The foregoing financial data stand alone as ?facts? as asserted by NHRA to the IRS. However, some analysis leads to some interesting conclusions. One is that (assuming 2005 is a typical year) NHRA spends about as much as it takes in during the year -- $100m or so. They pay out prize money that represents about 20% of their annual revenue. If one can conclude that the remainder of their expenses is reasonable or justifiable, the implication is that they are paying out the limit of what they can afford without increasing their revenues somehow. The compensation of their six officers/directors totals $2m which, while a lot of money, represents only 2% of their annual expenses. The expense listing also does not reveal any overt diversion of expenses to ?perks?. (You can view the full 501c report for the gory expense details if you need to be convinced.)

On the face of it, it would appear that the NHRA does a pretty fair job of efficiently directing revenues toward meeting its non-profit objectives, which are stated in the 501c filing as ?.?to educate the general public in automotive safety???.. to establish rules that govern competition ???. To help perpetuate the sport and maintain good organization ????.

Regarding the ?worth? of the organization, that would be the net asset value of $30m plus whatever goodwill NHRA can negotiate from a buyer. Whatever proceeds come from selling any part of the organization (such as the rights to the Powerade series and the aura of ?NHRA?, for example) would accrue to the organization, to be used as the directors see fit to further the mission of the organization. Typically, in an organization that started out as NHRA did, the control of the board of directors remains with the board of directors. That is, any addition to or replacement of board members is decided by the board itself, not the members at large. Perhaps someone else can comment on the authority held by the NHRA board if they have knowledge. If the board is self-perpetuating, then the members have only two choices if they don?t like the direction taken by the board: continue as members, or walk away. In this sense, even though racers have contributed to the success of NHRA for decades, they have no direct stake in the value of the organization and no direct say in how it is run.

As revealing as the financial information is about how NHRA conducts its business, it is a snapshot of the past, not the future. At that, it is unclear how either the revenues or expenses might be attributed to either the pro racers or the sportsmen. It is also unclear how things might change in future when pro revenues go away, but so does their prize money and the operating costs of Powerade series races. My guess is that even NHRA doesn?t have a perfectly clear picture of what ?non-profit NHRA? will look like when the dust settles. However, there seems to be good potential for them to return to their roots and reinterpret their objectives ( ????.. perpetuate the sport ??.?) in favor of class racers and others at the amateur level. I think it would be shortsighted to make the assumption at this point that NHRA intends anything else (and, in particular, that it intends only to enrich a small number of individuals.) I also think this is a poor time to be demanding to be accommodated, rather than asking NHRA how racers can work with the organization to build a future that will indeed ?perpetuate the sport?.

Food for thought.

Thanks for finding that Poverty Bay.
Interesting huh Lee ? The non-existent financial statement right before our eyes, just as you asked.
I hadn't had time to go find it, but I think I've glanced at the 2006 statement. Not sure if I saw an actual statement, but the figures actually looked better for 2006. Less debt. A little more profit.

There is a lot to be read in to this statement. Like OTHER...13 million ? Thats a lot of other.
There is a lot that can be looked at on that statement, but it doesn't really matter.
I believe that most of the overhead goes with the pro's. Advertising, 7 Mil, the massive Powerade series, tons of salary/wages expense there. The 9 Mil in TV production. Probably more than half of salary, wages should go.
I believe the sportsman side is the streamlined side. There will be no more track expenses, they own none. The insurance should go down.
There must be a huge reduction in labor, both blue and white collar without Powerade.
I believe the sportsman side will be on a very sound financial footing.
And I am glad.

Poverty, you might note that in most of my posts requesting some benefits for the people ( racers ) that built the NHRA in to what it is today, I have numerous times said we should work for the MUTUAL benefit of both sides. ( management and racers ) .
I have always said that there should be a partnership for the betterment of both. But I believe at this time of a very good financial windfall for the New NHRA ( make no mistake, this is a financial windfall ), that it is the right time for the NHRA to show appreciation to the people that built this empire...the racers.
We have in the past been sqeezed to death monitarily, and one needs to read no farther than Ray V's earlier post of the treatment we have taken on the chin for years.
IF the numbers can add up for management, ( with 4 to 10 Mil per year in interest alone I think things will work out ) it would be the decent thing to do to restructure some of our racing environment.


Mike ( madness & ) Mayhem

Mike, I know both you and Lee and I think I can see where you're both coming from. Lee, a young Guy, grew up watching his Dad and others doing this and would sell his Momma's Wedding dress just to be reassured that he'll have half a chance to be racing at the type of Events we have today when he's your age (not that you're old). As we get older some of us see things in a different light and that light shines differently depending on our personel finances and goals. Some approch this as a business , others as a picknick with a bunch of noisey cars and old friends. For some it's about the Fast Carshow side of it for others it's about putting together some POS and beating that $5000 paint job in the other lane. We all need a place. Way back when it was the sanction bodies that inticed us to travel to distant places to pursue the big purses, but once the audience was captured (us) the purses didn't keep up with the entry fees and other expences, but we are hooked. So where am I going with this? I don't know BUT Quit you darn bickering, who gives a hoot what Compton or anyone else in Glendora does with the 100 m large, we ain't getting any of it, don't want it if I didn't work for it anyway. Put your heads together and do someting constructive so when this all pans out we can share information and make informed decissions on what actions we can take and what options are available. The path of the last few years hasn't been all that good, can it get better? I sure hope so, Nicole gets her licence next year and wants my racecar. I'd sure enjoy crewing for her.

