I really enjoyed your post on Eventing Nation. Don’t stop believin’ / Hold on to the feelin’… WEG 2016!!!
Fooler, Jealoushe and Nevertime use some excellent examples. I will use an example of a friend in the racing industry.
I think B Share option is to vague, so I will refer to my friend’s plans as sponsorship plans (which is the same verbiage he used).
He had a very concise powerpoint presentation he used to talk to business owners. You can use this approach, as well as put the slides in a binder when talking to an individual. He set clear expectations of himself and the business owner.
Example:
$100 annual donation got you a patch on his uniform
$200 annual donation got you a sticker on his bumper
$300 annual donation got you a larger sticker on the side of the car and one day at your store to promote your store/brand and sign autographs
$400 annual donation got you a larger sticker on the hood, two days of him AND his car to sign autographs and promote your business.
The dollar amounts are made up (his went up to $3,000 or so). Something else he did, as mentioned earlier, is to promote himself and have a certain confidence. He mentioned that your business’ logo will be seen WHEN he does his victory lap and is in the winner’s circle (note, not IF, but WHEN). He talks about how his presence at your store will boost sales, etc. He also sold himself, not his car.
He created a business, created a website and posts updates on his business’ facebook.
He is not egocentric, but confident. It made me want to buy into a sponsorship.
So, with that in mind, what do you bring to the table for a sponsorship? Do you drive all across the country and can put stickers on your truck and/or trailer? Can you be a celebritiy and make guest appearances? Keep in mind, this was the beginning of my friend’s racing career and he was not even a local celebrity at the time, but he presented himself as one and now probably is one. Can your horse make guest appearances? This may depend on the ground manners of your horse and how willing you are to risk people around it (overall, horses do not stand as quietly as cars and people messing with them can cause more irrepairable damage).
Personally speaking, I do not want to just give money to any horse person. As a horse person, if I have extra money, I am likely going to put it into my own horses. As a self-employed ‘business owner’, I would like to promote my business. So, if I were to give you money, I would want you to spend some time promoting my non-horse business. I would want to see a return on investment, so I would look for ways to see that I am getting business from you - coupons, business cards, etc. I do ask people who call where they got my name from so I can thank the individual and usually give that individual at least small token of thanks.
[QUOTE=SuperEventer;7046391]
I do stand a stallion, Fuerst Rendition. He is by Fuerst Heinrich and is the only US bred son of him. Unfortunately, he was injured as a foal and was not supposed to be sound. I got him at age 4 and started him slowly at age 5. He is sound, but he is too old to do the stallion testing, nor can I afford it. We are going to try to get him approved through performance. He is registered Hano, but I am thinking we will go with ISR or Old. He’s quite a nice boy, and the babies he has on the ground so far are quite nice.[/QUOTE]
That’s a good way to go although Stallions are not terribly profitable… But keep up with him, as he is lovely.
I do know of syndicates with less known riders. All of them are with people who they have known. There are people who would rather have a relationship with a smaller rider for a number of reasons. Who do view it as supporting a rider more than an investment in a horse. In all those syndicates, the rider makes all the decisions but consent of the syndicate members is needed for budgets and and increase in costs. There are goals…such as to make it to a 4*. The ownership of the horse is put into the syndicate, but terms are set as to who makes the decision to sell or not sell, retire or not (and all of that typically requires the rider’s consent or is only the rider’s decision)…It is made clear from the outset that there is no intention to sell. The shares are not sold for the value of the horse but often far less…and there is a limited annual contribution requirement. The rider contributes their ownership in the horse and their sweat. The syndicate does own but really is there to support the rider. That is NOT an unusual syndicate…but it comes from the support of people the rider already has a relationship and is much more like a sponsorship relationship. And most of them do not cost a huge amount. As in less than 5K a year per share…I’ve seen some as low as 2500 and a relatively low buy in. The rider will still end up footing a lot of the bills but does have more help than they did before. The rider typically makes up any short falls…this happens EVEN with BNR.
Corporate sponsorship is also a good suggestion…but you do have to figure out what you can do for the company to make it worth their while. There are also several grants that you can chase to help off set the costs.
