Syndication for the "average" person

[SuperEventer]

Hello all,
I have been a member here for quite awhile, though I don’t often chime in.
I have an OTTB, Win the War, that I started as a 4 yo off the track and brought through the Adv/CIC*** level myself. He is a pretty amazing guy with a lot of talent. I ride regularly with Bonnie Mosser, who is guiding me along this journey of being and up and comer.
Owning an upper level horse is SO expensive. I have done some fund raisers with t-shirts and bumper stickers, but that still doesn’t begin to touch the costs.
I have talked with the USEF Owner’s Task Force, and I have been advised to sell “B Shares” of my horse. B Shares mean that I retain ownership and control of the horse, but those “buying in” would only be paying the yearly maintenance fees. That means there is no initial buy in cost, only the yearly upkeep fee. The maintenance fees are tax deductible, which is also a plus for those buying in.
It takes approx $30K per year to upkeep an upper level horse. That does not include any overseas competitions.
I feel that Bug and I have a large fan base, as I am an up and comer, and he is just a cool OTTB. I would like for a syndication to be affordable to the “average person.” Most of the big syndications are a $10K buy in and $5K/year or more.
I am thinking of doing the total of $30K per year, but I would like to split it up to make it easy for people to participate. I want as many people involved as want to be involved.
Of course, more than one person can go in on a share to make it more affordable, but I would still like to keep the shares low enough that it will catch people’s interest.
I am trying to poll people here and on FB to gauge interest, etc.
So,

1. Would anyone even be interested in being involved in a syndication of an up and comer like myself?
2. What is an “affordable” cost per year for the “average person”?
   Any insight is appreciated. Thanks!

[SuperEventer]

P.S. I am not selling shares here. Just wanting advice. Thanks!

[Debbie]

I’m curious as to what makes these expenses tax deductible? Do they funnel through the USEF and a tax exempt program? That’s so interesting and certainly a perk.

As to your question, if I had the means I would certainly like to help support an up and comer. I think something in the range of $2 - 3,000 a year would be a reasonable cost. I think you have a better than average chance of success because you are a good communicator and have obvious passion and enthusiasm - that’s what people are buying into in this scenario.

Good luck!

[JER]

I’m probably going to say some things you won’t want to hear. Keep in mind that I’m saying all this as someone who actually does support an up-and-comer as the sole owner of four horses in her barn. I’m also saying this as someone who worked ridiculous hours for many years doing something that wouldn’t have been my first choice, all because I wanted to have horses in my life on my own terms.

While syndication seems to have become the darling of the USEA/USEF lot, the reality of syndication is that it’s almost always cobbling together various friends, relatives, friends of mum and dad, godparents, and maybe the odd sponsor or two. These kind folks don’t get anything in return except the good feeling that they’re helping you out financially.

In other words, this is not a real-world business plan, especially in a world of shrinking disposable income. The amount that most average people can afford to pay is $0, which is either the hardest or the easiest number to work with depending on how you look at it.

If you can’t afford to keep one UL horse going on your own, you have a lifestyle problem. Syndication might sound like a good idea, but you’re still much too close to the margins if one UL horse is too big a stretch for you. You need to find either a supportive owner or owners or a different/additional means of generating income or defraying expenses for yourself. I know this is not what you came here for, so that’s all I’ll say on the subject.

This doesn’t mean it can’t be done. Charisma can get you places. It’s just that the USEF Owner’s Task Force is somewhat removed from the proverbial average person.

[SuperEventer]

I understand what you’re saying. However, I am working my butt off as a trainer, instructor, etc. A lifestyle problem? Yes, you could call it that. It’s being a professional horse person. Unfortunately, in this business, you have to constantly have horses going to get anywhere. I have more than one horse. It just so happens that only one of my horses has made it to the UL’s so far.
Do I think syndication is my only option? No. However, it would definitely benefit me to have any help I can get to keep my horse competing at the upper levels.
I am not ignorant enough to think that I can sit on my thumbs and wait for people to form a syndicate. However, I have been told over and over that I should syndicate my horse in order to help with expenses. Of course, when the time comes, those that make the suggestion usually fade into the background. haha
I am not upset at all by your words, JER. I just dont’ want to be misunderstood. I DEFINITELY work hard and do what I can to make ends meet. I am just looking for other ways to keep things running smoothly.

