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News & Analysis
Each year I take a look at NHRA’s most recently released tax return to get some insight into what the corporation responsible for the sport is doing financially and how and where it is spending the money generated by membership money, entry fees and ticket sales.
There was good news for president Tom Compton and his management team in 2013. The not-for-profit corporation’s gross revenues for 2013 exceeded the 2012 numbers by approximately $1,000,000. Total revenue for 2012 season was approximately $98 million compared to over $99 million for the 2013 season.
The upside as far as the NHRA’s racers are concerned is that the NHRA increased their total payout in 2013 to racers by more than $600,000, increased their advertising and promotion budget by more than 1.6 million, and increased the amount paid to “current officers, directors, trustees and key employees” by approximately $300,000.
All of Mr. Compton’s management team got pay raises over their 2012 salaries. They were led by Compton himself, who was voted a raise of almost $160,000 over his 2012 salary bringing his total compensation package to $868,713. All of the key management team members, treasurer Peter Clifford and general counsel Linda Louie received significant raises in 2013.
One other number that was impressive was that the corporation increased its cash on hand at the end of the season from approximately $11.7 million in 2012 to over $12.90 in 2013.
By almost any current entertainment industry standards Tom Compton and his management team had a good year in 2013. A quick scan of the return shows that the Compton management team has managed to reduce expenses in many departments compared to the 2012 numbers. This was done was by laying off or firing staff and cutting back on expenses.
This year I thought it would be interesting to not only go back and compare NHRA’s 2013 tax return to their 2012 return but also go back a few years and look at NHRA’s 2004 return.
The first thing that jumped out at me was that despite all of the financial problems this economy has had since 2008 NHRA’s gross income has stayed relatively flat over the past decade. In 2004 the total revenue for the NHRA was close to $102 million. In 2012 total revenue was $98+ million and in 2013 it increased to $99+ million. The average gross revenues over that nine-year period is just over $100,000,000 a year.
I would have to give Mr. Compton and his management team an ‘A’ for that effort, especially in view of how many motorsports series have folded during that period.
Another comparison I wanted to make was the 2004 salaries and revenues for Compton and members of his management team versus their 2013 compensation. I also wanted to compare gross revenues and expenses. In the NHRA tax return there is a line item that showed salaries of employees identified as “Officers, Directors, Trustees, Key Employees and Highest Compensated Employees.” All of Compton’s senior team members and some of those on the board of directors fall under that category. In 2004 the total compensation for the core management team of six men was just over $2 million. That year Tom Compton was paid about $630,000, Peter Clifford just under $350,000, Dallas Gardner $442,000, Wally Parks $417,000, and Graham Light $225,000. Since then Gardner’s salary has been reduced to $100,000 and Mr. Parks passed away. Those two men were making $900,000 between them in 2004.
In 2013 the total compensation for NHRA’s key employees increased from $2 million to $2.3 million and the number of “key” employees has increased too. Compton’s yearly total compensation increased by more than 30 percent between 2004 and 2013, as has the total compensation for almost all of his “key” team members.
Total receipts year after year for the NHRA over the decade have remained very close to $100,000,000, although there has been some improvement. NHRA’s 2004 gross revenue for ticket sales and sponsorships was approximately $67.5 million and for 2013 that number improved to $77.8 million.
The numbers found on the NHRA’s form 990 prove that Tom Compton has done a masterful job of maintaining status quo for the National Hot Rod Association and in some cases dramatically improve its financial well being since taking over the reins from Wally Parks almost two decades ago. Compton has raised the total revenue from sponsorships and ticket sales by almost $10,000,000 since 2004 to $77 million in 2013. He has also raised the monies paid to racers from $22.3 million in 2004 to $24.1 in 2014!
Compton and his management style and team are often vilified by the press, professional racers and some fans, but the tax returns over the last ten years are proof that he has done a very good job of financially stabilizing the NHRA. It would appear, though, that his strengths are maintaining the status quo and getting the NHRA’s financial house in order, but not particularly promotion of the sport.
In 2004 the gross revenue that the NHRA got from membership was $3.8 million. The 2013 tax return show membership revenues to be $3.7 million despite a $10 increase in the cost of a membership from $59 in 2004 to $69 in 2013.
The question that begs answering is how do Tom Compton and his team warrant constant raises over the last decade if the corporation they work for has not shown significant growth, no matter the reason?