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View Full Version : How to split payments with trainer - owning a horse together



TSHEventing
Nov. 14, 2010, 09:01 PM
Even if you haven't actually done this, I am interested in everyone's opinion.

Picture it (Golden Girls reference) Trainer and student go in to a horse (resale) together, 50/50. Horse was originally students who realized she didn't have time for him, so trainer agrees in lieu training board (and fees for riding at home and at shows only) trainer will ride/market/etc said horse in exchange for 50% of the horse and thus 50% of costs and 50% of profit.

Question is: As the student, what would you expect to pay for basic services? I.e, if trainer has to clip horse, would you expect to pay nothing (since it doesn't cost the trainer anything) or would you expect to pay 50% of what they normally charge? Would you expect to pay 50% of what is normally charged to ship? or would you expect everything at cost?

I appreciate your feedback, I have no experience with this.

Thanks!

Slow Motion
Nov. 14, 2010, 09:13 PM
In a situation like this if the trainer is riding, showing and marketing the horse to other clients/trainers I would expect to pay entry fees, shipping fees, farrier costs and any routine vet bills. If the trainer owns the barn where the horse is boarded I would not expect to pay for board, but if the horse is boarded out I would pay half of the board.

CBoylen
Nov. 14, 2010, 09:17 PM
1)Partnerships don't usually work.
2)It doesn't matter what anyone else thinks the agreement is, you and the trainer need an agreement. In writing. Written by an honest-to-goodness lawyer. Then, when the partnership goes south, the real lawyer you hire won't laugh when they read the contract.

Beyond those two points, reading your post you sound very optimistic as far as your costs go.
When I read this:
so trainer agrees in lieu training board (and fees for riding at home and at shows only) trainer will ride/market/etc said horse in exchange for 50% of the horse I don't think this
and thus 50% of costs and 50% of profit. necessarily follows. I think free board, training, and riding in exchange for 50% of profit is a reasonable deal, in theory, presuming the horse is saleable. I don't think it's a reasonable deal for the trainer if they're also paying 50% of costs, and I would expect everything beyond board, riding, and training to be your responsibility.

M. Owen
Nov. 14, 2010, 09:37 PM
I am with Cboylen, I think these situations don't usually work. If you are going to try it, I would put everything in writing that you can think of and get some help from a lawyer. I would include clauses about what happens if things go wrong and the horse gets hurt and becomes unsaleable, or doesn't sell in X amount of time, or anything else you can think of that could go wrong.

As far as costs, I think the cost split should be based on documented costs, for example of board is $800/ month, you pay $400, if a training ride is usually $60, you pay $30, but I would put it all down on paper. Not that you asked what people think, but I would caution strongly against entering this type of contract. I think there is too much risk for things going wrong and ending up badly.

buck22
Nov. 14, 2010, 09:42 PM
1)Partnerships don't usually work.
2)It doesn't matter what anyone else thinks the agreement is, you and the trainer need an agreement.
this^^

though I'm not from h/j land, I did do a partnership once. It was an awesome experience but I'd hesitate to do it again because I learned how easy it is to go wrong and how blessed I was everything went right.

my old BO - who was/is an instructor with a lesson program - and I found a great horse in a bad situation and both knew we could turn him around and he'd be valuable, but neither of us wanted the whole deal of ownership and all that goes with, so we decided to partner.

we made a clear plan before the deal and had it in writing:

We split the cost of his purchase even and it was null going forward and had no bearing beyond that.

We established that I was to do X amount of training/schooling per week in exchange for her costs of boarding/hay/feed. She used the horse for lessons & shows. Her gain in lessons paid for his costs at shows. It was my job to have him tuned up and ready to go at all times.

all medical bills split no matter what or who was to blame

all farrier bills split no matter what

any extra feed/suppys, she was responsible for but kept at tab. any extra tack he needed I was responsible for but kept a tab. After the sale it was evened up.

the horse had to go for sale by X date. He had X time frame to be sold. If he didn't sell by the time frame he was to go back to the original owner for the original sale price (who wanted him back desperately after they saw the remarkable transformation :lol: ) and we would eat the loss.

