[ SHOWGSD-L ] AKC Chairman's Report - September 2007
- From: Peggy <pmick12@xxxxxxxxxxx>
- To: Showgsd-l <showgsd-l@xxxxxxxxxxxxx>
- Date: Tue, 11 Sep 2007 16:31:43 -0400
shared by Peggy
Chairman's Report
September 2007
It is sometimes beneficial in both our personal and our professional
lives to step back and take a longer perspective of what we have
achieved and what we seek. Our natural inclination is to focus on just
today and tomorrow.
Today I want to share with you some longer range evaluation of just how
AKC is doing and more specifically, how we are doing financially.
In the year 1995 our annual report recorded a total income, both
realized and unrealized, of $32.4 million dollars. Our 2006 figure was
$70 million dollars. In this period we have never reported a net annual
loss.
We have a legal and fiduciary duty to maintain a pension fund sufficient
to meet our employees' retirement rights. While many U.S. corporations,
both profit and non-profit, are facing serious deficits in their
pensions funds, I am proud to say that our AKC pension fund is well over
100% funded.
For many years AKC produced very adequate income to fund its basic
programs; however, we failed to prepare for the uncertainties of the
future. In 1995 we had no Operating Reserve although our auditors
advised that an organization such as ours should have an operating
reserve of at least fifty percent of its annual budget. Today, in 2007,
we have an operating reserve of $32 million dollars.
As the nature of our revenue has shifted, it becomes increasingly clear
that it is wise for us to develop an endowment reserve. In 1995 we had
no endowment reserve. Today our endowment reserve stands at $22 million
dollars.
In the past eleven years we have seen a modernization of our
administration and our financial operations. There has been major
investment in the IT capability of our organization. The AKC of today is
far different from the "Mom and Pop" operations of the AKC of years past.
In this eleven-year period it is useful to note the new and improved
programs and expenditures:
1. We created the AKC Canine Health Foundation and have contributed
almost $16 million to it.
2. We have contributed $1.7 million to the AKC Museum of the Dog.
3. Through AKC/CAR, we have funded grants totaling $1.5 million for
Canine Support & Relief.
4. We have increased our PR advertising almost $10 million.
5. We have almost doubled our capital expenditures for information
technology resulting in a 20% reduction of headcount.
6. Online registration of dogs now has reached over 60% of litter
registrations.
7. We have added a full-time archivist and have created a Breeders
Newsletter.
8. AKC and AKC/CAR have contributed $400,000 to the Parent Club
conferences.
9. The AKC/Eukanuba National Championship was created and is now
considered among the three most prestigious dog shows in the world.
Forty percent of our entries are bred-by-exhibitor.
10. AKC now is considered a "first call" for disaster relief for dogs.
11. We have awarded hundreds of thousands of dollars in scholarships.
12. We have created a "Breeder of the Year" program and have
established significant online breeder services.
These only highlight what is a very long list of AKC achievements. We
have consciously strived to increase the quality and scope of our sport,
and to do so in a financially responsible manner.
I have spoken thus far of AKC's record of progress. We are proud of its
financial stability and have every reason to believe that under
enlightened management it will continue.
However as useful as it is to evaluate an organization in grand terms,
it is also necessary to cast a discerning eye on the distinct parts of
our club which help make up the whole. In this regard I have two areas
of caution.
We are all aware of the serious decline in AKC registrations from 1990
to today. Serious efforts have been made, and must continue to be made,
to address this problem. While some of the decline surely can be
attributed to the development of more competitive registries, the full
explanation is yet to be understood. Business and social patterns change
and we must be aware of those changes and develop a positive response.
The revenue experience of 1990 is not that of 2007 and we can expect
that there will be a changing revenue experience ten years from now.
The second area of my concern is the gap which continues in the cost of
our Event Department and the income which it generates. While we have
never expected this department to generate excess income, I am concerned
that it continues to cost so much.
The fees that are assessed in this department impact clubs and
exhibitors alike. Yet, when analyzed over the years and compared with
annual inflation figures, we find that these fees have failed to keep
up. Most employees of an organization would be very unhappy if their
annual wages did not at least keep up with inflation. The same standard
must be applied to company costs.
Part of the shift in revenue has required that those who participate in
our sport share a larger portion of its cost. The days when 100% of the
cost of our sport was paid by others are over. This does not mean that
your board and management will not continue to vigorously seek new
revenues to support AKC. It does mean that those of us who involve
ourselves in AKC activities will have a greater responsibility for "pay
to play."
In the past eleven years we have met some very serious challenges and it
is likely that in the next eleven years we will face unknown challenges.
We may be required to spend large sums of money to meet those
challenges. Our revenue sources may change even more dramatically than
they have since 1995.
While the future is unknown, our commitment to facing it squarely and
creatively is known. I am convinced that your board and your management
are making decisions today which will bear the scrutiny of time and will
ensure that the AKC of tomorrow will be as vigorous and dynamic as it is
today.
Sincerely,
Ronald H. Menaker
Chairman
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