SBJ/January 9-15, 2012/Leagues and Governing Bodies

NHRA expects to sell out race title sponsorships after hits from economy, weather in 2011

The NHRA continued to battle economic headwinds in 2011 and saw a significant decrease in revenue because weather dampened attendance for several races.

The organization worked to keep its costs under control by letting go of a handful of employees in October, said President Tom Compton, who characterized 2011 as a “tough year.”

NHRA President Tom Compton: 2011 was a tough year.
Photo by: GETTY IMAGES
“We’re going to show a loss that’s material,” Compton said. “What we’re doing to prevent that in 2012 is we’re making additional personnel cuts and scrutinizing costs even more.”

Compton said the NHRA is in the midst of renewing some of its biggest sponsors. He expects the organization to sell all of its race title sponsorships and said he’s bullish on attendance in 2012.

“We’ve got momentum on the sponsorship side, and when the weather was good last year, attendance was up,” Compton said. “We’re going to be fine and we’ve made the adjustments we need to on the cost side to deal with anything that comes our way this year.”

The cost-containing efforts undertaken in 2011 came after the organization trimmed expenses by $4.1 million in 2010, according to the association’s most recent tax filing. Such cuts allowed the NHRA to decrease its losses from $643,924 in 2009 to just $12,855 in 2010.

The tax document, which was filed last November, shows that the organization cut expenses by 3.6 percent to $104.4 million in 2010. The move helped keep its operating budget in line with total revenue, which shrank 3.1 percent to $104.3 million during the same period.

The bulk of the reduction in expenses came from two categories described as “other” in the filing. Compton said that the organization’s biggest cuts came from a readjustment of property taxes for its track in Indianapolis, cutting its spending on consulting services, and minor cuts across areas like information technology and insurance.

“Had we not cut those costs, we wouldn’t have been able to break even,” Compton said. “We managed our cash very closely.”

The organization’s biggest expenses included: $24.6 million on advertising and promotions, $24 million on prizes, $14.5 million on salaries and benefits, and $2 million on officer salaries. The NHRA reduced spending on officer salaries by more than $100,000 in 2010, but most officers saw their base compensation increase in 2010. The NHRA said in the filing that “economic conditions improved” enough by May 2010 that the organization reinstated senior management’s base compensation to pre-2009 levels. In 2009, senior managers’ salaries were cut 10 percent because of the recession.

Compton saw his total compensation increase from $701,257 in 2009 to $712,189 in 2010. Total compensation for Peter Clifford, executive vice president and general manager, increased from $382,983 to $414,397 over the same period, and compensation for Gary Darcy, senior vice president of sales and marketing, increased from $379,153 to $380,527.

Total NHRA revenue fell for the second consecutive year, but the decreases between 2009 and 2010 were not as severe as the previous year. The organization’s ticket revenue decreased 4 percent to $41.9 million, sponsorship revenue decreased 3 percent to $39.6 million and royalties and concessions decreased 10 percent to $5.6 million. The only significant area that increased was the royalty and licensing sector, which rose 1 percent to $12 million.

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