, throwing a major strop about not being invited to lunch and apparently feeling that his filly had been unfairly criticised. In the Great Voltigeur, Pat Cosgrave got into a barging match on Storm The Stars but under current British rules kept the race. It is now pretty clear that unless there is only a neck or a head difference in a result, the chances are that interference won’t lead to a result being overturned. Throughout the meeting a few jockeys picked up bans for over-use of the whip, and with the level of prize-money on offer it is clearly the case that some jockeys are still prepared to ignore the rules. There should be stiffer penalties to curtail this behaviour.

The two highlights for me, though, were undoubtedly the magnificent successes for “ordinary owners and ordinary trainers”. Mecca’s Angel’s win in the Nunthorpe was the first Group 1 for both jockey Paul Mulrennan and trainer Michael Dods. On the right ground she is a really game filly and was very well bought for 16,000 gns. The Prix de l’Abbaye at Longchamps is an obvious next target for her. Then in the Ebor the win by Litigant for Joe Tuite and A.A. Byrne was a mightily impressive performance bearing in mind that the horse had been off the track since April 2014. Again, cheaply bought at £18,500. The owner currently has seven horses in training, and the other six haven’t managed to win £10,000 in total between them this year. Such are the highs and lows of ownership. I used to live only a couple of miles away from Tuite’s yard, in Great Shefford near Lambourn, and doubtless if I was still based there would have heard some whispers beforehand. Sadly, all my bets went down, and indeed the final day of the meeting was just about a complete graveyard for punters. The Placepot paying £4,882 to a £1 stake says everything about the day!

Great to see the ordinary owner do well. That was in marked contrast to the results for some of the top trainers, most noticeably William Haggas, all of whose winners were owned by royalty and sheikhs. Such is the value of mega-wealthy patronage in the top yards at Headquarters.

Already looking forward to York next year, and indeed have already booked accommodation. See you there!

I am always interested to hear your views so please do leave a comment. If you can't see the comment box at the bottom of this post then navigate to the post using the right hand navigation or click here > and scroll to the bottom of the page. Look forward to hearing your views. Thanks very much for sharing them.