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Tuesday, January 27, 2009

The Freedom of Information...

I was nosing around the Albany Law School Racing page tonight and I stumbled across the 2007 filing of The Jockey Club, Inc.'s Federal Form 990 tax return. Through the Freedom of Information Act, all non-profit corporation's tax filings are public record, most can be found at It was interesting to find that TJC is tax-exempt under Section 501(c)5 of the Code (that's what us beancounters call it to sound cool..."the Code") which covers labor, agricultural and horticultural organizations according to IRS publication 557.

The Jockey Club's website states that its purpose is "dedicated to the improvement of Thoroughbred breeding and racing and it maintains a leadership role in numerous industry initiatives, including the National Thoroughbred Racing Association (NTRA)." The filing was made in late July 2008 based on the signature of Laura Barillaro (Exec VP/CFO) after being extended. Here's the good stuff:

1) They made $2.56 million in 2007 based on revenues of $13.76M less expenses of $11.2M.
2) Of the $11.2M in expenses, the top 4 executives made up $1.5M or >10% of the total expenses of The Jockey Club, Inc. (nice gig if you can get it)
3) All four executives are listed as working 40 hour work weeks...
4) President Alan Marzelli made $729,610 and had an additional $21,662 of benefit plan contributions made on his behalf.
5) The Jockey Club has over $29.5M in net assets (net worth in 'for profit' terminology)
6) They had no external bank debt.
7) They had approximately $19.4M in cash and temporary cash investments and another $9.8M in marketable securities (based on some of the sales of securities they held during 2007, I'm sure that they probably took a tumble in their investments over the past two quarters).
8) They had ~$2.7M in investments in 100% wholly-owned subsidiaries, those listed as TJC Holdings, Inc. and subs (Information Services & Softwares Services), The Jockey Club Racing Services, Inc. (Collection of Thoroughbred Racing Data) and The Jockey Club Technology Services, Inc. (Technology Services), all of which have revenue streams north of $5M.

It will be interesting to see how bad of a beating their investments took in 2008, and with the new Form 990 requirements (the form has been widely expanded to include a number of new disclosures and questions, which tells me the IRS is going to start scrutinizing non-profits in the not to distant future) going into effect in 2008, we should be able to glom even more information when they file their 2008 return.

It sure seems to me for a not-for-profit organization exempt from taxation, they are pulling down some big cash and have accumulated some dough for a rainy day. Maybe someone will tell them it's raining...


Steve Zorn said...

Didn't realize that there was another recovering tax lawyer in the racing blogosphere.

Interesting that they kept so much of their money in cash. I suspect they did take a hit this year, because they're sending out signals that they won't be able to make the same level of contributions as in previous years.

It's reasonable for the Jockey Club to be a 501(c)(5); for those who want to get the charitable deduction, there's also the Grayson-Jockey Club Research Foundation, which IS a 501(c)(3).

Gene Kershner said...

Hey Steve, thanks for adding some color.

And just so you know I'm far from being a tax lawyer, I'm on the audit side and can recite FASB much better than the Code...although I know enough tax to be considered dangerous (in some areas) :)

I actually wish I could see their consolidated financials which would shed some light on the for profit subsidiaries as well the Foundation.

Thanks for reading!

George said...

I certainly don't know much about tax law. However, as far as the nonprofits go it always seemed to me that they are only as good as their leader(s). From what I have seen more often than not more money goes to board members or top execs than to the cause for being. A bit of license to steal, don't you think?
Interesting post.


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