Analyzing the NHRA 2004 Tax Return
By Jeff Burk
s is our custom here at DRO, we once again have secured the NHRA’s tax returns. As a not-for-profit organization, their tax return information must be available to public access if requested.
If the NHRA were a publicly held company and you were a stockholder, you’d have to be very pleased with most of the numbers contained in the NHRA’s 2004 tax form.
The number that jumps out at you is the total gross receipts for the 2004 season. That number is $103,361,022. Compare that with the total gross receipts for the company of $99,565,634 in 2003 and $97,247,454 in 2002 and the only conclusion anyone can draw is that Tom Compton and his management team are doing their job quite nicely.
However, there are a few numbers that, depending where your political views and passions fall, may give you a little heartburn.
President Tom Compton’s base pay of $594,352 was actually slightly less than his 2003 base. He didn’t get a pay raise although, based upon the financials of the company, he deserves one. Dallas Gardner actually took about a $50,000 reduction. Interestingly, according to the tax return Mr. Gardner’s compensation of $442,452 as the Chairman of the Board is based upon one hour of work per week. Graham Light was added to the board with a salary of $203,930.
According to line 18 of the first page, the company ended the year with cash reserves of $3,559,124 up from $1,269,936 in 2003 and about $600,000 in 2002. Again, if NHRA were a public company, the management team would expect and probably get a bonus based upon these numbers. Interestingly, the total salaries (other than the board’s) was right at $12,000,000 which, with the number of cuts reported in the support staff, i.e. track workers, tech people, and other areas, would lead you to conclude that the NHRA added staff to the management team.
The gross receipts for spectator admission stayed almost level. In 2003 the NHRA grossed about $40.8 million dollars in ticket sales and in 2004 the number was $41.3 million, which is less than a one percent increase in ticket revenue. Both of those numbers are below what was declared on their 2002 return. That number has to make you wonder about claims of increased attendance, especially in light of the fact that ticket prices in some areas went up in 2004.
Another number that jumped out was the membership numbers. In 2002 the NHRA took in more than $4,000,000 in membership dues and assessments (we think the assessments means the money from fining racers such as Whit Bazemore, Paul Romine, and the oildowns fund). In 2003 that number changed just marginally but for 2004 dropped to about $3.8 million. On the other hand NHRA’s cost to produce television went from just over $7.6 million in 2003 to $8.8 million in 2004.
The main thing you can conclude without much argument by examining the NHRA’s latest tax return and comparing it to those from 2002 and 2003 is that NHRA drag racing isn’t actually growing dramatically under the current management. The numbers absolutely bear that out.
You also have to conclude that Tom Compton and his management team have done an excellent job of turning the NHRA into a very well run, profitable company, and are doing exactly what they are trained for: Run a corporation and make it profitable.
Are they succeeding in making NHRA drag racing bigger, better, and more attractive to fans? Not according to their tax return numbers.