The Partnership Agreement & Totally Transparent Costs
It is very important that every racehorse partner fully understands their obligations to the partnership, particularly in terms of payment. Equally they have a right of full access to detailed summaries of income and expenditure. We operate a totally transparent policy. Here are the key points.
Commercial Principles & Partnership Plan
- Agreed budget for purchase of the horse.
- Detailed estimate of likely costs for two years.
- Assumption that the horse stays in training for that period.
- Annual review of the horse’s performance.
- If the horse under-performs, it may be sold.
- If the horse has potential, it may be retained.
- All decisions taken by the partners themselves.
- Any conflicts of interest actively avoided.
- All shares are equal. There are no split shares.
Total Cost Transparency
- Quarterly and annual income and expenditure summary.
- All costs itemised. No hidden margins or mark-ups.
- Income covers prize money, appearance money, sponsorship, BHA and ROA discounts.
- Expenditure covers purchase costs, pre-training, training, out of training and sales.
- Purchase costs cover the purchase price, auction fees, agent’s commission, vetting, transport. No luck money or any add-ons. The costs are what the partners actually incur.
- Post-purchase keep, breaking and pre-training costs are itemised.
- Full training fees are broken down into their key components.
- All other costs are listed e.g. entry fees, registrations, gallops etc.
- Out of training costs are kept to a minimum.
- Sale and / or retraining costs are identified.
- All partners sign a written agreement.
- Covers the key decisions on the horse’s running and future sale.
- Assumes an initial term of two years (which can be reduced or extended by the partners).
- Binding on payment i.e. a one-off payment for purchase and estimated training fees over the two-year period or one-off payment for purchase and a quarterly payment schedule.
- Covers eventualities such as a partner wanting to exit the partnership.
- Further charges may be made if actual costs exceed the estimate.
- Exceptional veterinary costs are a typical example.
- Detailed review annually of actual costs against estimate.
- Annual dividend paid if income allows.
- Owners for Owners’ administration costs are kept very low.
- £900 in total per horse is the maximum total cost. This equates to £150 per owner, per year.
- Covers VAT administration, account information etc.
- Each partner pays their proportion of the annual cost.
- Insurance is at the discretion of each partner.