Being an "Owner/Partner" with a young horse with young aspiring trainer

[rideon2]

Was not sure what to title this, but here is my very long and loaded question…

What are the ins and outs of being an “owner/partner” with a young talented horse with a young local trainer? We are talking a mid four figure horse, no not really a syndicate or anything like that. Simply liking a horse, wanting to go in halves (or maybe even buy the horse outright) with the trainer who owns it and keep it in training with him. Trainer is very motivated to keep the horse in his barn, and I think would be flexible with finances. I’m just curious how this normally works. I am sure people do it. My motivations (in full disclosure) would be to possibly eventually own the horse fully, or sell for a small profit, or even to get reduced board on a nice horse in order to make it financially work. Maybe my head is in the clouds though, and it would just be a money pit of expenses. Perhaps I would be better suited to buy said horse and just pay for training and allow trainer to compete it for me. I guess I am wanting “perks” if that makes sense since he wants the horse to stay in his barn. Am I making any sense? LOL!

So if you’ve done anything like this, how did it work out? What were you responsible for and how did it work out? I’m seeing a possible opportunity to own part of a nice horse and enjoy seeing the process without all the bills, but I might be way off base.

Thanks!

[Hilary]

When you say “very motivated to keep the horse in the barn” - what do you mean?

The rider/trainer is enjoying working with the horse, who is for sale, and wants to keep him b/c s/he sees a lot of potential and wants to campaign the horse?

Thinks the horse is nice, and you’re a potential client so if you bought the horse and boarded it they would keep you as a client with a nice horse and some training rides?

Do YOU want a nice horse to ride and compete? Do you want to help this person with their career.

There are lots of ways to accomplish any or all of these things but you both will have to be honest about what you all want out of it.

[Hilary]

If you paid for the horse’s expenses but did not buy it, the rider could keep it i the barn, but would forego a lump sum of purchase price.

If you bought the horse and rode it yourself, and they did some training, they would get a lump sum, and a client, but wouldn’t get to use the horse for their own upward mobility.

You buy the horse and pay for its expenses while the trainer rides. Great for trainer, but are you getting what you want? (you might sell horse later for more $$ but you are taking that risk that it might not work out)

[babecakes]

There is a thread on the sport breeding where a person in Europe has a nice young stallion and limited resources, they were approached by people who offered a 50/50 partnership to promote her horse. This reply offers some thought. Others here are more experienced and will chime in as they have time right now. Vastly depends on the terms upfront and there are a lot of circumstances to be aware of beforehand. And I would think of it as a business deal versus your getting any goodies from any friendship.

[QUOTE=omare;8450482]
Wow Elles, that is a tough one–I would be cautious unless it is someone that is well established at making these types of deals work with people that own talented horses and have limited funds.

One thing I have noticed in partnerships with some trainers is that you pay 50 percent of the “retail” price of their services and not 50 percent of the “costs”–so they not only have half your horse but you are basically covering all their costs/covering their risk (and you have given up 1/2 your horse)

The other issue is how much control will you have over the costs as you can end up with a huge bill (even if 50 percent) real quick and lose the horse over a lien. You likely will not be in the driver seat on deciding what costs to incur and you maybe paying 50 percent of the retail price–not 50 percent of the trainer’s costs.

If you were in the USA I would definitely say do not do it and instead do the best you can moving forward (and if he is good you will get there) or sell him outright. Hopefully you have more honest horseman over there![/QUOTE]

[IronwoodFarm]

Whatever you do, please, please put it in a written agreement that details how the arrangement will work financially, and more importantly, how the arrangement can be terminated. We have seen so many posts over the years about situations where there is some casual arrangement about a horse that goes awry for whatever reason.

The cleanest way is the buy the horse outright, pay for the training, and pay for the related horse expenses. That way you have complete control over how your money is being spent.

If you buy a share of the horse with the trainer, then you need to sit down and detail what the costs of the horse are going to be. You may find that the trainer wants to provide Cadillac care when you really only want to cover Camry level care. Get all the types of expenses detailed; who decides when to spend the money, who decides what to spend it on, who does the accounting, and when must the other party pay. Address any income the horse might earn in prize money (I know, it is eventing) and what portion of the value of sponsorships or advertising would apply to the horse.

If you are thinking of selling the horse, then address the sale. When will the horse go on the market? Who will handle the sale? Is a commission paid to the trainer, if he/she is a co-owner? What is one party wishes to sell but the other party does not – who gets to buy who out? Who sets the value of the horse for a buy out?

What if there are veterinary issues? Who determines the level of care? What if one partner wants a different level? Who had to pay for what? Is there going to be insurance?

It gets complicated very quickly. My only question is WHY do you think the trainer should owe you any perks if you purchase the horse and pay for its training You SHOULD be paying the trainer to compete the horse for you as well – why would the trainer be giving away income? I don’t see why there should be any perks simply for doing business. Trainers get paid to board, to train and to show horses.

