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AKC ECONOMICS and WALL STREET

 

Barbara "BJ" Andrews BioAs the economy worsens, AKC raises its Event Fees again!  Those fees come right off the top of every entry fee.  With over $50 million in reserves, why does AKC sock it to exhibitors with a 300% fee increase!

 

Oct 01, 2008 | TheDogPress.com

Barbara J. Andrews, Editor-In-Chief

 

Update: As though this weren't enough, see Jan 2009 for news of the $25 per dog AKC Exhibition Tax.

 

For over a century, AKC relied on dog and litter registrations for fiscal health. That was AKC’s founding purpose and it kept the AKC solvent. Astute observers relate the unfolding financial crisis of September 2008 to those besetting our sport. Warnings of looming disaster were ignored by Congress, and that brought us to disaster. There have been warnings that AKC is in trouble, even from AKC itself. When banks and insurance companies took advantage of unthinking consumers and a bloated, self-serving system, Wall Street imploded. Only a few blocks away, AKC faces exactly the same risk.

 

Dog shows were once small but self-supporting events. They were to compare breeding stock, not to subsidize AKC. Things changed as AKC became involved in the approval and management of dog shows. Some would relate that change to the growth of Wall Street itself. But times were good in the fifties, business was booming and so were dog shows. AKC tacked on a few cents for handling dog show paper work and that was reasonable because all was well with the world and the sport of dogs.

 

AKC Entry Fees Increase Break The Dog Show Economy?Fast forward to today. Watching the news, it’s hard to grasp the enormity and personal implications of the global financial crises. So let’s break down the AKC’s stability into something that makes sense to every exhibitor. The AKC says event fees don’t cover event expenses which, along with AKC’s increasing involvement/control, have indeed increased. AKC now has over a dozen primary departments relating only to dog shows, which remember, were only peripheral to AKC’s original purpose. AKC now oversees the clubs, as well as testing, approving and monitoring Judges. Add to that cost, AKC Rep salaries, data entry staff, and a hungry computer system to be fed.

 

Registrations generated a healthy (tax-free) income for the better part of a century. Then along came merchandise and credit card sales, endorsements, etc. and the AKC profited. For example: AKC socked away $20 million bucks in the Endowment Fund in just the last two years. And then there’s the $30 million Operating Reserve, which, when compared to the $60 to $70 million dollar a year non-profit income, is probably proportionate. We’re not sure what the $50 million-plus bankroll is earmarked for but in view of the Wall Street crisis, let’s hope it is safely invested…

 

Here’s why. Expansion based on sound business principals keep a company healthy. Corruption and greed make it sick. Defrauding stockholders is a terminal illness. Since so many of us have our lives and our livelihood invested in AKC, we are stockholders.

 

So let’s look at the Event/Recording fee as a brokerage fee. In January 2004, AKC effectively increased the recording fee from 50c to $2.00. The extra $1.50 was called an “Event Service Fee” instead of a “Recording Fee” so it stepped outside the language of the Rules, Chapter 11 but the result was the same –entry fees went up 300% for each dog. There was some grumbling but most dog people agreed that a “cost of living” adjustment from the mid-1900s was appropriate.

 

But then in January 2008, AKC added an additional $1.50 to entry fees. So after fifty years with no increase, and with clubs struggling to stay afloat and exhibitors feeling the economic downturn, a 700% increase per dog per entry hit everyone below the belt. Superintendents, who depend on shows having good entries, were less than thrilled. As entries declined, they, along with the host clubs, were forced to act like “tax collectors” and unfairly blamed for the higher entry fees.

 

Our Delegates, the dog show world’s counterpart to Senators and Congressmen, fearful of losing their position, ignorant of, or complicit in the fees increase, kept silent. So in June 2008, AKC proposed yet another incremental change to Chapter 11. The proposal would have given the Board complete authority to raise the Recording Fee by whatever amount the Board decided at will and without Delegate approval.

 

It would have “legalized” what many, with 20/20 hindsight, suddenly recognized as an incremental, illegal usurping of Delegate authority that had been in motion since 2004. As one judge remarked “just because someone robbed three convenience stores and wasn’t caught doesn’t mean that he can get away with robbing a fourth store.” Perhaps, like Mutual Fund reports, AKC assumed no one would notice.

 

But ARTICLE XIX: RULES states “The Delegates to the AKC shall have sole power to make the Rules governing dog shows and field trials and the clubs or associations formed to conduct them.” So the AKC Board put the change up for Delegate Approval. We’re told the first vote was by a show of hands but the count was challenged and a roll call vote was demanded.

 

Thus the Rule change was defeated by four votes! Close indeed but every club whose Delegate voted against giving away their authority can and should be proud. Who knows better than the clubs themselves how much extra burden exhibitors can shoulder? And it is the clubs who will lose the most if exhibitors walk away. And walk they have!  Update:  January 2009, see new $25 Exhibition Tax, AKC calls an Annual Activity Fee.

 

We are learning a hard lesson today as Congress struggles to save our economy. Hopefully, the growing demand that AKC Delegates put their club’s best interest first will forestall the collapse of our sport. AKC Clubs must insist that their Delegates vote the will of the people. That is why checks and balances were written into the democratic system, whether it applies to the U.S. Constitution or the AKC Constitution and Corporate Bylaws. Members of Congress who served their personal political futures and “the party” instead of the people who elected them will pay a steep price. Delegates, take note.

 

The solution for the AKC economic pinch is simple. Don’t bite the hand that feeds you! Do like other service-based corporations that can’t just pass the pinch along by raising the price of their product. Do like our government must do to prevent collapse and revolt.

 

Cut back on spending! That includes non-vital staff, travel, entertainment, advertising, non-critical and uncommitted donations, and lastly, do what your constituents wish they could do - dip into that $30,000,000 Reserve Fund! What better purpose for a Reserve Fund and who better to Endow than your core constituency?

http://www.thedogpress.com/editorials/0810-AKC-Economics.asp

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