I would think their property would be worth more than 53 million

In Topeka, I was talking to a full time NHRA employee and he was saying the same thing. The four properties,glendora and the film arhives , he believed would be worth more than the price they paid.

Greg

Why not list some of the rules and regulations surrounding a 501c organization?

Election of board of directors and officers:

Voting rights of members:

Financial expendeture vs. income disclosure to members:

Profits are invested for the betterment of the member's experience in an association:

The definition of an association:

Stock options for members:

What rights and benifits are provided to a dues paying member:

Funny how alot of this stuff in legal terminology has the word member or participant attached.

I guess the bottom line to me is that I don't want any associations money. I want that money spent or invested in a way that will benifit the members of that association.

SS Engine Guy....Nice post! Some may not like it because you dont use your real name!!!

Tim, On paper it is a legal, because they are only selling the "assets" of the company.

Larry, Very true, and I can understand where everyone is coming from. We dont deserve a penny of the money because we didnt do much to earn that penny. Which car are you gonna stick Nicole in? How bout the Mustang? I might even make a venture down the H this year if we have enough arse to be competetive heads up.

Mike, You probably misread my old post. I didn't say the statements didnt exist, what I stated was that an Income Statement does not. When you get down to it the 501c does not generate a "profit", but they can take the revenues and invest them to create more funds for the organization. There is no one individual that will pocket the money from the transaction, but the organization can use it to better itself. And that is exactly what I would like to see, a more solid foundation within NHRA before we start worrying about round money. Round money is nice, but if I wanted to make money I can do that at my local track. Made a decent profit racing in street at Motor Mile 2 years ago when we didnt have a car put together.

So basically all I am saying is that you need to have your facts straight before you start getting into it. And what is so wrong about wanting the rules to be enforced correctly, and the classes more equal before wanting more round money. End the end it is supposed to be fun. If it wasn't fun I would just go fishing instead.

Lee Norton
I/PS '02 Firebird 231 V6

By Fed law, a 501c organization is ruled by a board of directors. The members of the board may be compensated for their work for the organization, but they cannot participate in any "profit sharing", i.e. their compensation is not related to the financial success of the organization. The 501c organizations fall under the general category of "corporation". The two major differences between a 501c and C-corps, sub-S corps or LLCs are (1) no profit and (2) in the original charter the intended purpose of the corp has to be defined which limits the activity of the organization to achieve the defined purpose.

The way that electrical co-ops etc. get by with the distribution of revenues is that their charter is to provide the cheapest form of electrical service to the members they service and to distribute excess operating funds to the members on a per annum basis. The members pay in a service fee and the organization operates on that revenue (plus any it earns from brokering or producing excess product). At the end of the year, the excess funds are redistributed to get back to a no profit status. Since NHRA does not have any statement in its charter to distrubute excess funds back to its membership, such ideas or claims are not founded. Its charter states that any excess funds are to be reinvested in the promotion of drag racing and hot rodding activities. That is exactly what they have stated they will do with the funds of this transaction. You may have opinions about their decisions to do that, but all the conspiracy theories are but evidence that our culture has educated the general public about human behavior from movies and television dramas. This is not a soap opera, guys. Simply ask the questions, follow the choices the board of directors makes and make your opinions known to them.

One area that was not clarified,but that should be considered is that if NHRA is to be the sanctioning organization and will still run the races that NHRA Pro Racing will produce, surely they will be compensated for this service.

Lee, I think you are using a play on words now. I never used the term income statement, I refered to >>financial statement <<. As grown ups and for this conversation I had hoped we all could understand my point was that the NHRA must, by law, provide a financial statement annually.
You mistakenly thought otherwise.

For Lee and for Dwight I am cut and pasting a portion off of the official IRS website on 501c's :

..........No part of the net earnings of the corporation shall inure to the benefit of, or be distributable to its members, trustees, officers, or other private persons, except that the corporation shall be authorized and empowered to pay reasonable compensation for services rendered and to make payments and distributions in furtherance of the purposes set forth in Article Third hereof................

Note the term NET EARNINGS. Without using a play on words again, the term net earnings = profit. Hence....NET

From you last post :
....>>When you get down to it the 501c does not generate a profit, but they can take the revenues and invest them to create more funds for the organization. <<...>>create more funds ?<<..... Is that not profit ? Without using a play on words of course. Also remember that the reason the NHRA , among others are tax exempt, is that they don't have to pay tax on their....>>profits<<. Or, >>net earnings<< whichever you prefer.

Also don't misread the sentence that the earnings cannot be distributed to it's members. It says they can pay reasonable compensation for services rendered............

That is all most of us are asking for. REASONABLE compensation. I don't want a check cut for a portion of the 100 Mil. If anyone had that coming it would be the racers long before me.
REASONABLE compensation is what we hope to gain here. If the NHRA can afford it of course.

And p.s., I am ecstatic that the NHRA is on sound financial footings at this time. I am thrilled of about the 100 Mil deal. I would never ask for more reasonable compensation if it was otherwise. I hope they make millions more, I really do. REASONABLE compensation would be great though.

Mike ( madness & ) Mayhem