This is the third article in our series on how to develop an edge in the world of racehorse syndication. The first two articles reviewed the trials, triumphs and tribulations of racehorse syndicates, then finding a system to beat the market. The fourth will cover structuring and managing a syndicate.

David Hill is the ex-Chairman of Warwick Racecourse, and has been the founder and manager of a number of racing syndicates – both successful and unsuccessful – over the last three decades. His previous articles for the Property Chronicle covered the historical financing of British Racecourses. In these troubled times he harks back to syndicate experiences in better days and how potentially to seek a competitive advantage.

The second article in this series covered some of the ways in which a structured approach to racehorse syndication can help sway the odds for success in your favour. Armed with this EDGE the next steps for implementing the system are the crucial decisions of which trainer to employ and how to set about buying suitable stock.

Choosing your trainer is paramount. According to Thoroughbredinfo.com there are three basic factors you need to weigh:

1. How much your budget will allow (a trainer’s success rate raises or lowers their price)
2. How much hands-on participation you want and expect
3. How to select the one that best suits your taste and philosophy

1. In truth there are only very slight differences in the quality of training methods employed by the top trainers and those slightly lower down the pecking order. But racing is all about achieving a scintilla of advantage. Whether it is in the sourcing of a horse, profiling that horse and its needs, selecting the type and method of feed, and determining the schooling and pre-race preparation or in race planning, the skills are relatively comparative. It is combining these elements, where you only need a 5% advantage to make a significant difference to results, which creates success. And success breeds success. Winners attract new owners with greater spending power. Spending power determines the quality of the stable stock. The quality of stable stock affects results. It’s a virtual circle. When you have pushed the snowball to the top of the mountain it tends to gain a momentum all of its own. But it sure ain’t easy to reach that peak. For the owner greater training fees, dependant on how high up the mountain the trainer has climbed, is normally money well spent.
2. The level of participation is down to personal preference. I love the day to day debate – whether it is in the selection of the syndicate horse or in planning its racing programme. Importantly though the big decisions for our syndicates are taken by our trainer – witness the switch of Nenuphar Collonges to hurdles leading to Festival success. As the saying goes you don’t keep a dog and bark yourself! In minor decisions such as targeting Nenuphar at an end of season novice handicap chase at Uttoxeter or in recently running Nebuchadnezzar from the front, I like to think the syndicate has an influence.
3. I would break down the third factor – philosophy and taste – into two parts. Does the trainer have a specific expertise in the sector or edge you have identified? How well are you going to get on with them socially and can you develop 100% trust? 

When we developed the concept of the Barbury Lions with trainer Alan King it was because of his previous record with juvenile hurdlers and his burgeoning talent for training middle distance Flat horses. It suited the EDGE or philosophy we were trying to develop.

Rather sadly in the eyes of my nearest and dearest, I spend more time either talking with, being at the Sales with, being on the gallops or at the races with my trainer than with them. It is important therefore that you share a mutual liking and respect. With both Alan, and historically with Kim Bailey, I have a firm friendship and total trust. That is important as you are dealing with investors’ money, and situations which are constantly evolving and demand difficult decisions.

Having chosen your trainer, the second crucial decision is how you are going to select the horses to populate your syndicate. This is more difficult as the world of bloodstock sales is less well publicised than the business of training where daily exposure through the press and television ensures wide appreciation. New buyers are entering a specialised and seemingly unregulated world where large sums of money pass hands. Caveat emptor need to be constant watchwords.

The auction houses and breeders purport to self-regulate through the Bloodstock Industry Code of Practice which in different guises has been in place since 2004. Both share a common interest in ensuring prices remain high however, and the fact that no breaches of the Code have been reported up to now suggests this Code has few teeth. 

The recently published Bloodstock Review by the BHA found that while ‘the bloodstock industry was generally a safe environment there were a number of unethical practices practiced by a small minority’. These include:

• Secret Profiteering – being the collusion between two parties (often the Vendor and the Agent) to make a secret profit
• Dual Representation/ Commission where the Agent acts for both the purchaser and the vendor in the same transaction and charges commission to both parties
• Luck Money where the Agent demands money from the Vendor of the horse
• Bidding Up where an artificial price is created through pre-agreed bidding

These nefarious practices are probably rare. But they do occur. Since the BHA Review the bloodstock world has set up the Bloodstock Industry Forum to police the buying and selling of racehorses and bloodstock in Britain so there is hope that these practices will be eliminated. 

Go to the Sales with your eyes open and with your choice of Bloodstock Agent at your side. An experienced eye for a horse and their knowledge of the pedigree is invaluable. But above all go to the Sales – it is racing’s most exciting casino! The Breeze Up Sales which take place in the Spring at Newmarket are my favourite days of the year. Watching 180 or so thoroughbreds gallop down the last few furlongs of the Rowley Mile, selecting which horses you are going to pull out to review, finalising which horses you are going to bid for and setting your limits, then watching the auction unfurl make for heady excitement.

Since the purchase of Nenuphar Collonges, our bloodstock agent of choice has been David Minton’s and Anthony Bromley’s Highflyer Bloodstock Agency. Any success we have had in selection has been down to Anthony’s eye for a horse and the Agency’s network of contacts. During the five iterations of the Barbury Lions we have invested over £600,000 in the purchase of horses. Normally a bloodstock agent will charge the buyer a 5% commission so our total outlay with them has been in the region of £30,000. This has been repaid many times over not just in their selection of horses to meet the Barbury Lions concept but as importantly in the horses we have avoided purchasing. On a number of occasions when we have shown an interest in a particular horse there has been an imperceptible gesture by the Vendor that this horse is not for us. Vendors know that to sell a dud to Highflyer Bloodstock is to risk future business. This is Highflyer’s EDGE and one from which in retaining them our syndicates benefit.

In creating a proposition which has a competitive advantage two key decisions syndicate managers must take are their choice of trainer and bloodstock agent. Make them carefully – they will determine whether your EDGE can be successfully implemented.