While the story that the fairgrounds’ board is considering the sale of their Gaithersburg property is not new, Saturday’s Washington Post has a story by Lori Aratani which purports to give a bit more information on the issue. Unfortunately, as typical for the Post, the article just leaves you wondering what is really going on.
Proceeds from the potential sale of the 62-acre site could go into an endowment that would support the continuation of the fair, which drew a record 220,000 visitors last summer.
Admission to the fair last year was $7 for an adult, $3 for kids from 2 to 7, free under 2. However there are all manner of discounts and promotions available. For example, I think that 4H exhibitors and their families get in free, and there’s children’s and seniors’ days with free admission for some people. So say that on average, somewhere around half, or 110,000, of the visitors paid $7 to get in; that would be $770,000 in revenue just from admission. At the same time, there are additional charges for events such as the demolition derby and the tractor pull; these events can draw thousands of people at $7 to $12 per person. Also, parking is $5 per car, and the various vendors have to pay for their space. It is hard to believe that — assuming the 220,000 attendance figure is correct — annual fair revenues don’t at least begin to approach $1 million.
Martin Svrcek, executive director of the Montgomery County Agricultural Center, said the past two years were the best in fair history. With last year’s record crowd, the fair made about $50,000 profit. But that’s not enough to offset the cost of air conditioning or heating buildings and powering rides. Compounding the problem is that many of the original buildings have never been upgraded, Svrcek said.
The cost of running the fair has increased from $4,600 a day in 2002 to $5,300 a day last year, he said.
So now things seem to be screwy. First off, the $50,000 “profit” isn’t a profit if it doesn’t cover operating expenses. Second, the mention of powering rides raises the question of how the contract with the carnival vendor works. While admission to the carnival area is of course included in the fair admission, there is a separate charge for the rides, food, and games within the carnival. Doesn’t the carnival vendor have to give the fair a portion of their revenues? Is the fair saying that this share of revenues isn’t enough to provide power for the rides?
The figure cited as the “cost of running the fair” also makes no sense — the fair runs for nine days, and $5,300 per day thus comes out to $47,700. Given close to a million dollars in revenues, this seems a drop in the bucket, and in fact a tiny amount given the level of effort that must be entailed for running an operation serving tens of thousands of people per day. Perhaps what Mr Svrcek was saying was that the annual cost of running the fairgrounds is $5,300 per day; this would add up to close to $2 million annually, and sort of make sense. But then, they have all manner of other activities throughout the year at the fairgrounds, which also bring in revenues. As I said, the Post’s story just leaves you wondering what is really going on.
Update: Fortunately, the Fairgrounds (”Montgomery County Agricultural Center, Inc.”) is a 501(c)(3) Public Charity, and thus their income taxes (Form 990) are public. The latest filing available on Guidestar is for tax year 2006. In that year they reported total revenues of $2,417,713 and total expenses of $1,913,512. Net assets (including land and buildings) and fund balances at the end of the year were $3,323,140. Clearly this is not directly connected to the actual market value of their assets, as, according to property tax records, the assessed value of their land (two lots, tax accounts 09-00820328 and 09-00840840) alone is about $14.9 million.
I note that $1,913,512 divided by 365 is $5,242.50, which would then be the expenses per day to run the fairgrounds, thus matching my guess as to what the Post might have been trying to say. This figure includes the costs to run all the activities through the year, including the fair. I also note that their “profit”, or excess of revenues over expenses for the year 2006 amounted to about a half a million dollars.
Revenues broke down this way:
Fair revenue: $1,015,549 plus $5,744 “unrelated”.
Use of facilities: $977,457
Dinners and Meetings: $201,048
Interest on savings & temporary cash investments: $46,800
Direct public support: $51,619
Government contributions: $61,500
Other income: $57,996
Expenses broke down this way:
Program activities: $934,461
Management and general: $176,992
Fundraising: $7,375
Compensation of officers: $81,094
Salaries and wages: $256,719
Employee benefits & payroll taxes: $61,777
Equipment rental & maintenance: $153,724
Depreciation, depletion, etc.: $216,335
Other: $25,035
Anyway I think that this may shed a bit of light on the Fairgrounds’ financial situation, where the Post’s approach of throwing out a few random, poorly identified numbers just creates confusion.