NHRA roles for bankruptcy
 

Just got a text. From a fellow racer
NHRA. Files for bankruptcy
Is it true. Can’t share text

Re: NHRA roles for bankruptcy
 

If they found that article off of FB than that article stated:
If NHRA was to file for bankruptcy, such n such would happen.

IF being the main word.

Re: NHRA roles for bankruptcy
 

Thanks Pete. Fake News. As usual

Re: NHRA roles for bankruptcy
 

Out of Curiosity, how does a nonprofit file for bankruptcy? Wouldn't they just close.

Re: NHRA roles for bankruptcy
 

They would have to liquidate all of their holdings and pay outstanding debts. The rest of the monies would be distributed among the shareholders (members).
The only outstanding debts that I could think of would be the B.O.D.s salaries, property taxes and insurance. If the NHRA isn't racing then why hasn't the B.O.D. taken voluntary lay-offs along with pay reductions?

Re: NHRA roles for bankruptcy
 

Putting out a fuzzy statement can be a precursor of things to come. And NHRA was/is still interested in buying Maple Grove. Without a sanctioning body, Stock Eliminator has a new mystique when all the cars line up on a back road and race. Can a wheelstanding SE car still wheelie on a low/no prep crowned asphalt road? Will 2021 be the new 1950's-60's?

Re: NHRA roles for bankruptcy
 

Don't tease! I'm ready!

Re: NHRA roles for bankruptcy
 

Excess funds would not go to members. Per by-laws and state law the funds would have to go to another tax-exempt organization.

Bankruptcy isn’t always liquidation/closure. There are reorganizational bankruptcies, which allow an organization to restructure debt under bankruptcy protection.

Re: NHRA roles for bankruptcy
 

Does NHRA actually pay any property taxes?

Re: NHRA roles for bankruptcy
 

Perhaps Julie can answer but the property they own in Pomona (i.e. Museum) would be more valuable than others such as Atlanta, Indy and Gainesville but who knows what their debt is. Possibly just all the equipment they own (or lease)? And don’t they still have revenue in the form of membership dues and sanctioning fees from all the tracks? Think their largest liabilities would be BOD salaries and buyouts. Don’t think they will declare Chapter 11 or any other kind of bankruptcy but if they did tracks could still gain sanction via IHRA or ??. If they did the greatest loss would be for all of their great employees. The associations would thrive unless their respective members acted contrary to the best interest of the group. There’s a whole lot of class (and comp) cars that are not going away anytime soon. COVID will not kill Drag Racing, we’re the only ones who can do that.

Re: NHRA roles for bankruptcy
 

The museum is a separate tax-exempt organization.

NHRA’s tax returns are public. The returns include a balance sheet which shows no long-term debt, i.e. mortgages. The organization owns real property, pays property taxes like the rest of us.

Re: NHRA roles for bankruptcy
 

Thanks Julie! Hope the races can swing west again this year and Jared can make it back out. Meanwhile you know your old car is in very good hands. Would love to run Vegas this year myself. Bet the Irvings have a race car or three I could run LOL.

Re: NHRA roles for bankruptcy
 

I would be surprised if NHRA filed for any chapter of bankruptcy; however, several years ago there was chatter here in NC that Bruton Smith would be interested in owning the NHRA but not at what they believed it was worth then. Given the current state of the sanctioned racing entertainment business I doubt the market value has gone up.

Re: NHRA roles for bankruptcy
 

The Facebook post last night was BS. The person posted it and got his chops busted. Later he posted a correction What if NHRA had yada yada yada.
It did get a lot of attention though.

Re: NHRA roles for bankruptcy
 

Let's use some round numbers of the Covid NHRA:

***Income or income avoidance ***

40,000 licensed drivers at $150/yr. = $6,000,000 yr.

80,000 members (40,000 are lic. drivers) 40,000 x $70/yr. = $2,800,000 yr.

So far, they didn't have to do anything to get the $8.8M. My guess is the National Dragster pays for itself with the advertising, so that may be a wash.

Fees from member tracks (I have no idea what the franchise fee is)???

No $15M payout to Fox to broadcast National Events that only 400,000 people watch.

No huge payouts to TF and FC, and modest payouts to PS. The combined payouts in these classes far exceed an "spectator" income at the majority of races.




******** Expenses *********

Salaries of top brass and board of directors (see tax returns) $5,000,000
Salaries of administrative staff at national headquarters. ?
Salaries of Division Directors, division admin., tech inspectors ?

Rent, utilities, insurance, upkeep at National and Division offices ?
Rent, utilities, insurance, upkeep of tracks owned by NHRA ?

Taxes, legal fees, accounting fees,.... ?

Misc other expenses ?


No payouts in the sportsman classes (I suspect that NHRA makes $$ off the sportsman classes and takes in (entry fee plus crew passes) much more than they pay out, so this may be considered lost income.



