Syndicates in different industries
Horse syndicates are nothing new and are especially common in the racing industry, which has just enjoyed its most prestigious jump racing event of the year, the Cheltenham Festival. However, syndicates are becoming increasingly popular in other disciplines and are important to the growth of the number of owners.
Syndicates can be established with a range of different structures, including:
- Company – where the horse or horses are owned by the company with the syndicate members taking shares in the company
- Partnership – where two or more people share ownership in a horse or horses with the syndicate members each personally owning a defined percentage of each horse
- Crowdfunding/ contribution agreement – usually where an owner is simply looking for a contribution, either towards buying a horse or to fund the horse’s training; those that contribute do not own a share in the horse.
Elite horse owners and riders looking to enter into a syndicate arrangement where ownership of the horse is shared should be aware of the pitfalls and the importance of having a legally binding agreement documenting the terms of the syndicate.
What should be included in a syndicate agreement?
- Financial contribution – how and when a member can be required to provide the initial and any subsequent finance
- Sale of the horse – who decides when the horse is sold and at what price? The agreement should also stipulate what happens when one party wants to sell their share in the horse/company and whether the share must first be offered to the other syndicate members and at what value
- Accidents/injuries – a horse owner could be held liable for any damage that his/her horse does to a third party or third party’s property whilst under someone else’s care. You should therefore ensure that adequate insurance is in place to cover any liability incurred in respect of injury or damage caused by the horse at all times
- Death or bankruptcy of a syndicate member – whilst it may seem unlikely, it is important to consider what should happen to the share of the horse if one of the syndicate members were to die or become bankrupt and high profile events have highlighted the importance of this. In the absence of any written agreement, this could result in a share in the horse falling into the hands of a third party. A syndicate agreement can be drawn up providing that, in such circumstances, the remaining syndicate members are entitled to buy the deceased or bankrupt party’s share in the horse/company.