Deva Racing Collapse Puts Syndicate Ownership and Trust Under the Spotlight
The news that Deva Racing is heading into liquidation is clearly a serious matter for those directly involved, particularly the syndicate members and trainers who claim they are still owed money, but its significance could stretch rather further than one ownership operation.
Syndicates have become an increasingly important part of British racing over the last couple of decades, opening ownership to people who would never contemplate buying and training a horse themselves. At their best, they offer something racing has always struggled to make accessible: the chance for an ordinary supporter to move from watching the sport to genuinely feeling part of it.
That model, however, depends heavily on trust, which is why the allegations surrounding Deva Racing are likely to cause concern beyond its own membership.
The Group 1-winning syndicate, run by director Ryan Tongue, is going into liquidation after the BHA had already prevented horses owned by Deva Racing and trained in Britain from being entered or declared. Among the allegations reported are claims that members have not received prize-money or proceeds due from the sale of horses, that shares in horses were oversold and that training fees remain outstanding.
Those allegations will now have to be properly examined through the liquidation process and should not be treated as established fact. Birmingham-based insolvency practitioner Leonard Curtis has been instructed to place Deva Racing Group Ltd into liquidation and has said that, following appointment, the joint liquidators will investigate the reasons for the company’s failure and the conduct of its director, while attempting to trace and realise any available assets for creditors.
For racing, however, the case raises an uncomfortable question that exists regardless of the eventual findings: how much does the average syndicate member really know about the financial structure behind the horse they supposedly own?
Imperial Emperor highlights how significant the sums can become
This is not simply a dispute involving a few inexpensive horses at the lower end of the sport. Imperial Emperor, one of the horses at the centre of the allegations surrounding Deva Racing, has earned more than £1 million in prize-money from three starts since December, including victory in the Al Maktoum Challenge at Meydan and a fourth-place finish in the Dubai World Cup.
It has been alleged that Imperial Emperor was entered for sales without the consent of syndicate members before subsequently being sold privately, while some members claim they are owed substantial sums relating to prize-money and horse sales.
Once horses begin operating at that level, the financial picture can change remarkably quickly. A relatively inexpensive ownership share can suddenly become considerably more valuable if a horse improves, earns significant prize-money or attracts a substantial offer from another owner.
That is precisely why transparency over ownership percentages, prize-money and sales proceeds matters.
Most people who join a syndicate are not doing so because they have extensive knowledge of company structures or bloodstock transactions. They join because they love racing and want to experience ownership, perhaps for the first time. They are entitled to expect that the less glamorous side of the arrangement — contracts, accounts, ownership percentages and payments — is being handled properly behind the scenes.
The overwhelming majority of syndicate managers understand that responsibility, and it would be unfair to allow the problems alleged in one operation to cast suspicion across an entire sector. There are plenty of well-run syndicates that have spent years building their reputations and providing owners with tremendous experiences.
Nevertheless, cases such as this inevitably make prospective owners ask questions.
Syndicates have become too important for racing to take confidence for granted
There was a time when racehorse ownership was largely associated with wealthy individuals, established owner-breeders and major racing families. That world still exists, of course, but syndicates and partnerships have helped broaden ownership considerably.
For British racing, that has been enormously valuable.
A person who buys a small share in a horse suddenly has a reason to follow a Tuesday meeting at Nottingham or an evening card at Kempton with considerably more interest than they might previously have done. They visit yards, attend race meetings, bring family and friends with them and become invested in horses, trainers and jockeys in a way that simply watching racing cannot replicate.
Some will eventually buy larger shares or become owners in their own right. Others will remain syndicate members because that is the level of involvement that suits them. Either way, they become more closely connected with the sport.
At a time when racing spends so much energy discussing how it can attract and retain an audience, that should not be underestimated.
The danger is that confidence can take years to build and considerably less time to damage. Somebody considering their first racing syndicate is unlikely to distinguish immediately between different ownership structures or regulatory arrangements. They may simply see a story about owners allegedly not receiving money they were owed and decide that putting several thousand pounds into a racehorse suddenly looks less attractive.
That would be unfortunate, particularly because the answer is not to discourage syndicate ownership but to make sure prospective members understand exactly what they are buying.
What should a syndicate member be able to establish?