If you need perks to make this arrangement work, then don’t do it.

[Ready_To_Riot]

If you own half the horse, but trainer is competing and training the horse, who pays for training and competitions?

I’ve never understood syndicating to begin with. Lol

If you could buy horse and get free board for horse and only be responsible for major medical, that would be a good deal. Id do that.

[rideon2]

Thanks for the replies so far! Ironwood-I guess I should clarify perks, I simply mean having a vested interest in a nice horse without ALL the expenses of owning one outright.

Certainly lots to think about. I’m also thinking of perhaps offering a lower purchase price in exchange for me keeping the horse with said trainer for x months or something. I do not wish to compete the horse, but enjoy going to events and being a part of it. But I do not have willy nilly money to blow either, so trying to think of a way to be involved with said horse in a way I can afford and allow the trainer to keep a nice horse in his barn.

[bornfreenowexpensive]

You syndicate the horse or enter into a partnership with the trainer. What that means absolutely depends on the horse. I have a few horses that I own in partnership with trainers who I know and trust (this is key-they are not aspiring but well established) and then a couple in full blown syndicates.

Whatever you do…put it in writing and work out a deal.

For a horse we intend to sell…I’ve done a partnership where I buy and pay costs but NOT training…rider puts in training…when we sell, I get back purchase price and we split the rest. So they are not getting training fees but get a much higher share of the future sale than just a standard commission. I WOULD NOT do this with just anyone (or just any horse). In this case, these are not normal horse people…and we all think alike and have similar goals. The type of horse I would do this deal on is one we think we can increase the sale price on quickly–as in less than a year or two by moving up the levels…I’m talking horses we get for low 5/high 4 figure and sell for high 5 figure in a year or two (costs to maintain/compete such horse will run 20-25,000 a year so in order to profit as an owner, we can not have them for that long). It is a different matrix if you are looking to keep a horse long term or the rider wants to keep them…then you may need the rider covering some expenses more than just riding. I have other horses with my partners that are more traditional training horses where I own the horse, pay them to train and will pay a basic commission on sale. These are typically horses that I either want to keep…or I think will be tough sales (so I have all the risk and can say sell for the low price to a great home even if it is a loss.)

But for a rider to be not charging training or riding fees…they need to be protected with either part ownership or something so the horse isn’t pulled out from under them. And as an owner…you need protection/controls so that you are not just funding someone else riding the horse with no return/decision making when you are taking on all the financial support.

Goals, budget etc all need to be worked out before…just like any business deal.

[IronwoodFarm]

[QUOTE=rideon2;8452603]
Ironwood-I guess I should clarify perks, I simply mean having a vested interest in a nice horse without ALL the expenses of owning one outright. [/QUOTE]

If the perk is just emotional, then you’ll need an agreement if you don’t wish to handle ALL the expenses. I’d also venture, if you really can’t afford ALL the expenses, then don’t do it.

Certainly you can make any purchase offer you wish and include in that offer the training board commitment.

And completely not being snarky, but if you “enjoy going to events and being a part of it” then consider volunteering. You definitely will be an important part of any horse trial. We need more volunteers! And the cost to you is minimal; your time and the cost of transportation to the horse trial.

[PhoenixFarm]

When I had a fancy young homebred I worked out a deal with a pro–I paid his expenses (board, vet, entries), but I wasn’t charged for training, hauling, etc. if we had sold him, her commission would have been 25%, rather than her customary 15%.

We didn’t sell him, she took him advanced, he won us some nice prizes, and at 18 is packing around my students. I feel we got a great deAl, and the rider is still one of my closest friends, but bluntly, once we hit the FEI levels, the competition and vet costs were a heavy burden. We made it work, but looking back at some of those bills makes me break in to a cold sweat.

[bornfreenowexpensive]

[QUOTE=PhoenixFarm;8452652]
When I had a fancy young homebred I worked out a deal with a pro–I paid his expenses (board, vet, entries), but I wasn’t charged for training, hauling, etc. if we had sold him, her commission would have been 25%, rather than her customary 15%.

We didn’t sell him, she took him advanced, he won us some nice prizes, and at 18 is packing around my students. I feel we got a great deAl, and the rider is still one of my closest friends, but bluntly, once we hit the FEI levels, the competition and vet costs were a heavy burden. We made it work, but looking back at some of those bills makes me break in to a cold sweat.[/QUOTE]

Yes…once you hit the FEI (really 2* and up)…the budget goes through the roof. That is why so many are turning to syndicate to help share that burden.

[fordtraktor]

It is unclear to me that there are any perks to owning upper level horses. I consider owners to be on parr with the saints. Which is why we always treat them with kid gloves and like celebrities, in the jumper world…they deserve it. Have tens, maybe hundreds of thousands of dollars, flush it down the toilet for the pleasure of watching your horse jump around for two minutes once or twice a week, fifteen weeks a year. Not sure how this is even a thing.

