7. Micro-ownership?

As someone who has spent the last decade promoting racehorse ownership and managing syndicates (for no financial gain), I was not at all surprised to see RacehorseClub’s high-profile launch ignite a furious debate on social media, with the majority of disapproval emanating from fellow syndicators.

The bulk of the outrage was directed at the (potential) profit margin for the individuals behind the initiative and, while it is impossible to justify the numbers involved here in my opinion, it must be remembered that the associated administration and marketing costs will be significant.

Additionally, it is important to contemplate the start-up capital required to launch such an enterprise and the high-risk nature of the venture; it is quite right that this should be reflected in the financial compensation that it’s stakeholders could receive if the format proves successful. Personally, I would be delighted to see someone make a lot of money by implementing an effective micro-ownership platform that helped introduce the sport to a new generation of owners. But, I feel a valid attempt at the concept would have provided greater transparency, a fairer percentage of prize-money and a legitimate share of the horse.

Despite, the small print stating that “in acquiring a share a member does not acquire a share in the company or the company’s business or in the racehorse itself,” RacehorseClub’s Twitter account describes their offering as “an opportunity to own.” A, presumably sponsored, Racing Post article stated: “A new ownership initiative is offering individual shares,” declaring “shares available in Grand National contenders for £75 and £80.” Qatar Racing, who own The Lir Jet in partnership with RacehorseClub, announced the club’s launch as “the chance to own micro-shares in leading racehorses.”

The use of such terminology is misleading and, in my opinion, is the biggest flaw in RacehorseClub’s current format. But it is an issue that is easily rectifiable. It seems clear to me that a substantial majority of any confusion and debate could be avoided by simply publicising a clear-cut, industry-wide guideline defining the differences between a syndicate and a racing club and, consequently, determining what can be referred to as ownership and what cannot. A racing club sells memberships, not shares and provides an experience, not ownership. In my opinion, there should be no mention of ‘shares’ or ‘ownership’ in RacehorseClub’s marketing content.

Better late than never, the BHA announced plans for strengthened regulation of syndicates earlier this week; hopefully this will deliver the clarity that is required. Ten new measures will be implemented as part of a phased approach from May onwards. For the first time, a Code of Conduct will be introduced for racing clubs. However, it is paramount that any regulation does not limit clubs or syndicates in terms of the benefits and experience they provide; what is value for one individual might be an entirely unsuitable option for another. Innovation should be encouraged; transparency is key.

Transparency ensures that anyone joining a club or syndicate fully understands what they are signing-up to. RacehorseClub’s website claims “members also receive a share of the prize money each time their horse wins.” However, the small print states “a member can request the company to pay the whole or part of any credit held in the member’s account at any time (subject to the credit being £20 or greater).” Even if Potters Corner wins the Grand National and picks up this year’s £375,000 prize, each member would receive credit of just £7.50. In my opinion, this is not made clear enough and I would suggest that if this information was more readily available, the result would be a significantly-reduced number of sales. Clearly nobody will be buying into the scheme assuming to yield a notable return, but nobody expects to win the lottery either – and they would soon stop buying tickets if there was no chance of winning.

Almost certainly, small-scale ownership is the future and micro-shares can play an important role in introducing the concept to a wider audience by providing an experience that is accessible and affordable for all. However, there is nothing radically new about Racehorseclub’s current approach - other than the numbers involved. It is not micro-ownership, it is an over-priced racing club; their business model exploits everyday racing fans and gives little back to the sport. It has the potential to do far more harm than good. How would we, as an industry, react if Michael O’Leary offered lease shares in Tiger Roll using the same model? Ironically, Gigginstown are the only party to have profited from the enterprise so far, via the sale of Balko Des Flos.

If implemented correctly, micro-ownership can provide untold opportunity for the sport. But done wrong, it has the potential to devalue the established ownership concept to such an extent that it has a negative impact on future ownership levels. Clubs and syndicates have a responsibility towards racing and it’s future owners.