Types of Ownership

Most trainers in Australia buy horses at yearling sales with the aim of on-selling them to their client base. So if you have a favourite trainer, you can call them and ask what shares they have available in horses.

They often have a range of options available in different horses and at different prices.

You can purchase a share outright or can even purchase a share with a group of friends. For example, you and four other friends buy a 10% stake in a yearling together.

Typically, share options range from 5% up to 25% but there is no hard and fast rule. There is nothing stopping you and a group of friends buying 100% of a horse to race together – if your budget allows for that.

A few important things to remember when it comes to racing a horse in partnership:

• Up to 20 individual owners can be listed in the race book (including syndicates), so if seeing your name in print is important to you, make sure you discuss this with the trainer.

• If you decide to form a syndicate with friends or family and purchase a share, you will have to nominate a syndicate manager. It’s their responsibility to handle communications with your trainer and take care of all the paperwork.

• The same goes if you buy a horse outright with a group of mates, you’ll have to nominate a managing owner.

Essentially, a syndicator sells shares in horses that they have bought; often at yearling sales. They are running a business, but that business is to ensure their clients have a great ownership experience.

Syndicators are regulated by Australian Securities and Investment Commission (ASIC) and need to have an Australian Financial Services License or be overseen by somebody that does.

While they charge some fees that trainers may not, it’s still a relatively inexpensive way to get involved in ownership and should be stress free. The syndicator will take care of all the administration for you, they usually offer great communication to keep you engaged with your horse’s progress, and many will organise social events for their owners too.

Syndicators generate their income through some of the following: charging management or administration fees, taking a percentage of prizemoney winnings, and retaining a share of the horse when it is sold.

As part of their ASIC responsibilities they are required to provide a product disclosure statement (PDS) which will include details of the horse, where it was bought and for how much, an outline of fees, information on how decisions regarding the horse will be made and details of what your ongoing costs will be. Before investing in a licensed syndicate, it is prudent to ask for and read the PDS.

Horses that fall under this category are generally split into units. For example, there might be 1,000 units offered in a horse at a cost of $100* per unit, with an ongoing monthly management fee of $16*. You can buy as little or as many units in the horse as you like.

Like licensed syndication, micro ownership is regulated by ASIC and you should request a copy of the PDS before committing to a purchase. The great thing about micro ownership is that it allows you to experience ownership but at a fraction of the price of the more traditional models. You’ll also be joining a community of like-minded racing fans.

However, you’ll have little to no say in the management of your horse and when it comes to owner’s privileges such as race day tickets and entry to the mounting yard, you will most likely go into a ballot with the hundreds of other owners.

*Costs are an approximate only and may vary.

While there is often no initial fee to lease a horse, it is common for a percentage (often 20%) of any prizemoney to be paid back to the owner.

As a sole owner you will collect all the prizemoney your horse wins and enjoy any upside in residual value if the horse becomes a champion. But you will also be liable for all the expenses.

Given the costs involved, from a financial perspective this is the riskiest type of ownership.

However, there are many people who choose to only own racehorses by themselves. For them, the ability to make all decisions about a horse’s career; from who will train that thoroughbred through to having a say in which races it will run in and who will take the ride, are vitally important.