If by the X sale date either one of us wanted to keep him, we had to establish a fair market value, even out the feed/tack expenditures and buy the other person out. If we both wanted him then he had to go back to his original home.

the horse came around brilliantly, loved his work, loved his students and sold within 4 weeks for more than we expected. It was a wonderful experience and we both remained friends and had a great time. Unusual as far as I hear. :lol:

jetsmom
Nov. 14, 2010, 09:42 PM
There is no way I would ever do it.

What happens if you and trainer get on the "outs" with each other?
There are too many things that can come up that could cause problems.
What happens if trainer gets hurt and can't ride/show? How will the horse be marketed?
What happens if horse tears a suspensory, and needs a year off, and will be suitable for flatwork only?
What happens if trainer decides to move?

fordtraktor
Nov. 14, 2010, 09:52 PM
I've seen it done several times and I've never seen it work out well. Avoid!

TSHEventing
Nov. 14, 2010, 10:18 PM
Thanks guys, but I'm not asking if I SHOULD Do it... but what you would expect.

Let me clarify, I am the trainer, horse used to be mine, gave the horse to my good friend (who also rides under me) and she is in grad school as am I and I decided I would help her since she doesn't have the money to pay for training board and she gave half of him back to me... we split the sale price. She is riding him half the time, I am riding him the other half.

So, the should do it or wouldn't do it isn't a part of this question, I just don't know what is fair to charge her in terms of fees in order to be fair. She would pay anything I asked her to without question, but I don't want to take advantage either unknowingly.

hopefully that clears it up.

fordtraktor
Nov. 15, 2010, 09:28 AM
I wouldn't charge her for services like clipping a horse that you are own half of, if you are performing the services and riding the horse (after all, you benefit from the clipping, etc and would clip it whether or not she rode it too). If you are paying for the services, pass half the cost to her.

Anyway, that is how I would do it -- ask yourself whether you would do the task whether or not she was riding the horse, and if yes, don't charge.

Best of all, have this conversation with her NOW about what to charge -- don't just bill her and expect her to pay without question. That is how these situations go awry. Talk BEFORE you incur the expense. You are in a business partnership, that's how business partnerships work.

luckyduck
Nov. 15, 2010, 10:10 AM
Official contracts.....after many experiences with this verbal deals not working.... have everything on paper. It keeps a lot from going wrong.....

Too many deals end up with someone feeling wronged or taken advantage of.... get it in writting.

GreystoneKC
Nov. 15, 2010, 10:22 AM
I just purchased a horse for myself and while he was inexpensive, I didn't really have the money laying around to do it. I considered asking one of my customers if they would like to be partners in the horse, but when I started thinking about the logistics of it all, I decided that I would rather own the horse outright. Trying to figure all of this out is one of the main reasons why.

If I ever did decide to become partners in a horse with one of my customers, say in a more expensive horse that I had NO ability to afford on my own, I would make sure we all sat down for dessert one day and chatted and made up a contract detailing every last thing. These things can go so far south so fast.

I recommend that you and your student sit down and have dessert and chat. Instead of surprising her (positively or negatively) with your choices in what to charge, you can have a reasonable conversation about it. Maybe write a list down of what you think is fair and then discuss it over coffee. That way, if anything seems unreasonable to her or like more than she can handle, you guys can work something different out without any surprises later.

hasahorse
Nov. 15, 2010, 10:36 AM
Since you are doing this, get everything in writing and make sure that both of you keep track of what is spent, even if you think there is no monetary value. Keep receipts for everything. I was in this same situation with my former trainer, and when the time came that the deal went south (and believe me it will), I had excellent records of what I had spent and she had none. I still had to hire a lawyer to get my money.

I would seriously rethink this arrangement, but, if it is going to happen, spell out everything in writing, including what will happen if horse is injured and no longer able to perform as it had been.

findeight
Nov. 15, 2010, 11:00 AM
Do you have anything at all in writing that clearly states who owns the horse and has ultimate financial responsiblity or that each party owns and is financially responsible for 50%???