[JER]

[QUOTE=SuperEventer;7039096]
I understand what you’re saying. However, I am working my butt off as a trainer, instructor, etc. A lifestyle problem? Yes, you could call it that. It’s being a professional horse person. [/QUOTE]

But that’s the part that might need reconsidering. That’s exactly what I meant by ‘lifestyle problem.’ I didn’t mean to imply you were an often-topless partygirl or a loiterer or anything of that ilk.

I’m not in any way doubting your work ethic or good intentions. But…

Is it realistic to forecast a non-struggling future for yourself as a conventional teach-and-train horse professional if you also want to be a top-level rider?

Sometimes working one’s butt off in simply cannot fund one’s ambitions. The key is to realize that sooner rather than later. Bitterness and burnout are much more serious lifestyle problems than young-person financial difficulties.

[SLR]

I don’t think the “B” share idea will get you where you want to go. People buying into a syndicate generally want a piece of the horse. Its a less expensive way for them to aquire an UL horse, and get to say they are an owner, because that is really the only benefit to buying into a syndicate.
People who have small amounts of money to buy into your plan are generally on the edge themselves, and will figure out they could spend that on their own horses. I don’t mean this to be harsh, but you have to ask yourself what makes you so special that someone would want to support your habit?
If you can find that one or two people who think you are special, then they could be sponsors. Again,even those people like to be owners and maybe want someone to ride their horse. Your scenerio would be a really hard sell.

[asterix]

I think it’s hard to answer this question in a useful way without having a sense of what a participant would get out of being involved.

People who own upper level horses (not their own), or own a chunk of one, are typically folks with some disposable income. If you are aiming at a more “everyday” kind of eventer, then I think it’s a tough sell without a compelling package in return.
You seem like a great person and if I was a family member or close friend I’d probably be happy to send some cash your way…but as a total stranger who wants to campaign at the upper levels? If I decided I had 1000$ to “give away” – to be honest, I’d probably give it away to a rescue, or a non profit working on a cause I cared about.

Now, if you are talking 50 or even 100 bucks…then that’s a more doable “get,” but it’s a LOT of people who need to be involved. Do they get to come watch a schooling session with someone famous? Fun, but only useful if they are local. You’d need to be creative to come up with “goodies” that you could provide that would work…

[subk]

I know it’s a “syndication,” but without any actual plans to sell a horse or ever to put one up for sale a syndication is really just another way for a tax decuctible (maybe) contribution that appeals to a person’s emotion. Looking at the way non-profits raise money would be a better model to learn from than the business of syndications. I have been involved with raising money for many different types of non-profits.

The basic rule of money raising is that it is easier to find a few big donors than many smaller doners that raise the same amount. So I know that as impossible as it might seem to you to find big donors, many smaller donors will be harder and more time consuming.

Many times non-profits view smaller donors more as a way to energize their base and as a form of community awareness or community “buy-in.” Thinking out loud here, I wonder if you wouldn’t be better served with a very minimal “fan club” fee. Then get that support group vocal and active using things like newsletters, updates, meet and greets, (like wine and cheese Saturday after XC of your local HT) free give aways (like lessons) then use the proof of that type of following to get sponsorship money/product/services to help mitigate costs. Creating a fun, involved, organized and inclusive circle of supporters might go a long way to helping bigger money find you.

The problem that is usually under-estimated is that it takes time and work to run a money raising operation and in the long run sometimes it would take less time and effort to pick up a second job like delivering pizzas.

.

[JFCeventer]

I was just reading Will Coleman’s blog post that EN posted earlier today and he was talking about finding more incentives for people to buy into event horses and I think that is the key. If you can come up with two or three fantastic, never-been-done-before ideas to make your syndicate offerings that much different than everyone elses you might be on the right track. Unfortunately, the people with the money to pour into the horses usually go for the proven riders who already have six Advanced horses.

By the way, I’ve seen your posts about Bug on EN and I’m a big fan of you guys!

[RedLetterSales]

I can’t say I have any answers for you OP, I am in the same boat as you. I work 14 hour days 7 days a week to support my “I want to be Phillip Dutton” dream. I train, teach, and hold another full time job to support my CCI*** horse, a young prelim horse, and 2-3 prospects at a time. I’m currently going through a total destruction of my current system, which means selling all of my horses and starting new with a couple of young horses that will be syndicated. What I’ve found with those that have committed to joining in the future syndication of these new horses is this:

1. $10,000 horses are easier to syndicate than $50,000 horses.
2. It absolutely feels like starting over, but in the long run I will be much less financially committed to my (hopefully) upper level horses than I am at this point.
3. The one thing that every one of the soon to be syndicate members has expressed a desire to have the option of selling the horse should it not fulfill the potential that we hoped it would.

