FREQUENTLY ASKED QUESTIONS
What determines the price of a share?
How was the price and monthly fee arrived at?
Can I get out of the Syndicate?
Whose racing colours are used?
What if I live outside Tasmania?
What determines the price of a share in the syndicate?
The cost per share will depend on whether the Syndicate is to have ten members of twenty members. Generally the ten member syndicate is prefered as this will allow each shareholder to have their name recorded in the race book on race day and to access the privileges offered to owners by the host racing club.
This does not prevent a group of people joining together to buy a one-tenth share and adopting a syndicate name for that group.
Thus a share will be either one-tenth or one-twentieth of the price for each horse and provide the owner/s of that share with an equivalent percentage holding in the horse.
How was the price of the Share arrived at and the ongoing monthly fee?
The horse was purchased by Pine Lane Thoroughbreds at a price which reflects the value of the horse as determined by an independent person and as certified in the Product Disclosure Statement (PDS). This person will have no interest in the horse or in anyway benefit from the sale price. Currently the valuation is undertaken by a representative of the Magic Millions Sale Pty Ltd.
Factors that would influence the price are the service fee for the sire of the horse, the performance of its dam and any siblings and the cost to rear the horse up until sale date and GST.
The seller may of course take a lower price than implied by the above having regard to market conditions for a horse of the age of that being syndicated.
The ongoing monthly fee is determined by the cost of having the horse in training and when out of training while it is being agisted. In additon, there are allowances for veterinary services (excluding major surgery), transport, insurance in the first year, and the reasonable cost of entry of the horse into feature races where there is a requirement to make a nomination payment. Reasonable should be taken in the context of nominating for races such as say, a Blue Diamond, wher the early nomination fees only which generally are in the range of $200 to $400. Over and above this the Syndicate would need to meet the subsequent payments noting that if this is the case it would be expected the horse would have won more than sufficient prizemoney as these races generally have a qualifying level of prizemoney to get into the field, hence the additional cost would not be sought from the shareholders per se but funded out of the Syndicate bank account.
Depending on the age of the horse at acquisition some of the cost may also be incurred on breaking in and educating the horse for example, if it is purchased as a yearling or two-year old that has not reached a ready to run sale.
What are the obligations of a shareholder?
Each shareholder is contractually obligated to meet the relevant percentage cost of the expenses of the horse being the purchase price initially and then over the period it remains in the ownership of the Syndicate the costs associated with training and maintaining the horse, including but not limited to verterinary fees, transport, agistment and equipment. Currently the promoter has set the ongoing fee at a (calendar) monthly rate at $5 a day payable within 14 days of invoice.
In the event the Syndicate members, on the recommendation of the Manager, determine the horse must undergo major surgery then each member would be required to contribute to the cost therof at a level equivalent to his/her shareholding.
What rights do shareholders have?
Provided the Syndcate is ten members only then the name of each member will appear in the records of the Registrar of Racehorses and as such will appear on raceday in the racebook issued by the Club hosting the meeting.
Along with this each member will have ownership rights for the day at the racemeeting which, in essence, is similar to being a member of the Club for the day. Hence the member will enjoy free entry to the racetrack, access to the Members' enclosure (including the dining area) access to the saddling paddock to meet the jockey and listen to the trainer's instructions for riding tactics before the race and the post mortem on its performance when the horse returns to scale after the race.
If the horse wins there will be the chance for the Syndicate to lead the horse back to the saddling paddock for feature races and the Clubs usually provide a celebratory drink hosted by a Committee member to recognize the win. The Club may also provide a copy on DVD of the race and the course photographer will offer each member the chance to purchase a photo of the race finish suitably framed and recording thereon details of the ownership, jockey, trainer, time of the race and its name and breeding details.
Ownership rights also offers access to the stabling area before the race to view the horse prior to and while it is being geared up to go out for the parade in the saddling enclosure.
Can I get out of the Syndicate?
Owning a share in a racehorse creates a saleable commodity provided a buyer can be identified. Under the Syndicate arrangements in the first instance each shareholder is required to offer the share to the other members of the Syndicate at a price that is set after consultation with the Manager albeit the shareholder may elect to set a price reflecting what he/she requires.