[hb]

It’s not clear to me what you are getting out of the arrangement, other than the satisfaction of owning a nice horse and seeing it compete?
This seems like a great deal for the trainer, who will get a purchase price for their horse and then get the horse’s expenses paid while they develop and compete it.
If you are looking to make a profit from selling the horse later, be sure that the trainer is on board with that. If they want to keep the horse in their barn they may not do a very good job marketing for sale later, or may cut a deal to their next “sponsor”.
Your idea of a reduced price with X months in the trainer’s barn makes sense. But prepare for a full split with the trainer if you later move the horse.

[ellebeaux]

[QUOTE=fordtraktor;8453972]
It is unclear to me that there are any perks to owning upper level horses. I consider owners to be on parr with the saints. Which is why we always treat them with kid gloves and like celebrities, in the jumper world…they deserve it. Have tens, maybe hundreds of thousands of dollars, flush it down the toilet for the pleasure of watching your horse jump around for two minutes once or twice a week, fifteen weeks a year. Not sure how this is even a thing.[/QUOTE]

Well geez, when you put it like that…

[goodmorning]

Look at how the Dutch handle it. They have a phenomenal program. If a trainer wants a ride on a horse they must contribute. I would not pay board, etc., to hand over my nice young horse I could easily sell for mid/upper 5 figures. To put it rather bluntly very few trainers in the US have a record worthy of waiving always fee on a nice horse to campaign. Let along me as an owner foot the bill. Owning & allowing a rider to campaign your very nice horse is a privilege.

Maybe it’s easier to put it like this: Hand over your 30-50k asset + 20k to maintain = 70k to have the ‘Privilege’ to own a horse. It’s a pretty horrible model & eventers ought to look towards the Dutch ownership model if they want to keep up Internationally. Or just keep upping dues & hoping to expand the base enough to support free competitions & grants galore for chosen individuals

[OverandOnward]

Whatever you do needs to fully protect you should things become very, very disappointing - because of the horse, or because of the young trainer.

Deals like this begin all sunshine & roses & good intentions. Things change. People behave in unexpected ways.

My biggest concern would be that the trainer is young and there is not a track record on her conduct with long-term deals. Also that you say you are not long in the pocket financially, so if the horse were to need expensive vet care, and/or suffer a career-ending injury, what happens then?

If you are a partial owner, your decisions are constrained by the other partner. I would not accept part ownership for that reason.

Do not do the deal without 100% ownership and everything in writing, INCLUDING a cancellation clause. If you can’t discuss or write up a clause with no-fault cancellation on both sides, or if either of you can’t absorb the trainer cancelling, don’t even think about doing the deal. Even without the clause the other party may walk away anyway if they feel they must, for any reason. If something happens in your life or in the trainer’s life that means this is no longer a viable project, both of you need to be able to get out. The other party must be able to take on the entire care of the horse. Don’t even think about it if you both can’t do that.

Cancellation can be very simple. “30 days notice” or something like that, no reasons required. Yes, that introduces uncertainty … actually it does not “introduce”, but merely acknowledges the uncertainty that exists anyway in everyone’s life.

If you can’t get an agreement in writing, with a cancellation clause, that you are both ready to sign, don’t even think about it.

If you can’t deal with significant downside to this deal, due to the horse or the trainer, don’t even think about it.

If you have the wallet to absorb every possible adverse contingency you can think of without significantly altering your life, go for it and have fun!

[kcmel]

[QUOTE=bornfreenowexpensive;8452630]

For a horse we intend to sell…I’ve done a partnership where I buy and pay costs but NOT training…rider puts in training…when we sell, I get back purchase price and we split the rest. So they are not getting training fees but get a much higher share of the future sale than just a standard commission. I WOULD NOT do this with just anyone (or just any horse). [/QUOTE]

I did this with my trainer. She was young and just starting out on her own, so it gave her another young horse to compete. I bought a nice OTTB, paid all his expenses for about 9 months and we sold him. This is not a scenario that I would recommend for making a profit–we made very little! But it gave her some more experience, and it was fun for me–especially since my competition horse was lame that season.

[crosscreeksh]

I can’t say I’ve ever heard of a “casual partnership” on a horse that went well!! Some day…someone is going to feel used or cheated in the deal and everything will go south…quickly and badly!! There are too many variables here, IMO. Big question…what happens if the horse gets hurt?? I’d buy and pay for training…or just enjoy watching the horse progress with no strings. It doesn’t sound like there will be a HUGE payoff any time soon…but lots of “IF’s”!! JMO.

[Ready_To_Riot]

If you’re wanting a horse of your own to ride, why not buy this one and you ride it?