CLEARING THE AIR
THE TRUTH ABOUT COMMISSIONS

© Heather McCutcheon
348 Weddenburn Rd SE FNAS Rights
Calgary, AB, T2J 1J1
403.569.1500
h_mccutcheon@shaw.ca

When Louise McKay* decided to sell the 6 year old paint mare she’d owned for 4 years, she let her friends and family know of her intentions. When a friend mentioned that she knew of a nice young girl who might make a good match with the energetic grey mare, Louise agreed to meet her for trial ride and assessment. Mare and teenager got along wonderfully and Louise even dropped her price slightly to come closer to what the family could pay. Check in hand and saying her farewells, Louise was taken aback when her friend asked for her commission.

Not wanting to cause problems, Louise gave her the requested 10%, but harboured definite resentment. She had ridden and shown the mare, and all this person had done was pass the word along. “What we have here,” to quote Strother Martin's character in Cool Hand Luke, “is a failure to communicate”.

What could the parties have done to avoid the awkward moment of silence, the hastily written cheque, and the lingering resentment? They could have communicated with an honest and upfront discussion on the legalities and expectations of the sale.

The onus is on the person receiving the commission to state their desired rate before proceeding with a transaction, or passing along a number. The seller of a horse should enter in to the agreement with the mindset that they are purchasing a service.

The above situation describes a brokering relationship – the use of a facilitator which brings seller and purchaser together for the purposes of a transaction. The much safer and reliable method, is one in which a seller or buyer, enlists the help of his or her own trainer to facilitate a sale.

For a trainer, the challenge of partnering the correct horse and rider team is more difficult than simply picking a nice horse in a given price range. Often the task involves making several phone calls, ‘test driving’ prospects, finding out the history, knowing the bloodlines, and hopefully some personal knowledge about the current owner and reasons for selling.

Horse trainers commonly promote and facilitate the purchase or sale of horses for their clients. A relationship between a trainer and a client needs to be one of trust, honesty, and open communication to properly forge a working partnership for both parties. Around the horse circles, we have all heard tales of woe where trainers have constantly ‘up-sold’ clients on bigger and better horses, and therefore taken bigger and better commissions and profits. Horse after horse either doesn’t fit the client/trainer/program, or simply isn’t talented enough – despite the trainer’s initial recommendation. In situations such as this, the client must ask themselves, who is my trainer working for?

Cranbrook, B.C. trainer, Jeff Beckley has witnesses similar scenes played out. While there is nothing wrong with purchasing a horse, and later selling it for a profit, each transaction should be made in good faith. “There should be a risk factor involved for the trainer buying the horse to up-sell it … if you mislead your seller into thinking $2500 is all you can get, then you turn around and sell it for more to a second buyer .. you have not been honest.” Often these types of deals can do the most damage to a trainer’s reputation. “Anyone who wants to continue to do good business now, and in the future … must play the game honestly.”

Conversely, there have been damaged client-trainer relationships when clients have refused to see the benefits of paying a commission to their trainer to either buy or sell a horse on their behalf. What clients must remember is that the commission is the stipend that they pay for an expert opinion on a possible purchase. Or, in the event that a client is selling a horse, the trainer is often available to demonstrate the horse’s talents or promote it as a saleable product.

The trainer of a client selling a horse does not generally charge their client a commission. This is usually because that individual is selling the horse for one reason: to purchase another horse. The seller becomes a buyer and the trainer is enlisted to find a suitable mount.

Well known and established trainers – the ‘Big Guns’ - will often state a set fee for locating and brokering a sale for their clients. Some of the biggest names in the NRHA have been known to charge $5000 US, and the number increases when you poll high level dressage and jumping barns; often upwards of $10,000.

Tamie Phillips, jumping trainer and owner of Fiddler’s Grove Farm in Prince George, B.C., acknowledges that in her industry, the commissions tend to be higher because the horses are more expensive. “A $100,000 horse is not unheard of in our industry …. And the normal commission rate is still 10%. However many horse brokers will charge 15 – 20% because that is their business.” What is important to note in a client and trainer relationship, “is that there is a great deal of weight placed on the opinion of the trainer when recommending a purchase for a client. Someone is spending a lot of money on a horse based on your recommendation” states Phillips, “trainers need to ensure that they are making sound and defendable decisions.”

Responsibility, in this arena, involves a considerable amount of risk for the trainer. A horse entering a new training program can react in both positive and negative ways. There is no guarantee that the newly purchased animal is going to live up to the hopes and dreams that its new owner as bestowed upon it. If problems arise, the client turns to the trainer for an explanation.

Cody Sapergia, a reining and working cow horse trainer from Okotoks, Alberta, and Team Canada member, facilitates several horse sales and purchases for his clients each year, often across international borders. To avoid confusion surrounding commissions, Cody believes in an honest, open door policy. “I have an agreement that I have my customers sign … it goes over all the aspects of our arrangements and points we may take for granted, so that there are no questions after the fact.”

Whether Sapergia is acting as an agent, selling a horse for a client, or marketing a horse currently in training, he charges a flat rate of 10% of the sale price of the horse. Misunderstandings can occur between a trainer and a client when clear-cut, written agreements are not reached. He says, “If a client were to tell me he wanted $20,000 out of his horse, we need to be clear that my 10% is a part of that price. I am not going to sell the horse for $22,000 to make my commission.”

A common occurrence in the horse industry is for a client from another barn to come and purchase a horse already in training with a different trainer. This can often result in confusion over which trainer receives a percentage of the purchase price. What most often happens is that the trainer of the seller, receives the commission, and then presents the purchaser’s trainer with a ‘thank you’ kick back.

If the purchaser’s trainer has come with his or her client, ridden the horse, and assessed its suitability for the client, Sapergia states, “I will discuss arrangements with the other trainer, and we split the commission.” Both parties, having put time, effort, and expertise into the marketing, assessment, and sale of the horse, deserve to be paid for their endeavours.

In the event that the seller does not need to pay commission to a trainer, often times the purchaser will often be required to pay a fee to their own trainer. This is again in payment for that trainer’s expertise, and is more likely to be a set fee, rather than a percentage of the purchase price.

The horse industry revolves not just around horse and human relationships, but human to human relationships as well. The trust between a client and a trainer must be solid. Each individual should understand the other’s priorities and goals.

The opinions offered by a trainer should be given with the client’s needs in mind. The horse, assessed as an individual, must be able to serve the needs of the client. This depends on that person’s riding ability, financial capacity, and personal goals. Trust of the trainer by the client cannot be stressed enough, and can be likened to the advice of you banker or financial advisor.

In all things, honesty truly is the best policy. When navigating the muddy waters of confusion, let honesty be your boat and open communication be your oars.

Heather

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