In part 4, I ended up taking a look at how USPSA was managing the money generated by Front Sight, an unplanned detour that lead me to the question of whether or not USPSA’s ad sales staff is really doing a good job. Today I want to regather my focus and look at Nationals, the single largest expense on the USPSA tax returns. We’ll post the cost of Nationals and the revenue generated for each year going back to 2008’s tax return.
- 2008 Cost: $545,035; Revenue: $387,020
- 2009 Cost: $666,179; Revenue: $353,721
- 2010 Cost: $651,353; Revenue: $365,433
- 2011 Cost: $712,064; Revenue: $386,595
- 2012 Cost: $588,776; Revenue: $330,671
- 2013 Cost: $576,114; Revenue: $357,440
It is immediately obvious that USPSA loses money each year on the National Championship matches. The average money lost by USPSA over the six year period of Nationals we tracked is approximately $250,000 a year. That is an awful lot of money. Today we have two questions: can USPSA run a profitable National Championship series, and more importantly, should they?
To answer question one, you first have to look into the greatest cost of putting on Nationals: travel. USPSA provides room, lodging, and other travel expenses to the volunteers working the National Championship matches. That’s not cheap; and in fact travel is the single largest line item on USPSA’s expense reporting aside from wages and salaries. The problem that we run into in figuring out where USPSA is spending the money that goes into Nationals though is the same as we had with Front Sight – “Nationals” isn’t a line item expense so we can’t see which buckets are going into it. It’s safe to assume travel is a big part of the cost, but what else? Rental fees for the facility, administrative costs like printing/mailing entry forms, etc; all of those go into the cost of putting on a National Championship.
However, the answer to whether or not USPSA could run a profitable Nationals is simple: yes they could. The delta in 2013 was about $220,000 between costs and revenue. According to the 2013 tax return, 1650 shooters participated in the Nationals that year. That means that the average entry fee was around $200; if USPSA increased the average fee by about $130 and had the same shooter turnout, the matches would approximately break even. Of course, the math isn’t that easy, because any increase in the cost to the shooters is going to mean some people will stay home. Of course, the fee for the 2014 handgun nationals is already $295; would people be willing to pay a higher fee?
The most important question though isn’t “can”, because of course they could make money off nationals. The most important question is “should” USPSA run a profitable nationals? That’s much more complicated, and gets into the ethics of running a 501c3 organization. A for-profit company, regardless of how it’s organized (LLC, S-corp, etc) has a duty to deliver value to its shareholders/owners. A 501c3 doesn’t have that same duty, so one could argue that as long as USPSA is able to meet their obligations to their members and pay their employee’s salaries, they don’t need any particular event to be profitable.
But the question remains, so I’ll put it out to the readers: should USPSA attempt to run the Nationals so that it is a profitable event?