Good luck! You have a horse of a lifetime in Bug but there will also be other lovely ones.
[QUOTE=subk;7039439]
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.[/QUOTE]
That’s being dishonest, unhelpful to the OP and taking a cut at the poster who mentioned funding.
If the bedrock reality is that it takes a deep financial base to get to the point that you can hope for a viable syndicate in eventing, then the OP would do well know that.
Starting out with dough doesn’t make someone any less of a nice guy, talented or hardworking.
[QUOTE=mvp;7046804]
Starting out with dough doesn’t make someone any less of a nice guy, talented or hardworking.[/QUOTE]
I agree, it certainly doesn’t. All it means is he has a safetly net not all have…and possibly knows more people who would potentially be interested in participating. But honestly, I know several riders who do NOT come from wealth who have syndicated horses…and some of those riders are NOT big names nor have they done a 4*. I dissagree that you have to have a certain wealth level to do so or even to be successful—and you do not have to be a 4* rider. There are 4* riders who have trouble raising a syndicate or even sponsorship.
What you need are good people skills as well as good horsemanship. An ability to communicate well…and network. People who are attracted to syndicates or sponsorships will be very different. Some like the social aspects…so they will be attracted to the more social rider. Others will be turned off by someone too “charming”. It depends on the person…and for a syndicate to work and be successful takes WORK. But if you do not have a base of supporters already…syndication is probably NOT the most efficient path. I’d focus more on the grants and building you business. Teaching…especially clinics can be a way to increase the people you meet and get to know. Be nice and supportive to everyone…Karma comes back around…it just takes time sometimes.
I’d focus more on the grants and building you business. Teaching…especially clinics can be a way to increase the people you meet and get to know. Be nice and supportive to everyone…Karma comes back around…it just takes time sometimes.
This for sure. I originally got to know Sally Cousins when she was always willing to talk with me about her horses and preferences for the TB lines when I was volunteering and then she made it super easy for me to ride with her in Aiken and when I did, she made me part of her “team” and I got to groom and see how her operation worked when she was showing 4 horses in the intermediate at a one-day event. When she offered really well priced shares in Taz (see my post above), it was a no-brainer for me
Excuse me if this has already been addressed…but what is the real motivation for someone participating in a syndicate? Why would I care about your “dreams and goals”? I mean, let’s be frank. What are the economic incentives to participate? I’ve always heard the spiel about convincing people to support you etc etc but I’ve never heard the real reasons.
I am not a tax expert by any means, my accountant does mine. but my understanding is that to take a loss there has to be a real plan to make money down the line or it is tax fraud. People get losses on horses because they are “investments” that don’t pan out. Since there is no profit sharing in OP’s plan, I can’t see how this would be tax deductible. OP is not a nonprofit and can’t be.
What am I missing here? Or is someone giving collossally bad tax advice? I personally would not want to try to explain to the IRS why I took a deduction for the “perks” described here.
I like the idea of sponsorship, rather than selling shares.
I think of of the 'What’s in it for me" people just don’t get it.
The people who do, those are your supporters.
For all the Get a Job folks, training is a job. There is money in teaching and training. The OP is successful, has a lovely farm, nice horses coming along and a support system.
I think something along the lines of Run Henny Run is the ticket for the OP and Bug.
[QUOTE=fordtraktor;7047537]
I am not a tax expert by any means, my accountant does mine. but my understanding is that to take a loss there has to be a real plan to make money down the line or it is tax fraud. People get losses on horses because they are “investments” that don’t pan out. Since there is no profit sharing in OP’s plan, I can’t see how this would be tax deductible. OP is not a nonprofit and can’t be.
What am I missing here? Or is someone giving collossally bad tax advice? I personally would not want to try to explain to the IRS why I took a deduction for the “perks” described here.[/QUOTE]
Businesses have to show a profit every two years, if memory serves correctly. So, you can have losses, as long as you show a profit every once in a while.
That being said, it probably depends on how the syndicate money is worked into your business plan. Let’s say I form Ajierene LLC, which sells canes and as part of my ‘advertising expenses’, I buy into a syndicate on a horse. In this case, while that money is a loss, my business overall can still show a profit.
