In a total USIA operation that is in the $5 million-plus range, the trade show/conventions component represents 64 percent of the revenue budget, and the Las Vegas shows alone, 54 percent of the total. It is a dominating factor; and since that component represents only 37 percent of the total expenses, a very “profitable” one. (In understanding the big picture, accept the various area trade shows and conventions as, essentially a “wash.”)
This dominating factor can skew the overall picture and influence the direction of the association. In the new way of looking at USIA’s finances, the trade show/convention functions are broken out and shown separately. From now on USIA will be thought of as having, essentially, three major operational areas: 1) basic, or core association functions (education, communications, ASF, technical services etc.) meaning everything USIA does except for, 2) trade shows/conventions, which is now considered as totally stand-alone; and 3) external marketing, which will largely be financed by trade show revenues in No. 2 above.
The key to this breakout is that the core functions are seen as the very reason-for-being of the association which, it is felt, must be, but currently is not, self sufficient. In other words, the association exists to serve its members with basic, core services, and these must be funded on a pay-as-you-go basis and not be dependent on the fortunes of the Las Vegas shows. As of fiscal 1992, USIA’s Tom Ptach was pointing to an operational shortfall of $587,313 on this basis. The plan is to “make up half of the shortfall in dues and the balance in other revenue generating programs and continued cost-cutting,” says the letter to area members.
Looking at the financial picture without the trade show/convention element and without the potentially volatile external marketing component, shows four principal sources of revenue: 1) dues from all seven categories of membership; 2) royalties from the Gold Pass program; 3) royalties from various sources, such as the Federal Express program; 4) all other, which includes sales of educational materials and services, revenue from use of USIA’s data base, etc.
In order to achieve this financial self-sufficiency for the association’s core function, three main sources of revenue enhancement (the politically correct way of saying “more money”) are dues increase from areas, a doubling of Federal Express royalties to $200,000 and an increase in royalty (currently $112,500) from the Gold Pass program. (See box.)
The dues increase on the area side is not only to help balance the “core” budget, but also to meet the obligation of “dues parity.” When NSAA and USIA merged, there was an understanding that disparate dues would be brought into parity so that the respective memberships would each contribute on an equitable basis toward the association. Dues on the old SIA side were set considerably higher than on the area side. Furthermore, it was clear that in demand for, and delivery of, membership services, area members were costing a great deal more than their SIA brethren. In the turmoil of consolidation, recession and war, the time never seemed appropriate to bring area dues into line, but today the leadership is determined to make the parity move.
(More than one person has suggested that parity between two unequal dues contributors could be achieved by reduction as well as by increase, but an exercise in zero-base budgeting convinced the staff and board that funding levels could not be reduced.)
The proposed dues increase was not in its final form at press time, due to incomplete negotiations with the U.S. Ski Team as to USIA’s royalty on Gold Pass revenues. However, regular ski area members could expect something like: $200 plus a graduated percentage of gross lift revenue (GLR) of .13 percent up to $5 million, plus .1 percent between $5 and $7.5 million, plus .05 percent of all GLR over $7.5 million. The formula is designed to limit the increase of any single area to $2,950
On the ski area supplier side, associate members will be facing increases ranging from $300 for the lowest three categories of dues, to $1,800 for those with ski industry gross sales of $2.5 million and over. (This is a modification of the original plan to impose an across-the-board doubling of association member dues.)
The dues increases for the area side are budgeted to yield an increase of 38 percent, though percentages for individual members will obviously vary from this.
Dues in USIA are set by a vote of the board, which next meets following the Orlando convention. However, it could also be voted on in a telephone ballot. The association is asking for member input based on notification of each member area of its increase.
That ski areas have not had a dues increase since the mid-eighties makes one clearly justifiable now in the eyes of most people. But “justifiable” may be a relative term, because conditions have changed since the days of NSAA in the mid-eighties.
Many areas are now paying higher dues to, and expecting more from, their various regional and state associations, and the discussions are likely to turn more on questions of perceived value of the benefits of USIA membership — the services member areas are prepared to pay for today, and at what level of funding, from a national trade association.
