1968-Voice Of The Tennessee Walking Horse 1968 January Voice RS | Page 26

SYNDICATED HORSES
Reduced to simple terms, a syndicated horse is one
that is owned by several people. Most commonly, it’s
a stallion; although an expensive yearling or brood­
mare is sometimes syndicated. Also, any number of
people can form a syndicate. However, there is a ten­
dency to use the term "partnership” where two to
four owners are involved, and to confine the word
"syndicate” to a larger group of owners.
Each member of the syndicate owns a certain num­
ber of "shares,” depending on how much he purchased
or contributed. It's much like a stock market investor,
who may own one or several shares in General Elec­
tric, IBM, or some other company. Sometimes one
person may own as much as half-interest in a horse.
Occasionally, half-shares are sold.
Generally speaking, the number of shares in a stal­
lion is limited to the number of mares that may rea­
sonably be bred to him in one season - usually 30 to
35 with Thoroughbred stallions.
Why Owners Syndicate
Owners of stallions that have raced successfully
usually have the opportunity to choose between: (1)
continuing as sole owner of the horse, and standing
him for service privately or publicly, or (2) syndicat­
ing him. In recent years, more and more owners of
top stallions have elected to syndicate. The most com­
mon reasons given for so doing are:
1. The stallion owner does not have a breeding farm
or an extensive band of broodmares.
2. The owner’s belief that the stallion under consid­
eration may not nick well with many of his mares, or
perhaps because he’s closely related to them.
3. The owner’s need for immediate income. More­
over, the profit, according to a Tax Court ruling, is
subject to the frequently advantageous captial-gains
treatment on income tax. By contrast, if sole owner­
ship is retained, considerable promotional and adver­
tising expenses will be involved for approximately
three years until his get make their debut on the
tracks; and, in the meantime, practically no income
can be expected until about a year from entering
stud, at which time the usual "live foal” guarantee
is met - a live foal being one that stands and nurses
unassisted. Until this condition is. fulfilled, any stud
fees that are collected are generally held in escrow
as protection if they should have to be returned
’
4 It spreads the risk; should the stallion B
jured or die, or prove unsuccessful as a sire.
get ilv
The owner may arrange the syndication him
usually with competent legal advice; or, if prefe ®6lf>
the syndication can be turned over to a profess n’
manager, who will generally take a free share as h'
organization fee.
ms
The following pointers are pertinent to successf
syndication of stallions:
bIul
1. CHECK FERTILITY - Before syndicating itk
good idea to check the fertility by test-mating tn 3
cold-blooded (draft) mare. Of course, if the stallion u
still racing, and has not been retired to stud, this is
impossible.
2. ESTABLISH STUD FEE - A common rule of
thumb is that each syndicate share is worth four
times the stud fee. Hence, if it is decided that the
stallion under consideration will command a $5,000
stud fee, each share would be worth $20,000. If 30
shares are involved, the horse would have a value of
$600,000 for syndication purposes.
3. PAYMENT DUE - In most cases, payment is due
upon signing the syndicate contract, although some
contracts (a) allow 30, 60, or 90 days, or (b) provide
that the price of a share may be paid on the install­
ment plan over a two- or three-year period.
4. PUT IT IN WRITING - Syndication agreements
should be clear, detailed, and in writing. In addition
to identifying the horse, the agreement should state
(a) the shareholder’s proportionate interest (say 1/32);
(b) the breeding rights of a shareholder (for example,
the right to breed one mare per season to the horse,
so long as he is in good health and able to breed);
(c) the method of distributing shares by lot should it
be necessary to limit the number of mares bred dur­
ing any given season; (d) the method of disposing of,
and the price to charge for, any extra services (over
and above one per share, for example) during a given
season; (e) the place where the horse shall stand, or
how such determination will be made (usually by ma­
jority vote of the shareholders); and (f) how other
policy matters not covered in the agreement will be
determined (usually by majority vote).
Generally, such routine matters as the feed, care,
and health of the stallion, and the scheduling of the
mares, is left to the discretion of the syndicate man­
ager; at a stated fee per month, billed to each share­
holder proportionate to his number of shares. The
manager also handles the promotion and advertising,
insurance, and unusual veterinary expenses, as stipu­
lated by the syndicate, with the costs prorated among
them.
Normally, a shareholder can barter his breeding
service to another stallion. However, he cannot sell
his share without prior approval of the manager and
giving the other shareholders the right to buy it at
the price offered; and, normally, this same stipulation
applies to the sale of a service during any season.
Also, provision is usually made for sale of the horse
should the majority of the shareholders so desire,
with them also determining the price and whether
sale shall be at private treaty or auction. Further,
he contract usually provides for "pensioning, 01
otherwise disposing of, a sire should he become ster-
e or be overtaken by old age before dying.
.
in short, a syndicate agreement, like any g°od
gal contract, attempts to spell out every foreseeab-
con mgency that may arise during the stud’s cau
26
Voice of the Tennessee Walking Ho