A run for your money

Buying a racehorse is a gamble. But one that can pay dividends.

How would you like to make pounds 60,000 from an initial investment of just pounds 600? That is just what each member of the All at Sea syndicate, a group of racing enthusiasts, has managed to do.

Their horse, Taufan's Melody, cost them just pounds 4,750 in 1993. It finished fourth in the recent - and highly lucrative - Melbourne Cup, winning pounds 41,667 and taking his total prize money close to pounds 600,000.

All at Sea's story started in July 1993, when racehorse trainer Lady Anne Herries took a cruise on the QE2. Colin Donnurumma, the assistant restaurant manager - and a keen punter - decided this was his chance: "I introduced myself and said I had always wanted to own a horse. Lady Anne said that seemed a good idea; why didn't I do it. I went to the crew bar that evening and got the names of 14 people who were interested."

The 14 included bartenders, chefs, waiters and the QE2's sanitation officer, each of whom stumped up an initial pounds 600. "All we went into it for was a bit of fun," says Mr Donnurumma, now the syndicate's treasurer.

Next he visited Lady Herries' yard, where he first met Taufan's Melody, an unraced two-year old. Mr Donnurumma cleared his choice with the other members - now narrowed down to 10 - and they were off and running.

Mr Donnurumma estimates that keeping the horse costs each member about pounds 2,300 a year, including the cost of transporting him round the world.

The British Horseracing Board (BHB) says the average racehorse costs about pounds 17,000 to buy and pounds 13,500 a year to keep in training. Taking the BHB's figures as a guide, each member of a 20-strong syndicate (the maximum allowed) would have to contribute pounds 850 to the purchase price and another pounds 675 a year to the training fees.

Ron Hodges, a trainer at Cedar Lodge yard, near Taunton in Somerset, says: "Syndicates are the future. There is no reason why ordinary fans cannot get involved in all the thrills of ownership. There's nothing like seeing your own horse do well."

The trouble is, of course, that horses as good as Taufan's Melody are few and far between. Maxine Cowdrey, Lady Herries' assistant, says: "Taufan's Melody is the ultimate racing fairy tale. Lots of people spend a fortune and race for years before they ever have a winner. You can pay pounds 1m, and there's no guarantee that it's going to win for you."

Whether your horse wins or not, there is one tax aspect of ownership which can save you a good deal of money. Running your horse as a business entitles you to reclaim VAT at 17.5 per cent on all the racing goods and services you buy - including the horse itself, saving you pounds 175 for every pounds 1,000 you spend.

Persuading Customs that your horse is a genuine business will mean finding a sponsor prepared to pay you hard cash in return for his logo appearing on the horse's blanket and the jockey's colours when it races. Many trainers work out a sponsorship deal for their whole yard, with every horse trained there carrying the sponsor's logo.

Even if you cannot find a commercial sponsor of your own, you may still be able to save VAT. The Racehorse Owners' Association operates a sponsorship scheme of its own, which pays participating owners a small sum each year. The actual money received in sponsorship income is far less important than the VAT saving.

Another important consideration is to get a proper partnership agreement drawn up at the outset. This should cover issues such as disputes about the horse's career, sharing prize money and partners leaving.

For those interested in betting, ownership also offers the chance to get some tips straight from the trainer's and the jockey's mouth. Mr Donnurumma has boosted his own return from Taufan's Melody with some judicious wagers on the horse - a worthwhile business if you recall that victory in last month's Caulfield Cup came at 66-1.

For a free copy of the BHB's `Thrill of Ownership' brochure call 01753 897211

How To Buy A Racehorse

l Decide whether you want a horse that will run on the flat or over jumps. Horses that run on the flat (as Taufan's Melody does) tend to be more expensive but are less prone to injury.

l Decide whether you want to buy from a trainer or a bloodstock agent. An agent will charge 5 per cent of the purchase price; a trainer will expect to train the horse.

l Decide on a maximum purchase price.

l Choose your colours and a name for the horse, then register them.

Average cost of purchase (1997 figures): pounds 17,000.

One-off partnership and registration charges: pounds 193.88.

Yearly registration of colours: pounds 27.91.

Training costs per year: around pounds 13,500.