By The Numbers

Tweet I have been stalking the Guidestar website for the release of several IRS Form 990 tax filings over the past few weeks and finally this weekend the non-for-profit website had the NTRA's 2008 Form 990 posted. While the information is over a year old now (they didn't have to file the return on extension for 2008 until November 15, 2009) it was filed on November 10, 2009 by the CFO/Treasurer of the NTRA.

So while most folks are interested in the salaries being made, I like to look for other clues as to what happened in the finances of the "marketing arm" of thoroughbred horse racing and to determine how solvent they are. I actually agree with DeRosa's post and theories on paying for a rainmaker. I, too, would rather pay key executives a half million bucks if he/she can deliver seven figure deals or pay him/her for attaining goals and incentives that meet the mission of the organization. Sometimes you have to spend money to make money. So I won't be harping on how much Alexander M. Waldrop made ($425K for those who want to keep score), but how he managed the finances and where the focus of the money spent was pointed.

So let's start with the "income statement" and compare it to 2007 figures. I know it's stale, but it's all we have to work with (so stay with me here).....with commentary to follow...



So what did we learn from this little exercise?

- The NTRA lost about $3.3M (~$800K from NTRA Investments) in 2008.

- Revenue decreased by $4.6M basically due to the significant drop in membership revenue of approximately $2.6M. Per the 2008-2009 Annual Report at the NTRA website, this drop was due to the NTRA Board of Directors approving a 43% drop in Membership Dues in 2008.

- The other significant factor in the revenue decline was the loss of Dodge as a NTRA partner, which provided significant membership fee revenue ($3M) and sponsorship income ($1.1M) in 2007. This figure was a big fat zero in 2008, due to the economic stress felt in the automotive industry.

- Not only did the NTRA have a fall in revenues, but they also increased expenditures by almost $2M. I can pinpoint the majority of the increases related to marketing, advertising and promotion and the start-up of the Safety Alliance. I'll be looking for the Annual Report release for 2009, to see what they actually spent on the Alliance as the fee revenue of $15K per track will probably be a pittance in comparison to the expenses incurred.

- The Travel number of $400K seemed a bit high to me, but this is totally a gut feel.

Ok, let's take a look at the balance sheet next.....



Balance Sheet Highlights:

- Obviously the loss ate away at the cash balances available ($10M) and we'll be sure to see more come the 2009 statements with the Safety Alliance going full steam ahead.

- It would be interesting to see what the 5 year plan is as with a continued burn rate that they've been experiencing I'm more convinced than ever that they do have some serious financial issues and cash flow issues to deal with.

- The Annual Report consolidates its for-profit partner, NTRA Investments LLC which has over $5M of debt related to its 1999 acquisition of Winnercomm, Inc. (purchase of racing libraries, broadcast rights etc.).

- A mistake of about $246K was discovered in 2008, dating back about 7 years wherein 401K matching contributions were not properly made on bonus and commission pay in accordance with its plan document. Thus the 2007 financials had to be restated for this error (whoops Ernst & Young - paid $240K by the way for its audit and tax services) and the funds put into the shafted employees 401k accounts.

So that's a lot to chew on for one evening. The NTRA is not without its challenges. A drop in fee revenue, new expensive programs to tout and overall sponsorship revenue drying up due to the current state of the economy. What direction is the NTRA Board going?

We'll keep an eye out for the 2009 Annual Report and dissect the numbers when the annual audit report is issued. Stay tuned.