If no existing shareholder is prepared to pay the price required by the seller then the share may be offered to persons outside of the Syndicate.
It should be noted, as provided for in the GFS which you should sight, owning a racehorse is a business that does bring with it the risk of loss of the original investment. Hence if the reason for the shareholder wanting to withdraw from the Syndicate is because the horse has failed to perform to his/her expectations then this may mean that (a) it could take some time to identify a willing buyer and, (b) the amount received from the sale may not reimburse the owner for the original investment.
If the reason for withdrawing from the Syndicate is because of personal issues, unrelated to the performance of the horse per se, then it may be that the time to sell the share and the price received will be different to the circumstances outlined above.
Is the horse covered by Insurance?
The horse will be covered for its purchase value as from the date of finalisation of the Syndcate's purchase thereof. After this first year based on the Manager's recommendation, the Syndicate members may choose whether or not to insure the horse based on a majority decision of members. If insurance is to continue the original policy will be renewed at a value that reflects what is detailed above in the section relating to what a share is worth and the horse's performance on the racetrack.
What happens to prizemoney?
The distribution of prizemoney must take into account the overall financial status of the Syndicate bank account and the capacity to meet the ongoing costs of the horse for the next twelve months while holding the members' monthly payments constant. Thus it is likely that prizemoney for placings in races will be held in the account and for winning a race the net amount received after payments to the trainer and jockey are deducted, distributed to the members if the Manager judges the financial status of the bank account can accommodate this.
Can I inspect the horse?
For purposes of efficient management of the Syndicate all initial contact with the trainer will be by the Manager and a report provided to each member on the horse's progress etc. However, generally speaking provided it is arranged in advance the trainer or his staff will be pleased to allow the Syndicate members access to see the horse while in his care. During periods when the horse is being agisted the Manager will be pleased to provide an opportunity to visit it by prior arrangement.
Whose racing colours are used?
The Manager has a set of colours that will be made available to each Syndicate to use on racedays. However, if a horse is predominantly owned by any one shareholder then provided the other members have no objection that owner's colours could be used. Alternatively, if a Syndicate of members wishes to continue on with other horses having enjoyed the experience together in an initial syndicate then it would be encourage to register its own unique set of colours.
What is my share worth?
The value of a horse once it begins racing (in the context of what applies after the above comments on the purchase price and leaving aside a value determined for withdrawal from the Syndicate) will depend on whether it is male or female and directly on its racetrack performance. Hence the better the latter is in terms of consistency and, more importantly, the quality of races it wins, then the higher the value other things being equal.
Clearly the top value horses are stallions that have won at the highest level as they offer considerable residual value for breeding purposes. Equally a filly or mare that has performed well and which is fashionably bred will be a breeding proposition and this will enhance her value. A filly or mare that has not raced may still have good residual value if she is related to a well performed horse or is a daughter of a top producing mare (for example, a producer of a stakeshorse).
On the other hand geldings have little or no residual value after their racing career is over as there is no ongoing breeding opportunity with them.
Generally for the first two segments the Manager will seek the guidance of one or other of the two major thoroughbred sale companies to determine a range of values for the Syndicate to consider. For geldings there is likely to be chance to sell the horse to recreational or other equine pursuits such as dressage or eventing. The latter value will depend greatly on the temperament of the horse, its conformation and general overall appearance.
Ultimately however, as in other market places, the ultimate value for the Syndicate's horse is what a willing buyer will pay and that will also be a function of the state of thoroughbred market at the time.
Finally, in addition to the sale price of the horse the assets of the Syndicate would also be distributed according to each member's holding unless as a group it decides to continue on and acquire another horse.
What if I live outside Tasmania ?
Almost all of Tasmanian thoroughbred racing is broadcast on the SKY Channel service available on subscriber based television services. Currently these meetings are held on a Sunday afternoon and hence interstate and overseas members can watch their horse race. Also wagering on Tasmanian racing is offered by all TABs in Australia.
It should be noted SKY Channel may change the day of the week it broadcasts Tasmanian thoroughbred racing and it is likely that this will be to accommodate night racing from the Mowbray racetrack which is scheduled to commence in the Autumn of 2010