10 Frequently Asked Questions About Horse Syndication

With more and more riders syndicating horses, EN is partnering with Athletux Equine and the Event Owner's Task Force to answer your most frequently asked questions about the syndication process. You can contact Athletux with any specific questions, and be sure to visit Athletux Equine for all of your equestrian business needs.

Congratulations to Boyd Martin and the Blackfoot Mystery Syndicate! Photo by Jenni Autry.

One of the biggest perks of syndication? More people to celebrate when you win! Photo by Jenni Autry.

Athletux Equine is here to help you answer 10 frequently asked questions in regards to syndication. Yvonne Ocrant, an equine attorney, is also available to answer any legal questions regarding syndicates at no charge at [email protected]. What other questions do you have about syndication? Let us know in the comments below!

1. What is syndication? In a horse ownership syndication, a group of people comes together to purchase ownership in a promising horse for a professional event rider. The ownership not only covers the actual cost to buy the horse, but also the annual costs needed to maintain the horse.

For example, if you are joining a horse syndicate offering 10 ownership interests, then you and nine other people will own that event horse (through your ownership in the syndicate) and help maintain the costs of your event horse on an annual basis. The good news is that all of these costs are usually predetermined, and syndications come in many affordable price ranges!
2. Why would someone create a syndicate? As a rider, creating a syndicate allows you to afford to purchase a horse and share in the experience of competing a horse with a group of supporters. Additionally, creating a syndicate allows you to offset the annual expenses of competing and keeping a horse going in the sport.

3. I want to create a syndicate; what should be my first step? Your first step in creating a syndicate should be to decide on a specific horse, or to determine what criteria you will look for in a potential horse such as age, price range, etc. Once this has been completed, you should then determine what the total amount you will need to raise through your syndicate would be (see number 4 for further information on price).

Once you have done this, you will want to contact an equine lawyer to create a limited liability company (LLC) for your syndicate and draft the syndicate agreement (known as the Operating Agreement) specifically for you, your horse and your owners. You can then present the terms of the Operating Agreement to your owners and promote the benefits of your syndicate.

4. How do I set the ownership interest purchase price? When determining the ownership interest purchase price, you should include cost to create the LLC (including legal fees and state filing fees, which the attorney can provide); vetting; transporting the horse from current owner to you (if, for example, the horse is overseas); insuring the horse for one year; commission and any other potential fees, including the actual purchase price of the horse, which would be required for the syndicate to acquire the horse.

5. What is an annual maintenance fee? An annual maintenance fee is split between all syndicate members and is put into an account annually in order to cover the expenses related to the horse. You need to determine this fee and discuss it with potential owners so that they understand their annual financial obligation, in addition to their one-time ownership interest purchase payment.

You can also suggest that the annual maintenance fee payment may be tax deductible for individual owners if their payment is made through one of two available 501(c)(3) organizations, such as the American Horse Trials Foundation or Southern California Equestrian Sports provided for this purpose.

6. What do I need to do in regards to legalities for my syndicate? You should always have a contract drawn up by an experienced equine attorney to be signed by each syndicate member. This is incredibly important to protect both you and your syndicate members.

7. How should I approach people about joining a syndicate? This should be determined on a case-by-case basis, but you should be prepared to answer any potential questions they may have about the opportunity; why they should support you or join in on your syndicate; and how things such as annual maintenance fees, event passes and other items will be handled. The Operating Agreement will answer these questions, and the equine attorney can assist with summarizing these points.

8. What should I be doing to maintain my syndicate? You need to be sure you are regularly updating all syndicate owners about your horse and including them on exciting things that are taking place. You should also remind your owners about annual maintenance fees and making sure they feel involved so that they have a positive experience as a syndicate owner. Additionally, you need to work with your accountant to be sure the LLC is filing the required returns and providing your owners with the required tax documents.

9. What happens if I don’t sell all the shares in my syndicate? As the syndicate is an LLC, ownership of the entire company has to be accounted for by assigning 100 percent of the ownership interests. If not all the ownership interests are sold, the previous owner of the horse who is selling it to the syndicate (or you, as the Manager) can hold that unaccounted-for ownership until it is sold to a new member. When new owners are found, the person who has the additional available interests will assign those interests to the interested new owner. The equine attorney can assist with documenting the ownership transfer. 

10. What financial documents should I be giving my syndicate members annually? The Operating Agreement may require that you provide regular budgeting reports and other accounting of the company finances from time to time. Work with your accountant to understand the financial documents required to provide your syndicate owners each year.