Fair ends year with loss; horse racing huge drain on budget

From the February 2, 2016 print edition

Its 2016 theme may have been “one for the books,” but when those responsible for running the Humboldt County Fair Association (HCFA) and the fairgrounds look back on last year’s results, 2016 might not end up on their best-seller list.

Figures released for Monday night’s meeting of the HCFA board of directors, show that a negligible increase in 2016 revenues were more than offset by cost increases in several critical areas.

According to year-end financial statements released by the HCFA, the organization generated $1,784,883 in revenues from its 2016 operations, compared to the $1,776,000 it had budgeted, for an increase of just $8,883 (before depreciation). It was expenses, however, that dampened last year’s results as the non-profit organization spent $43,500 more than it budgeted to run the operation, with actual costs coming in at $1,793,506, compared to $1,750,000 (also before depreciation).

Based upon the financial information presented, it was horse racing that put a damper on last year’s performance for the association.

According to its profit and loss statement, revenues from horse racing dipped to $464,570 in 2016, compared to the $540,315 generated in 2015 and the $536,000 budgeted for last year. Horse racing expenses presented a double whammy on 2016 results for the fair, as costs jumped to $501,324, up from last year’s total of $494,427 and more than the $484,000 that was budgeted.

Costs attributed to the administration of the fairgrounds once again took a significant upward turn, jumping from $230,400 in 2014 and $271,000 in 2015 to $305,000 last year.

Much of the $71,000 lost in 2016 racing revenues can be attributed to the HCFA not receiving a subsidy from its counterpart, Golden Gate Fields (GGF), which runs horse racing concurrently with the HCFA. In the years leading up to 2016, GGF had agreed to share some of its profits generated during overlap with the HCFA. As reported in the September 1, 2016 issue of The Enterprise, it wasn’t until just before last year’s fair and race meet the HCFA representatives realized that the subsidy would not be coming their way. Those same representatives were in attendance at a 2015 meeting of the California Horse Racing Board (CHRB), when 2016 race dates were approved and GGF informed those in attendance that it would be paying to Ferndale only what the law required, an amount that did not include the additional subsidy. That announcement seemed to have been missed by HCFA representative and pro bono attorney Jim Morgan and fair GM Richard Conway, both of whom were in attendance at the CHRB meeting when GGF representative Scott Daruty presented his company’s position.

The double-hit from horse racing, along with higher administrative costs, wiped out gains in other areas of the fair operations that would have otherwise resulted in a more positive outcome. While 2016 admission revenue for the fair remained close to the prior year ($273,000 vs. $269,471) more substantial increases came in the area of concessions ($328,321 vs. $303,489), sponsorships ($184,141 vs. $143,331) and non-fair activities ($236,878 vs. $197,700). In addition to revenues generated from its own activities, the HCFA also received financial assistance from the State of California, which allocated $38,190 to support the fair’s general operations, which will help close the gap on losses this year.

Since 2012, the HCFA has seen its operating reserve fund decrease from $494,108 to $253,355 at the beginning of 2016. HCFA’s beginning 2017 reserve will not be official until it submits its budget in the coming weeks. Whatever level those reserve funds turn out to be, they will play an important role in supporting the HCFA as it begins plans to produce the annual event one week later in the calendar this summer.

Based upon a decision made last year and supported by the HCFA, 2017 fair dates will be from August 23 through September 4, dates which will likely overlap at least the second week of the fair with the opening of most school districts throughout Humboldt County. When contacted, fair officials did not respond to inquiries by The Enterprise about the year-end financial reports. The bright spot for the 2016 fair, as it usually is each year historically, was the annual junior livestock auction which exceeded the $700,000 mark in sales last August — returning huge dividends to junior livestock exhibitors. The fair association retains a small amount of funds left from a commission withheld from sellers’ checks which pays for auction costs.

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