5 Most Common Syndicators Tricks - Part 1
As a syndicator of racehorses, it pains me to write the above headline. But as an honest operator who always does the right thing, it sickens me to see so many tricks being pulled on people who know very little about racehorses, but who just want to have some fun.
You’ve all met a dodgy car dealer right? And you’ve all bought something or other in the past where you know damn well you’ve been had! But in all those transactions, you probably had a general idea of what the product was worth-in general terms.
But what happens with a horse? Most people who aren’t in the game wouldn’t know the difference between two yearlings standing before them, one just purchased for $15,000 and the other for $150,000. Most wouldn’t know the difference between a colt just sold through the ring for $45,000, or the very next Lot, which just sold for $450,000! And if they were in a paddock, without the benefit of extensive grooming and a nice shiny coat, I’ll bet 9 out of 10 couldn’t tell the difference between a four figure horse and a six figure horse!
Which is fair when you think about it-“cos horses ain’t your game”!
You’re probably a very good architect, miner, tradesman, businessman or hard working scaffolder. You may be the best Mum in the World-“but you ain’t a horse person”!
Which is why you have to trust someone in the industry. But here’s why you have to be very careful who you give your valuable trust to…
Ready?
Then here we go.
Trick Number 1. Excessive Mark ups. Well, it’s actually not a trick-just an excessive mark up! Now I’m not one to refuse a profit, or indeed one to tell anyone what they can or can’t make on any given business transaction. But when I see a syndicator buy a horse for $6,000 and mark it up by $30,000, (ex GST), well I just think that’s a bit rich! Let’s take $5000 for expenses off that figure and we still end up with a horse being sold for FOUR TIMES its cost price!
Syndicators buy at WHOLESALE cost at the sales, and just like everyone else in business-add a margin to form a RETAIL PRICE which covers the cost of being in business, and hopefully turn a profit. The average mark up on horses offered for syndication is between $15,000-$30,000 on an average yearling purchased for anywhere between $40,000-$120,000 through the sales ring.
Trick Number 2. The “Valuation” Rort. A syndicator buys a young, unbroken horse from a public auction, for let’s say, $30,000. Then miraculously, in the Promotors Disclosure Statement issued within a fortnight or so, it’s “valued” at $60,000 or $70,000-by a registered bloodstock agent! The valuation certificate is included in the Promoters Disclosure Statement INSTEAD of a receipt from the sales company. You are not told the purchase price of the horse, (as you should be), but rather just given a trumped up valuation which has been inflated.
Now clearly, the market price of that yearling, after being offered to everyone, is $30,000. A horse can go up in value if you break it in and it starts showing exceptional promise straight away, or if a close relation wins black type pretty soon after it’s been purchased. But a young, unbroken horse doubling in value almost overnight – and then expenses and profit margin going on top as well? No way Jose! That’s a major con job and you’ve just been had!
Trick number 3. Beware the “Video”! Buying a racehorse is an emotional event. Those videos that are on some web sites are emotional things! Let me tell you that ANY HORSE looks good galloping around a paddock. ALL HORSES run fast, (it’s just that some run faster than others!). Whilst you can get a good idea of their athleticism by viewing the video, it doesn’t give you a fair idea idea of their conformation which can be critical to the future success or otherwise, of the horse. DON’T buy a share in a horse just on the video itself. Make sure you also check out the vet report! Remember that more sales are made in the height of emotion-than in the depths of logic!
You’ve all met a dodgy car dealer right? And you’ve all bought something or other in the past where you know damn well you’ve been had! But in all those transactions, you probably had a general idea of what the product was worth-in general terms.
But what happens with a horse? Most people who aren’t in the game wouldn’t know the difference between two yearlings standing before them, one just purchased for $15,000 and the other for $150,000. Most wouldn’t know the difference between a colt just sold through the ring for $45,000, or the very next Lot, which just sold for $450,000! And if they were in a paddock, without the benefit of extensive grooming and a nice shiny coat, I’ll bet 9 out of 10 couldn’t tell the difference between a four figure horse and a six figure horse!
Which is fair when you think about it-“cos horses ain’t your game”!
You’re probably a very good architect, miner, tradesman, businessman or hard working scaffolder. You may be the best Mum in the World-“but you ain’t a horse person”!
Which is why you have to trust someone in the industry. But here’s why you have to be very careful who you give your valuable trust to…
Ready?
Then here we go.
Trick Number 1. Excessive Mark ups. Well, it’s actually not a trick-just an excessive mark up! Now I’m not one to refuse a profit, or indeed one to tell anyone what they can or can’t make on any given business transaction. But when I see a syndicator buy a horse for $6,000 and mark it up by $30,000, (ex GST), well I just think that’s a bit rich! Let’s take $5000 for expenses off that figure and we still end up with a horse being sold for FOUR TIMES its cost price!
Syndicators buy at WHOLESALE cost at the sales, and just like everyone else in business-add a margin to form a RETAIL PRICE which covers the cost of being in business, and hopefully turn a profit. The average mark up on horses offered for syndication is between $15,000-$30,000 on an average yearling purchased for anywhere between $40,000-$120,000 through the sales ring.
Trick Number 2. The “Valuation” Rort. A syndicator buys a young, unbroken horse from a public auction, for let’s say, $30,000. Then miraculously, in the Promotors Disclosure Statement issued within a fortnight or so, it’s “valued” at $60,000 or $70,000-by a registered bloodstock agent! The valuation certificate is included in the Promoters Disclosure Statement INSTEAD of a receipt from the sales company. You are not told the purchase price of the horse, (as you should be), but rather just given a trumped up valuation which has been inflated.
Now clearly, the market price of that yearling, after being offered to everyone, is $30,000. A horse can go up in value if you break it in and it starts showing exceptional promise straight away, or if a close relation wins black type pretty soon after it’s been purchased. But a young, unbroken horse doubling in value almost overnight – and then expenses and profit margin going on top as well? No way Jose! That’s a major con job and you’ve just been had!
Trick number 3. Beware the “Video”! Buying a racehorse is an emotional event. Those videos that are on some web sites are emotional things! Let me tell you that ANY HORSE looks good galloping around a paddock. ALL HORSES run fast, (it’s just that some run faster than others!). Whilst you can get a good idea of their athleticism by viewing the video, it doesn’t give you a fair idea idea of their conformation which can be critical to the future success or otherwise, of the horse. DON’T buy a share in a horse just on the video itself. Make sure you also check out the vet report! Remember that more sales are made in the height of emotion-than in the depths of logic!
posted by Liam Webb at 11:10 am
0 Comments:
Post a Comment
<< Home