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Syndicating a Stallion

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kavg View Drop Down
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    Posted: 02 Apr 2010 at 5:17am
I've heard this term being mentioned many times but not sure what the deal is.
 
I was just reading about Gerry harvey buying Swiss Ace and standing him at Westbury. He said that they are syndicating him into 50 shares at $30000 each which includes 2 services for each of 4 years.
 
Do those 50 shares each own 2% of the stallion or do they get 2% of the profits or do they simply get 8 services over the 4 years? In other words is it an investment whee you get a return or is it simply a way of getting cheap service fees and in the process helping the owner pay off the cost of the stallion?
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VSP. View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote VSP. Quote  Post ReplyReply Direct Link To This Post Posted: 02 Apr 2010 at 5:38am
Each share constitutes part ownership of a stallion. That share entitles you to a certain usage of the stallion (2 nom's for 4 years and thereafter 1 nom per year in this case). It also entitles you to 1/50th of any earnings pool that the stallion generates.
Syndicates have complex standing agreements (different with each stud) but basically the stud gets services to use or sell which cover all expenses, so the shareholders only ongoing cost is optional insurance usually, however the ASIC regulations governing syndication in Australia have meant a vast increase in yearly regulatory costs so there may be a yearly surcharge depending on the syndicate set-up. And of course NZ may also have different criteria as well.
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nod View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote nod Quote  Post ReplyReply Direct Link To This Post Posted: 02 Apr 2010 at 7:03am
Where one does not get any ownership, nor share in any profits, is usually termed a 'lifetime breeding right' and that entitles you to send one mare every year. Logically it is cheaper than buying a share.
N Z -Land of the wrong white crowd.
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dimevision View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote dimevision Quote  Post ReplyReply Direct Link To This Post Posted: 02 Apr 2010 at 8:03am
depends how much you believe in the stallion i suppose. far less risk with a lifetime nom and 99% aren't stars...
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kavg View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote kavg Quote  Post ReplyReply Direct Link To This Post Posted: 02 Apr 2010 at 9:08am
This is what I find hard to understand VSP. If 50 people get 1/50th of the earnings then what does the stud get? You mentioned that the stud gets services to use/sell to cover expenses but how do they make a profit?
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Post Options Post Options   Thanks (0) Thanks(0)   Quote VSP. Quote  Post ReplyReply Direct Link To This Post Posted: 02 Apr 2010 at 9:37am
Stud gets 10 (or more) noms to stand @ 10K = $100K earnings. Plus another 5 (or so) noms @ 10k for advertising expenses.
And of course agistment / foaling fees etc from approx 100 shareholder mares through the farm during season.
(and if the horse becomes Redoute's Choice that can become 10 (or more) noms @ $300k each per year.)
 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote dimevision Quote  Post ReplyReply Direct Link To This Post Posted: 02 Apr 2010 at 7:00pm
I have shares in more than one stallion where the shareholders pay for the advertising
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Progold Quote  Post ReplyReply Direct Link To This Post Posted: 03 Apr 2010 at 7:40pm
And usually the stud gets any profit on the original syndication price.  While this horse is being syndicated for $1.5 million, it was not necessarily the purchase price of the stallion.
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kavg View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote kavg Quote  Post ReplyReply Direct Link To This Post Posted: 04 Apr 2010 at 9:06pm
Thanks for the clarification VSP.
 
That makes sense Progold, do you know how much less than 1.5mil he paid?
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Post Options Post Options   Thanks (0) Thanks(0)   Quote slightchance Quote  Post ReplyReply Direct Link To This Post Posted: 07 Apr 2010 at 12:17am
Mick Mair is an old friend of Singo's.....
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