When you have one party contributing only $$$ and the other contributing only "sweat equity" and end up with 1k or more in vet bills and a horse out of service for 6 months or more? The cash only party gets, basically, screwed when they are paying the board on an intended resale horse. If trainer is carrying the board, it's a hole in their pocket and becomes a likely loss with no profit at sale time.

These vague deals with nothing in writing defining clear financial responsibility go south 99% of the time and the above is exactly why. Unforseen, major expenses are not defined and there is never a profit realized to split.

Your basic question of what is "normal" for this type deal really cannot be answered because most trainers stay away from them. It's whatever you decide between yourselves.

Beenthere
Nov. 15, 2010, 11:04 AM
As a lawyer who sees when these deals go bad....don't do it. Enough said.

simc24
Nov. 15, 2010, 11:52 AM
My BO (dressage trainer) and I came very close to entering into a similar deal, with a very promising and fancy almost 3 y/o TB that we found hiding in a stall, unmarketed at a local race training stable. We ultimately chose against him because he was so young that we couldn't turn him fast enough to make any money, but I'll give you the preliminary deal we'd worked out (before we found out he wasn't even 3 :))

She is older (thus breakable- her words, not mine:lol:) and not interested in dealing with young, unpredictable horses. Also, she doesn't like to jump, and that's the direction we were going with him. She was to buy him outright ($600, I believe) and provide 100% board, vet and farrier fees. Of course, she was boarding him at cost since she's the BO. He was not going to occupy a board spot though- she was making an exception for one extra horse, hence the necessity for a fast turn. We were to split show fees 50/50, and hauling was admittedly never talked about. We did agree (at her suggestion) that she'd give me mini-lessons and pointers for free whenever she was around while I was riding that horse.

I was to be responsible for all of the hands-on work, and time spent. Once it came time to sell, she was going to handle marketing him, and I would show him to prospective buyers.

She was to take 65% of his sale price, and I the rest.

Like I said, we lost interest when we found out he wasn't even 3 years old at that time (he was a strapping 2 y/o!!).

It wasn't so much that we went looking for a deal like this. We just ran across a horse that nature had been very kind to:lol:, and we wanted to scoop him up!!

The one thing we never talked about was a specific timeframe for selling him, and what would happen if he didn't sell. I think those are big things to take into consideration. Also, what would happen if the animal dies or has a major injury in the middle of the partnership? I was in it for the extra ride time and experience more than anything else, but I'm not convinced this is a great money-making venture.

IMO, services provided (like clipping) should be done for free, or done at cost and split two ways. I would be sore to say the least about paying full price for a service like that when the person doing it owns half the horse. Perhaps the co-owner can provide other services for free (like being responsible for all trimmings, if trainer does the body clip). Obviously, agree upon before hand:)

Catherine Cullen
Nov. 15, 2010, 12:08 PM
I could see doing it as a straight 50-50. So you buy the horse together, it gets billed normally for everything and you pay 50% each (the trainer doesn't have to "pay" their 50% of their training fees, but it still gets tracked that way), then you split 50% 50% on selling price. I suppose you'd pay 50% of the commission, too.

However, it would be a can of worms if the horse becomes unusable and/or one person wants out at any point along the way. Can they sell their half without your consent? How do you determine the horse's agreed upon value at any point? I would think you'd need to form an entity like an llp and have a plan for that.

Actually I would be interested in learning more about how this is handled for syndicates. Any racing or major jumper peeps know have a sample contract?

findeight
Nov. 15, 2010, 12:25 PM
Actually I would be interested in learning more about how this is handled for syndicates. Any racing or major jumper peeps know have a sample contract?

Don't have a sample contract but these are usually set up by attorneys as business entities like an LLC with limited liability and specific buy in and exit procedures. There are attorneys who specialize in setting these type breeding or performance horse partnerships/syndicates up.