Can anyone fill in the blanks on some of the expenses?

Re: NHRA roles for bankruptcy
 

We would love to have you come out our friend and race with
use absolutely any time you like!

There is a rumor that there will be THREE Divisionals at LVMS
AND some other surprises (Stay Tuned!).

Be Well Jim.

Re: NHRA roles for bankruptcy
 

Now THAT'S some crazy talk.

Re: NHRA roles for bankruptcy
 

Ya know, I've always said, "I'm crazy, not stupid".

Re: NHRA roles for bankruptcy
 

If the NHRA were to file for bankruptcy would you guys think that was a good or bad thing.

Re: NHRA roles for bankruptcy
 

Bankruptcy may seem like a sign of trouble, but it is only to some extent in most cases. Bankruptcy is very often a " financial maneuver" in order to regroup and move forward again. Most people even come back stronger than before with a legal regrouping of their finances. Bankruptcy judges and lawyers can make it very comfortable for their clients in most cases. In fact nowadays it carries no shame like it once did, it's considered a way of business.

Re: NHRA roles for bankruptcy
 

In the early 1980`s, I first heard of a bankruptcy "strategy". The story went like this: max out your lines of credit, whatever anybody would give you, take it. There never was any intention of paying the bills.They payed back pennies on the dollar, if at all. Terrible deal for honest vendors. Not saying NHRA would do anything like that, but many people did.
MJ

Re: NHRA roles for bankruptcy
 

I know you are not suggesting that they are filing bankruptcy or even considering it, but I have a general question for you in this regards. You have researched that they have no long term debt, mortgages, etc. My question is why would bankruptcy even be on the table at all?

Unless somehow a company, individual, or organization would have liabilities or obligations exceeding assets or capital to cover then nothing should force (no pun intended) them to choose bankruptcy as an option.

Re: NHRA roles for bankruptcy
 

Kyle, you could have assets that are worth more than your liabilities but still can file bankruptcy, especially if the assets are hard to sell, would take a lot of time, etc. For example, you could have a building but little cash to operate with, have creditors and employees breathing down your back. In conditions like we are experiencing now, cash is necessary to get businesses through this pandemic downturn and closures. Bankruptcy basically provides debtors with significant power to rearrange their business affairs while giving creditors a clear plan as to how they will get paid. If there are lawsuit issues oftentimes the defendant will file bankruptcy, get that debt in the entire scheme of the finances.

Re: NHRA roles for bankruptcy
 

Thank you for responding and I should have narrowed it down to be more specific for the NHRA. I do understand about the lawsuit issues and that is why I somewhat referenced it with my "obligations" comment. I wrote that thinking about how Texaco filed bankruptcy many years ago to protect them from the lawsuit that Pennzoil won when Texaco gave Getty a get out of jail free card to sell to them instead of Pennzoil. I think Pennzoil was awarded something like $10 billion which made Joe Jamail famous (and rich). I digress.

Specifically on the NHRA it appears that compensation for upper management and the board of directors are their greatest ongoing liability. Why would the board want to put their organization into potential receivership or at the mercy of a bankruptcy judge that would determine their ongoing compensation as they are working through a reorganization? Their compensation would appear to be the first thing at risk of significant reductions by a judge.

Re: NHRA roles for bankruptcy
 

Well I don’t think NHRA is filing bankruptcy, only rumors? Compensation is looked at in bankruptcy proceedings and adjusted if they are out-of-line for a similar sized business. Though some may think upper management of NHRA are over-compensated, when you compare to other organizations with similar revenues, I don’t think the compensation is out of the ordinary. I deal with businesses, see many W-2’s of CEO’s, etc. High 6 digits is the norm.

Re: NHRA roles for bankruptcy
 

I don't think they are either, but I am curious if the other businesses that you view with highly compensated CEOs, CFOs, COOs,
VPs, Boards, etc....how they compare to the compensation ratio of the corresponding NHRA executives to revenues versus other ancillary liabilities.

Re: NHRA roles for bankruptcy
 

Maybe this would clarify where I am going with the compensation ratios a little better with the NHRA. It is fairly well known that they don't pay the track help much at all and that they seem to produce VPs like weeds. If you look at their most recent available tax returns they had been running at about a 15% compensation to revenue ratio.

But the last couple of years that are available to review they have increased that to about 20% without a material change in revenue. I would venture to guess that the 2018 and 2019 filings would reflect a percentage of greater than 20%. It is information like this along with the reduction in tech, payouts, increased entries, and other things that make the upper execs at the NHRA appear to be lining their pockets at the expense of others such as the racers.

Re: NHRA roles for bankruptcy
 

And of course, everyone believes to other makes too much money. I've been away for a while, but a $30 per hour employee actually costs the company around $50 when figuring the costs for workers comp, social security, retirement, 401 matching, insurancex2, life insurance, osha's compliant.
So, ya want to start a company, or bitch about one.