If I form Ajierene LLC specifically to dump money into various event horses and that business always experiences a loss, then no, the IRS will not be happy.
I can also, as an individual with a 9-5 job, write off a certain amount of money as ‘gifts’, without penalty, so B shares may fall into that category.
[QUOTE=fordtraktor;7047537]
I am not a tax expert by any means, my accountant does mine. but my understanding is that to take a loss there has to be a real plan to make money down the line or it is tax fraud. People get losses on horses because they are “investments” that don’t pan out. Since there is no profit sharing in OP’s plan, I can’t see how this would be tax deductible. OP is not a nonprofit and can’t be.
What am I missing here? Or is someone giving collossally bad tax advice? I personally would not want to try to explain to the IRS why I took a deduction for the “perks” described here.[/QUOTE]
There are several foundations set up to help riders with expenses. One in California, that I know of and the American Horse Trials Foundation. Giving to these foundations allows you to deduct the donation. Riders submit an annual budget to the AHTF, and are given grants based on that budget, and submitted original receipts. As a rider you must meet the criteria to be funded. Per IRS rules the donation MAY NOT be designated for a certain rider, but goes into a pool for all. Riders are allowed to help raise funds for the AHTF, though, which is why you see on a lot of riders’ websites, the request for donations to the AHTF, and the tax deductability.
[QUOTE=Ajierene;7047604]
Businesses have to show a profit every two years, if memory serves correctly. So, you can have losses, as long as you show a profit every once in a while.
I can also, as an individual with a 9-5 job, write off a certain amount of money as ‘gifts’, without penalty, so B shares may fall into that category.[/QUOTE
Your first statement is incorrect.
You may be able to write off donations to approved organizations. I don’t know where you can write off gifts.
[QUOTE=SLR;7047652]
Your first statement is incorrect.
You may be able to write off donations to approved organizations. I don’t know where you can write off gifts.[/QUOTE]
I can revise my first statement to state - if you don’t show a profit, expect an audit and penalties. This is, of course, excluding non-profits. I did not mean for anyone to infer your business will be closed by the IRS, just that the IRS expects to see a profit every once in a while.
You can give up to a certain amount in gifts, per year, without having to show anything on your taxes or pay a gift tax (either party can choose to pay this tax). Otherwise taxes have to be paid on the amount of the gift. Basically, it counts at income to the recipient. The gift can also count as a deduction on your taxes, under certain rules.
More information here: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Frequently-Asked-Questions-on-Gift-Taxes
[QUOTE=Ajierene;7047754]
I can revise my first statement to state - if you don’t show a profit, expect an audit and penalties. This is, of course, excluding non-profits. I did not mean for anyone to infer your business will be closed by the IRS, just that the IRS expects to see a profit every once in a while.
You can give up to a certain amount in gifts, per year, without having to show anything on your taxes or pay a gift tax (either party can choose to pay this tax). Otherwise taxes have to be paid on the amount of the gift. Basically, it counts at income to the recipient. The gift can also count as a deduction on your taxes, under certain rules.
More information here: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Frequently-Asked-Questions-on-Gift-Taxes[/QUOTE]
According to our accountant, you must show an intent to make a profit. I believe a 7 year plan was in effect, IDK if that still is true. Horse businesses are notoriously suspect for the IRS, due to the difficulty of establishing whether it is a business or a hobby, but I would not say that you should expect an audit.
Citing your link to the IRS rules. Gifts are not tax deductible. Donations to certain organizations are.
My husband and I give a lot of gifts, and also donations. I know the difference.
[QUOTE=Ajierene;7047604]
That being said, it probably depends on how the syndicate money is worked into your business plan. Let’s say I form Ajierene LLC, which sells canes and as part of my ‘advertising expenses’, I buy into a syndicate on a horse. In this case, while that money is a loss, my business overall can still show a profit.
.[/QUOTE]
Maybe I am just risk averse but I have a hard time imagining how the IRS would fall for the old “my cane business advertises by subsidizing an event horse” gig. Braver souls that I do it all the time, but that doesn’t make it right.