I’m jot saying that you should start all over like I am, but, maybe think of a way that your future syndicate members can benifit, or at least take money back later (that they can reinvest in you). if you currently own your advanced horse, maybe syndicate for a lower price than it’s worth. You will still make money, and you will be able to keep your horse going without having to commit so much financially.

[EventerAJ]

Until there is more incentive to own an event horse, there will always be a serious owner shortage. As is, event horse owners (syndicates or individuals) do it solely because it makes them feel warm and fuzzy inside. They truly love the sport; they truly respect their rider and the horse; and just knowing they are involved makes them happy. There is almost zero hope to make ANY money whatsoever, aside from the occasional horse that gets sold. And that “profit” probably doesn’t offset the loss of the other one that went lame.

My husband asked what’s up with this syndication thing; I explained to him the general gig. His ultimate question was “Why? Why would you want to do that unless it’s your relative or best friend?” And it was tough to come up with a realistic answer. Coming from a TB perspective, he said at least if you own a racehorse you have the chance to win some money back; even if that doesn’t happen, at least it’s Possible…it’s the point of the sport. In eventing, aside from a few elite events, there is no chance to win money. In show jumping, there are opportunities to earn money; same with most of the western sports (reining, cutting, roping, etc).

If I was a successful business person who loves horses and wants to own one, why would I buy an eventer instead of a show jumper or reiner? Show jumpers go to the Olympics; reiners go to WEG; and in those sports, there is the chance of the horse earning prize money to offset some costs.

I’m not saying prize money is definitely the way to go (I think it could create a whole 'nother issue of pushing horses too hard to win), but it would be nice to come up with a way to make the sport more affordable. It’s getting so expensive that the average person is getting priced out of the sport-- even at the lower levels. You used to be able to MAKE your own upper level horse on a budget; yes, you can still buy them cheap off the track, but now the Experience of making them costs so much (just to get to Prelim!) it’s difficult to get there without a stable income.

Unfortunately, it’s a problem in which there are few solutions. Sometimes all you can do is try your best and work with the budget you have. And sometimes that budget means you won’t be able to match the Ideal upper level schedule; it will take you longer to get your qualifications (even longer now, thanks FEI), and you will have fewer opportunities to mess up. But that’s the hand you’re dealt, and you make it or you don’t. No matter what, don’t forget to enjoy your horse along the way. He doesn’t care if you make it or not, as long as he gets carrots.

[ThirdCharm]

Wow. How dumb does the Owner’s Task Force think J. Q. Public is, anyway? (the fact that they may be right is irrelevant!) Calling it a “B Share” in a syndicate doesn’t change the fact that it is, in fact, a straight up donation. The rider/owner isn’t giving up anything and the check-writer isn’t getting anything they could not get by writing a check for ANY amount to AHTF.

At least in a normal syndication scenario, the person writing the check can say they own part of the horse on TV and if the horse increases in value they could sell their share to another supporter and recoup the initial investment.

Jennifer

[ThirdCharm]

JER is totally right about the ‘lifestyle problem’ thing, too. Wofford talked about it in a column in PH not that long ago… The pros have to teach teach teach to afford to survive, often at the expense of their own riding… I wish I had realized twenty years ago what a stupid paradigm that is to follow. Since I started shoeing horses full-time (still teach part-time, but just the loyal few who fit into my schedule as it were!) I have more disposable income, more time to ride, weekends (formerly prime teaching and clinic time!) free, and absolutely no danger of having to sell my best horse to fund the ‘pipeline’…

Jennifer

[chunky_munky]

Will Coleman. Nice kid, talented rider. Family has owned some of the most beautiful horse farms in VA. He may be now looking to get people to buy horses, form syndicates, etc., but up to this point has had very strong family financial support. Don’t think I would look there for ground roots advice.

[ThirdCharm]

Yeah maybe ask Colleen Rutledge instead!

Jennifer

[subk]

[QUOTE=chunky munky;7039414]
Will Coleman. Nice kid, talented rider. Family has owned some of the most beautiful horse farms in VA. He may be now looking to get people to buy horses, form syndicates, etc., but up to this point has had very strong family financial support. Don’t think I would look there for ground roots advice.[/QUOTE]
Eventing is a sport in which it is very difficult walking through the stabling area to figure out who the millionaires are and who they aren’t. Most people DON’T look like one unlike some sports where it seems everyone is trying to look like one. (Note that you felt the need to come here to tell us about a well-known rider’s financial status.) If someone is trying to learn the ins and outs of syndication it would be foolish not to look how someone like Will is doing it–regardless of his family’s percieved wealth–if he is indeed doing it successfully.