Sometimes trainers/riders are a partner in return for the riding and training but keep it within that seperate entity and not associated with their overall business. And you bet there are specific procedures defined for when the horse is unuseable plus insurance requirements.

Janet
Nov. 15, 2010, 12:28 PM
Even if you haven't actually done this, I am interested in everyone's opinion.

Picture it (Golden Girls reference) Trainer and student go in to a horse (resale) together, 50/50. Horse was originally students who realized she didn't have time for him, so trainer agrees in lieu training board (and fees for riding at home and at shows only) trainer will ride/market/etc said horse in exchange for 50% of the horse and thus 50% of costs and 50% of profit.
If you go into this kind of arangement, you must also be responsible for 50% of the loss. Highly likely that you won't make a profit.


Question is: As the student, what would you expect to pay for basic services? I.e, if trainer has to clip horse, would you expect to pay nothing (since it doesn't cost the trainer anything) or would you expect to pay 50% of what they normally charge? Would you expect to pay 50% of what is normally charged to ship? or would you expect everything at cost?

I appreciate your feedback, I have no experience with this.

Thanks!
As the student/half owner, I would expect to actually PAY half of the actual expenses (vet, farrier, gas for trailer, entry fees at show).

For all "fees to trainer" I would expect that to be kept "on account", to be paid out of the proceeds when the horse is sold. (and not to exceed the sales price)

Within that constraint, I would expect to pay (on account) 50% of what the trainer normally charges.

I would also expect that this will end with the two of you "not on speaking terms".

OntheBuckle
Nov. 15, 2010, 12:48 PM
We tried this and for us being the owner, not the trainer, it did not work the way we had thought it would. We were offered to put the money up front to purchase a yearling. They paid us back their half after the sale. We were told we would split the "hard" costs of the upkeep monthly and registration fees, yada yada. They did alot of things themselves and we helped...hoof care, worming, etc., we just paid half the supplies, or we wormed this time, they did next time, stuff like that. This was a weanling, and would not be broke until 2. Well at the end of the first year, we decided this was not working the way we thought it would. Weanling was turned out with the rest of trainer's weanlings at a big farm they pay like $2000 per year to lease and have as many horses as they -want on it. They were running about 12-15 at the time. Lots of grass, just grain for the baby. Hubby figured it cost for the pasture $15 per month for the weanling/yearling. It couldn't eat more than a bag of grain a week, even at $15 bag. We were being billed $150 per month for our share of the board. Well, I know that is what most people pay, some for stall full care. This was a partnership with hard costs only being split. So we decided this was not "fair" on our end and sold the weanling back for what we put into it, as it was worrisome to us once the horse went to training, how that expense was going to be split, and honestly, we wanted to remain friends and get out of the partnership. It ended well, the filly is hopefully going to race this year and I hope she does fantastic for them.

gottagrey
Nov. 15, 2010, 01:05 PM
If trainer is 50% owner then the other owner pays 50% of everything. To simplify things you should have a written contract which states which fees owner will be 100% of (say routine vet care i.e. shots/worming) and trainer (now co-owner) pays 100% of -(say clipping). You should also have in the contract vet expenses to be shared - in case of injury/colic - or state any vet expenses exceeding X amount will be shared 50/50...

In any case I would have everything written down in a contract; signed and notarized and copies to each owner... you might also want to be a expiration date of the partnership agreement - like if horse is not sold in 2 years partnership is null and owner is entitled to full ownership (so you can sell elsewhere or on your own) or owner might want to turn over enitre ownership to trainer...

findeight
Nov. 15, 2010, 02:26 PM
... you might also want to be a expiration date of the partnership agreement - like if horse is not sold in 2 years partnership is null and owner is entitled to full ownership (so you can sell elsewhere or on your own) or owner might want to turn over enitre ownership to trainer...


Which owner would be entitled to full ownership as both parties are defined as "owner"? What consideration for work performed or cash outlay would the other owner be entitled to for relenquishing their half? People with money or time tied up over a year or more are not just going to walk away empty handed.

Like we keep saying, can of worms and a classic lose-lose situation.