Donor can’t show “intent to make a profit” if there’s not even any possible way they will get money back. Getting to wear an owner’s badge at Rolex may be valuable to some, but it isn’t a profit.
I’m still skeptical this is a valid deductible expense for an “investor.”
[QUOTE=fordtraktor;7047951]
Maybe I am just risk averse but I have a hard time imagining how the IRS would fall for the old “my cane business advertises by subsidizing an event horse” gig. Braver souls that I do it all the time, but that doesn’t make it right.
Donor can’t show “intent to make a profit” if there’s not even any possible way they will get money back. Getting to wear an owner’s badge at Rolex may be valuable to some, but it isn’t a profit.
I’m still skeptical this is a valid deductible expense for an “investor.”[/QUOTE]
Yeah The cane thing is pretty much a load of bunk.
But if the OP has a riding, training, farm, which it sounds like she has, and also stands a stallion, then its in the realm of possibility. It is a business. Now, her upper level horse and his expenses can be deductible, because 1) she plans to sell him. 2) she proves she is a trainer, so it builds her business, she sells other horses, so showing horses and increasing their value is part of that business.
The upper level horse brings clients to her, and that can be readily explained. It passes the red face test.
Those horses can also be depreciated. :winkgrin:
Again, the advantage of ownership in a syndicate could be the tax deductibility of the horse expenses. Others would have to answer whether that is allowed.
Maybe it is different in the UK, in that no one expects to make any money from horses, Syndication started in racing e.g. http://www.eliteracingclub.co.uk/
and the idea has gone into eventing. Elite Racing tried eventing but it didn’t work in their business model.
[QUOTE=fordtraktor;7047951]
Maybe I am just risk averse but I have a hard time imagining how the IRS would fall for the old “my cane business advertises by subsidizing an event horse” gig. Braver souls that I do it all the time, but that doesn’t make it right.
Donor can’t show “intent to make a profit” if there’s not even any possible way they will get money back. Getting to wear an owner’s badge at Rolex may be valuable to some, but it isn’t a profit.
I’m still skeptical this is a valid deductible expense for an “investor.”[/QUOTE]
Yeah, I’m not discussing the…um…morals or ethics involved in some business practices and how are used come tax time. I was just noting the possibilities.
“Intent to make a profit” question is how I conjecture B Shares would work in Eventing because there is no way to make a profit. I have not read enough into the concept of B Shares vs the IRS regulations, though.
Every syndication member that I know who wants a tax deduction participates through the AHTF (American Horse Trials Foundation). A non-profit. There are pros and cons (primarily a small percentage of the contribution goes to AHTF rather than the rider/horse) but if the tax deduction is what is worth it to the syndication member…then it is worth doing.
Just to clarify a few things:
I did state that the B Share thing was a misunderstanding from my original discussion with the EOTF. That has since been clarified, and I would, in fact, be selling ownership of Bug but retaining management of him. This seems to be the common thing with syndications. See Mr. Medicott’s (i.e. Karen was and now Phillip is rider/manager).
There is a new syndication plan in the works…one that includes a lot of everyone’s suggestions, etc. I am still not sure if I definitely want to do it, but I’m working through a lot of the ideas and going through things with the EOTF. Like I said in my EN article, I want to be as invested in my syndicate owners as they are in me. I have some product sponsors, and I love advertising for them and promoting their products. I am hoping that I can figure out a way to make everyone happy in a syndicate. If not, I will not pursue it. I do have some other sponsorship ideas in the works as well.
I have my B.S. in Equestrian STudies and have my own farm. I stand a stallion, teach lessons, teach clinics, sell horses, train horses, etc. It is my business. I tried working a part-time job at one point, but living in the boonies makes it hard to find something. I worked at Tractor Supply, and they wanted me to work nights and weekends…the highest time for teaching lessons and shows. Besides that, I think I spent more money in gas driving to the closest town to work than I made working. Now, my part-time job is writing for EN.
Again, I appreciate everyone’s input and have definitely used it in my decisions and changes in plans.