Anyone purchasing a share in a racehorse ought to be able to establish, without unnecessary difficulty, what percentage of the horse they own, how many shares have been issued, what their ongoing liabilities are and how prize-money will be distributed.
The position should be equally clear when a horse is sold. Members should understand who has the authority to approve a sale, how the sale price will be communicated and how their share of the proceeds will be calculated and paid.
None of that should be regarded as excessive bureaucracy. It is simply the basic information somebody needs when entering into a financial arrangement.
There is also an important distinction between making syndicate ownership safer and making it more complicated. Racing does not need another layer of regulation simply for the sake of appearing to have acted. Smaller syndicates are part of the attraction of ownership and should not be burdened with costs and administrative requirements that make them impossible to operate.
What racing should want is clarity.
If a horse is divided into a certain number of shares, that should be readily verifiable. If money is received on behalf of owners, there should be an obvious record of what has been received and how it has been distributed. If a horse is sold, members should know the terms under which that decision can be made.
Good syndicates are probably doing most, if not all, of this already.
The question is whether everyone else is required to meet a sufficiently clear minimum standard.
The BHA’s intervention will also attract scrutiny
The BHA had already taken action before news of the liquidation emerged, preventing entries and declarations from being made for Deva Racing horses trained in Britain.
That demonstrates that the governing body was prepared to intervene, but the eventual findings may provide an opportunity to look more widely at whether the present system identifies potential problems early enough.
It is easy to examine these matters with hindsight. Financial difficulties inside a business are not necessarily visible to a regulator, and allegations made by individual members have to be investigated properly rather than immediately accepted.
Even so, once the full circumstances become clearer, racing would be sensible to ask whether there were warning signs that could have been picked up sooner and whether members had a sufficiently straightforward route through which to raise concerns.
The purpose should not be to guarantee that a syndicate can never fail. No regulator can realistically provide that assurance. Businesses encounter financial difficulties and racehorses themselves remain speculative assets whose values can rise and fall dramatically.
What members should reasonably expect is confidence that the horse they have bought into is owned in the manner represented to them and that money due to them will be accounted for properly.
Racing cannot afford to make ownership feel risky for the wrong reasons
Racehorse ownership is already risky enough.
A beautifully bred yearling can fail to win a maiden, an expensive purchase can suffer an injury before reaching the track and the relatively cheap horse nobody particularly wanted can become a Group performer. That uncertainty is part of racing and anybody entering ownership has to accept it.
But there is a considerable difference between accepting the sporting and financial risk attached to the horse and accepting uncertainty over the administration of the syndicate itself.
The former is unavoidable. The latter should not be.
That is why the Deva Racing liquidation should eventually be viewed as more than simply another racing business story. Once the facts have been established, there may be useful lessons for the wider ownership sector about transparency, accountability and the information provided to syndicate members.
British racing needs syndicates. They make ownership attainable, create committed racegoers and give people an emotional stake in the sport that is extremely difficult to manufacture through marketing campaigns.
The best operators should have nothing to fear from greater confidence in the sector; in fact, they stand to benefit from it.
If prospective owners know what questions to ask and reputable syndicates can demonstrate clearly how their money and ownership interests are handled, the distinction between good operators and poor ones becomes easier to see.
The Deva Racing story still has some way to run, and the liquidation process must be allowed to establish what happened before conclusions are drawn about those involved. Racing, though, does not need to wait before recognising the wider principle.
Syndicate ownership works because people are prepared to put their money, enthusiasm and trust into somebody else’s hands.
The sport has every reason to make sure that trust is deserved.
John Mills’ View
There is something particularly special about syndicate ownership because it allows people who might otherwise never get close to owning a racehorse to experience the sport from the inside. I’ve always thought racing needs more of that rather than less, which is why stories such as this matter.
The answer isn’t to frighten people away from syndicates, and it certainly isn’t to suggest that one troubled operation represents the many good syndicates working in British racing. It is to make transparency the norm. If you’re buying a share, you should know exactly what you own, what you’re paying for and what happens to any money the horse earns or generates through a sale.
The gamble should be whether your horse is any good. It shouldn’t be whether the paperwork behind it is.
Thanks for reading, and have a great day’s racing.
John Mills Racing
