For a new owner, perhaps the safest and most inexpensive way to get involved in racing is to become part of a racing syndicate or partnership. Basically that means that ownership of a horse (or group of horses) is split among more than one party. This reduces the cost for each party, but can still give the full experience and enjoyment of owning and racing and American Quarter Horse.
A syndicate is a formal business agreement between a general partner and some number of limited partners that creates a group ownership of a horse or horses. A written agreement details what the syndicate activities will be and what will be the responsibilities, investments and returns for each partner.
Those returns come from race earnings of a horse in training, breeding fees from a stallion standing at stud, or, in the case of syndicated broodmares, from selling foals.
Some successful racehorses have been owned by partnerships. The first Quarter Horse of renown to be syndicated was world champion Dash For Cash. He was followed by champions Moon Lark and Easily Smashed and graded stakes winners Streakin Six and Easy Six.
Syndications are not limited to ownership of breeding stallions, however. Top mares bring to dollar, and rising purses and expanding race opportunities also have boosted the value of yearlings, making syndicates to buy and race American Quarter Horses fashionable.
Some successful racehorses have been owned by partnerships, including multiple Grade 1 winner and 1999 Champion Three-Year-Old Old Habits, who was purchased for just $18,500 by a group of 10 women known as “The Girls.” Each partner started by putting in 10 percent of the purchase price ($1,850) and then the expenses and earnings of the horse were split equally. Old Habits has since earned more than $600,000 racing.
Most recently is 2005 Grade 1 All American Futurity winner Teller Cartel, who was purchased by a group or “syndicate” of 10 owners for $100,000 and has gone on to earn $1,138,071. Each member of the syndicate paid 10 percent of the purchase price and then shared expenses and earnings of the horse . In addition, two shares were split into smaller partnerships, so several syndicate members were able to invest even less for their participation. Although these parties earn a smaller percentage of the horse’s earnings, they get just as much pleasure from owning a winner.
Fun With Friends
Barry Cooper of Edmond, Oklahoma, paid $10,000 for a share in the horse, but then sold two-thirds of his stake to life-long friends Terry Wootan and Joe David Yates, both of Llano, Texas.
“None of us bought into the deal thinking we were going to win the All American,” he said, “we just thought it would be a lot of fun. I would certainly advise anyone interested in getting into the business to go the same route. It’s a great way to go,” he said.
An owner for just three years prior to joining the Teller Cartel crew, Cooper said he never anticipated how valuable the experience could be — and not just in monetary terms.
“We had the chance to get hooked-up with people who have been in the business for years. You get the opportunity to buy a much better horse and play on a much higher level than if you go it alone,” Cooper said.
“It was a tremendous learning experience,” he continued, “It was such a benefit to see the different perspectives of the people you’re partnered with.“
Follow My Lead
As in the case of the Teller Cartel racing syndiate, a successful partnership or syndicate often is initially organized by an experienced horseman or bloodstock agent, who acts as a syndicated manager for the group. This “managing partner” may advise less experienced partners in the decision-making process and can help the group avoid costly mistakes.
Floyd “Butch” Wise of El Reno, Oklahoma, is a member of the Teller Cartel Syndicate and was the one who assembled the group.
“We raised him at Lazy E Ranch, so I’ve known him all his life,” Wise said the morning after the All American. “The bidding stalled out at $87,000 and they repurchased him, but I was so taken with the horse that I went and put nine other guys in to buy the horse. I had a
lot of faith in this horse.” Including his show finish in the November 4 Golden State Million Futurity (G1), which boosted his bankroll to $1,138,071, Teller Cartel so far has returned the faith at more than 11-1.
But Teller Cartel is not the only marquee sprinter with credence on the line. Within the next few months, faith also will be put to the test by a full-brother to champion and All American Futurity winner Royal Quick Dash, champion First Sovereign, Los Alamitos Million Futurity (G1) winner A Regal Choice and Kindergarten Futurity (G1) finalist First Rate Choice.
Harems Legacy topped the October 1-2 Los Alamitos Equine Sale, where Dr. Ed Allred, the nine-time AQHA champion breeder who owns Los Alamitos Race Course, signed the ticket for $330,000. Produced by embryo transfer, the colt by First Down Dash is one of 14 named foals from Harems Choice, a 21-year-old Beduino (TB) mare who has produced the earners of more than $2.2 million. Allred purchased Harems Legacy on the first day of the Saturday-Sunday venue. By the next evening, after a day of dealing for dollars, he had the syndication pretty much in place.
“I thought about it Saturday night and decided that it would be great fun to share ownership of Harems Legacy,” Allred said at the time.
“We divided ownership of Harems Legacy into 20 shares. I’ve kept 10 shares and we made 10 shares available for $30,000 each. A lot of big name owners stepped up right away and we’ve already sold all 10 shares. A lot of top players are now involved with this horse.”
Although it will be a while before investors see any return on their shares, Allred and his partners are looking forward to Harem's Choice's racing career, then hopefully, continued success in the breeding shed.
Tax Considerations
Like most new businesses, a syndication might take a while to show profit. Loss sheltering and depreciation methods can reduce tax liability in early years, and losses and expenses can be used to shelter the ordinary income of the limited partners. Recent and proposed changes in tax laws, and the difficult categories of the depreciation and different time schedules for horses in different uses make direction from tax professionals advisable.