But USIA’s president, David Ingemie, counters that it is not a question of “perceived” values at all, but of real value received — that USIA is providing indispensable services, which members are using, and which can only be provided by a national organization, no matter how well organized and skillful a regional association might be. He adds that despite current budget constraints, those services are steadily being increased.
A Closer Look At The Proposed New Dues Structure For Ski Area Members
Dues for ski area members in the past have been on a percentage of Gross Life Revenues (GLR), with minimum dues set at $200. Up to $5 million of GLR, the percentage was .1 percent. On GLR above $5 million, areas paid an additional .05 percent. Thus, for instance, the smaller area with $75,000 in GLR paid minimum dues of $200; an area with GLR of $230,000 paid $230 in dues: while an area with GLR of $6 million paid $5,500 (.1 percent of $5 million plus .05 percent of $1 million).
Under that formula, USIA’s 1990-91 Annual Report shows 134 members (37 percent) paying minimum dues, representing GLRs of $200,000 or under. The breakdown by gross showed as follows:
| GLR | Percent |
|---|---|
| $200,000 and under | 37% |
| $200,000 to $1 million | 29 |
| $1 million to $2 million | 12 |
| $2 million to $3 million | 7 |
| Over $3 million | 15 |
It generated $550,000 in dues in 1990-91.
For this coming year, the proposed dues would start with a $200 base which everyone pays, on top of which is a scale of payments, again based on GLR:
- .13 percent of GLR to $5 million; plus
- .1 percent of GLR from $5 million to $7.5 million; plus
- .05 percent of GLR over $7.5 million.
Following are some sample gross lift revenue examples and how the old and proposed new dues structures compare in the dues generated.
| GLR ($) | Old Dues | New Dues | $ Change | % Change |
|---|---|---|---|---|
| 50,000 | 200 | 265 | 65 | 33 |
| 80,000 | 200 | 304 | 104 | 52 |
| 120,000 | 200 | 356 | 156 | 78 |
| 150,000 | 200 | 395 | 195 | 97 |
| 200,000 | 200 | 460 | 260 | 130 |
| 220,000 | 220 | 486 | 266 | 121 |
| 300,000 | 300 | 590 | 290 | 97 |
| 450,000 | 450 | 785 | 335 | 74 |
| 750,000 | 750 | 1,175 | 425 | 57 |
| 1,000,000 | 1,000 | 1,500 | 500 | 50 |
| 3,000,000 | 3,000 | 4,100 | 1,100 | 37 |
| 5,000,000 | 5,000 | 6,700 | 1,700 | 34 |
| 6,000,000 | 5,500 | 7,700 | 2,700 | 40 |
| 7,500,000 | 6,250 | 9,200 | 2,950 | 47 |
| 10,000,000 | 7,500 | 10,450 | 2,950 | 39 |
| 20,000,000 | 12,500 | 15,450 | 2,950 | 24 |
| 30,000,000 | 17,500 | 20,450 | 2,950 | 17 |
The Gold Pass
The Gold Pass program, wherein a limited number of transferable ski passes, provided by USIA, are sold by the U.S. Ski Team as a fund raiser, started back in the 1970’s in NSAA. Today, the proceeds represent a substantial source of Ski Team funding, yielding it $637,500 this past year, while the 15 percent royalty, or fee, amounted to $112,500 for USIA. This was based on the sale of 250 passes for $3,000 each.
For 1992-93, USIA, with an eye to moderating the dues increases planned, was seeking a sharply increased take, and in the first version of the budget, approved by the executive committee, it was set at $400,000. The increase was to come from the sale of more passes and from a different royalty arrangement.
This plan evoked very strong opposition, especially from Nick Badami, a past chairman of NSAA. He pointed out that no more than five ski areas, including his own Park City, bear the overwhelming brunt of the use of these passes, and that USIA’s plan amounted to these areas being asked to subsidize the association. Furthermore, he felt the plan was unfair to the Ski Team, for which he is also a Trustee.
The final arrangement, negotiated by USIA’s David Ingemie and Howard Peterson, president of U.S. Skiing, resulted in a renewal of last year’s arrangement, but with prospects of almost $50,000 in additional royalties for USIA based on phasing in of a higher selling price of a Gold Pass in August.
