It is easier to collect $1 from a thousand people than to collect $1000 from one person. The truth of this statement sounds like the philosophy behind some of the great retailers of our time. Apply this principle of marketing to the horse business and this undeniable statement appears: "More people can afford an inexpensive horse than an expensive one." One way to convert that principle into the sale of a high dollar horse is to sell an expensive horse to a group of people - each of whom pays a portion of the purchase price.

Partnerships and syndications are legally recognized instruments which can be designed to create joint ownership. In the past, joint ownership has been common for breeding stallions and race horses but today more and more people are exploring the idea of syndicating a horse for various other reasons.

Performance horses in many events now have the opportunity to win large amounts of money. With the development and acceptance of embryo transfer, broodmares have the opportunity to produce more than one offspring a year. The growth and sophistication of major horse events provides the opportunity for many horse owners to enjoy their sport as a spectator rather than just as a participant.

One of the prime consideration in marketing this idea of joint ownership or syndication to a group of investors is to be sure that the individuals involved are aware of the standard practices in the horse industry. This is especially true if the participants are new to this type of ownership. A great deal of attention should be taken to educated the investor and the syndication agreement must be very clear, detailed and explicit.

A syndicate agreement should include these major points:

1.) Define the objectives that the purchase of the horse is trying to obtain.

2.) Specify the price of each share and the number of shares that will be sold.

3.) State the terms and conditions of payment for the shares. This includes how the shares can be resold after the original syndication. How the share owner can sell his share. How many votes are required to sellout the syndicate.

The importance of this information is highlighted by the story of a thoroughbred stallion who was originated syndicated for $500,000. At a cocktail party attended by a majority of the share holders as well as the syndicate manager, the stallion was sold to a new syndicate. Over the course of the evening, the new syndicate sold the horse to another syndicate. The result - the owners of the third syndicate now owned a horse worth 2 million dollars.

4.) Explain how the income and expenses are passed down to the shareowners. Upkeep, advertising, training bills, show expenses, insurance, etc., are normally deducted from the income When expenses exceed income, the shareowners are usually responsible for their prorated share.

5.) Describe the duties of the syndicate manager including the number of votes necessary to remove or change the management


While many people buy into a syndicate for the fun of sharing the joy of owning a "Good" horse, don't over look a discussion of the tax implications of their investment. For most syndicate members, the investment is currently considered a passive investment and the profit and loss of this horse venture will filter down on their tax forms to line where other passive investments are listed.

It should also be noted that the tax law can change at any time and each investor's tax consultant should be aware of their involvement in a horse syndicate. Historically, there has been some special investment credits for horse owners. We can always hope that the IRS will return to its senses and refuel the horse business with special tax consideration for horse owners.

copyright, Dr. Jim and Lynda McCall