LEASING THOROUGHBREDS

Leasing thoroughbred bloodstock has grown in popularity in recent years and is particularly common with fillies and mares. A breeder will often act as a lessor of either a young filly, ready to enter training, or a mare at stud.

Details of horses available for lease are published on this area of this website, which is updated frequently. This article is no substitute for professional advice, which should always be sought by both parties before entering a lease agreement. However, the information below gives some idea of the issues which will need to be agreed in writing between the lessor and the lessee.

Granting a lease on a young filly, ready to enter training, gives the breeder the reassurance that she will return home as a breeding prospect once her racing career is finished. Importantly, any such lease saves the breeder the expense of training fees and other related costs: the average breeder is in the business of producing horses, not racing them. If a horse fails to make its reserve at auction, for example, or if the breeder cannot justify paying training fees on a horse he would like to retain, then a lease comes into its own. For the lessee, a lease arrangement brings all the benefits of racehorse ownership without the initial 'up-front' capital purchase costs.

Most leases involving racing stock will stipulate that the lessee, ie the racehorse 'owner', will be responsible for all training and racing costs associated with the horse for a set period, typically a horse's two-year-old and three-year-old racing career. In return, the lessee is usually entitled to any prizemoney won by the horse and all the other privileges and benefits associated with racehorse ownership.

In a similar vein, a breeder may also wish to offer a lease of a filly who has finished her racing career or a mare already at stud. In this instance, the lessee has the opportunity to use the mare for a specified length of time as a breeding prospect. While the lessee is usually responsible for the mare's keep, stallion fees and other related charges, of course this comes without any need for capital investment in the mare and the lessee keeps any foal. The lessor knows that at the end of the term, the mare will be returned to him.

Any lease document should mention the issue of insurance, in the event of the death of the horse or loss of use due to injury or illness, and the matter of public liability cover. It is usually reasonable for the lessee to cover all routine veterinary costs, but a lease agreement needs to state what happens if emergency, life-saving or expensive surgery is required. Furthermore, when a racing prospect is leased, the agreement should detail which party benefits from a Pearl Series award or any other bonus.

Leasing bloodstock remains commonplace and there is no reason why a lease arrangement cannot be made for the fair benefit for both parties. In 99% of cases, leases prove to be mutually beneficial. However, a lease document should include details of a professional mediator in case of unforeseen problems.

As with any issue involving thoroughbred bloodstock, it is always safe to plan for the unexpected when granting or being granted a lease. Many deals in this business are agreed on trust and a handshake but entering a lease without a written document is risky business as so many unexpected things can happen with thoroughbred bloodstock. Additionally, memories of verbal agreements can become blurred over time. Friendships and professional relationships are at risk if expectations and understandings prove to differ and the terms of the deal were not put down in writing.

Naturally there is no substitute for the relevant professional advice which should be sought by any party entering into any such agreement. If the lease is agreed properly and written down from the outset, it will work to the benefit of both parties concerned.