[ccr0009]

I read Will’s article. It is quite a downer, but very intuitive and truthful. I actually emailed it to a group of investors that I have brought together. Through going incorporated and gathering this group of “contributors” I have really learned a lot about what I need to do if I wish to grow and maintain a program long-term. Rather than syndicate a particular horse, I created an LLC with my ‘owners’ holding ‘shares’ of the LLC.
They asked me at our very first meeting:
Make a budget, a 5-year plan. This way you can get a better generalization of the costs, even if through experience you have an idea. Write it down. Also don’t leave out costs. Even if you have the normal case of syndicate owners of a horse, will they help cover more than just horse expenses? (vehicle insurance, gas, show clothes. Very different topics. BUT if you do happen to win over ‘Owners’ they don’t want to see you with a hole in your saddle pad. (extreme case).
You’re running a business. Shareholders want a return. You can play up the advertising factor they get from your traveling, etc. You have to get creative on what you give them back besides the warm feeling of helping a poor rider with the next Secretariat. It has worked to my benefit to be very personable. Using social media and a monthly newsletter your supporters really feel involved.

Any questions about creating an LLC you can PM me. This has only gone into effect over the past two months, so I can’t vouch for being extremely knowledgeable about how to make Eventing at the top-level affordable. But, I feel a lot of riders forget it’s a business.

[EWim15]

Here are a couple of thoughts:

1. Have a supporters club and then draw from that for a syndicate. Target people that love horses but for whatever reason don’t have their own but would love to be involved at the upper levels. I think the others are right about it needing to being an owner’s syndicate rather than B-shares. Owners can then sell the shares on and they get more reason to buy in, but you’d still retain control. This is how WFP’s Oslo syndicate http://www.britisheventing.com/news.asp?section=59&itemid=3981 is done. It is made up of people from an existing WFP Eventing Club and seems to consist of people who aren’t putting money into their own horses, so older, working in the city, etc. The WFP syndicate has 12 members and with your costs of $30k a year would be roughly equivalent to $2.5k per person plus a buy in at the beginning (which would also give you extra cash).

2. Find other ways to monetize your existing horse business and/or your property. In the long run the “teaching to fund the competing” model is hard and very difficult to sustain. You may buy and produce youngsters for the purpose of sale already but is it possible to take this to expand this? Are the margins good enough to generate the extra revenue you need? I know in the UK riders don’t really teach as a major income stream and often selling is what provides the income. Then at least it keeps you in the saddle. (I don’t know what the margins/costs would be for you, I’m just throwing out ideas).

Can you do anything else with your farm - corporate away days, family holiday farm stays, experience days? Some of that might take initial capital to get up and running, but you would probably find an investor for that and/or a company that would manage the reservations.

I do think it’s worth trying to find something that is a replicable model for other upper level horses, which will put you in a much better position in the long term. If you get people giving $100 for B-shares then you need 300 people (a lot!) which you need to replicate every year for every upper level horse. Does buying B-shares require you to pay the $100 a year for an unspecified number of years? How exactly would you “sell” a B-share if you wanted to stop if there isn’t any ownership of the horse attached? What happens if you compete overseas - do the B-share holders have to up their contribution? Without actually owning the horse that seems a really tough sell. I doubt people who only want to put in small amounts are going to want to be liable every year and then have the potential to owe more, if you compete overseas, do more FEI events etc, etc.

OP you are obviously talented and hard working so you’ll get there!

[FitToBeTied]

There is an old saying in investing - Only invest money you can afford to lose. Buying into a syndicate or sponsoring a rider, regardless of the financial format, is strictly a loss proposition.

I think the problem with the OP’s position is that she actually owns the horse. It seems to me that the best model, admittedly hard to implement unless you are a top rider, is to have wealthy people buy the horse and give it to you to compete. But there are few people named Mars, Wildasin, etc. out there who are willing to do that.

Unfortunately, as an up and coming rider, I think you may have to realize that you are going to have to develop young horses and sell them to be moved up the higher levels by someone else in order to develop reserve funds. Eventually you’ll have the reputation that you need where you’ll be able to keep the horses yourself.

If I wanted to be invested in Upper Level eventing I would do it by sponsoring a rider instead. It’s a lot less likely the rider is going to be put down the day after I write the check.