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Old May 22nd 05, 12:47 AM
 
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Default USCF Executive Board Meeting, Minneapolis 5/21

USCF Executive Board Meeting, Saturday 5/21

I attended the open session of the EB meeting from 3:00-5:00 PM today
in Minneapolis. Here is a brief report about some of the more
interesting items discussed. This is based on my notes from the
meeting, which were sometimes rushed because of the pace of discussion.
So this is not an official account and may contain errors.

There were five EB members attending: Marinello, Shutt, Schultz, Bauer
and Shaughnessy.

CONTRACTS

The first item of interest was a motion to set a limit on the amount
and duration of contracts that USCF employees can agree to without EB
approval. The initial amount suggested was $10,000 and 1 year. There
was a lot of back and forth about whether the dollar amount was so low
that the EB would end up reviewing a great many contracts. It was also
suggested that maybe just the President and/or the VP of Finance could
handle review. No motion was passed Saturday but the issue will be
discussed further on Sunday.

VOLUNTEER EXPENSES

It was confirmed that volunteer expenses have only been published in
the Delegates Call in recent years. That practice will be continued,
i.e. they will not be published in EB newsletters or on the web.

AUDIO TAPES

Recordings from telephone conferences cannot be placed on the web
because it has proven impossible to separate the closed from open
session material. An effort will be made to post all the recordings
from regular meetings that are still missing.

THE CROSSVILLE MOVE

The move to Crossville has been completed. The final total cost for the
move was just over $100,000.00. This does not include such items as
Marinello's expenses, building or architect's cost etc., just things
directly related to getting into operation in Crossville. A number of
line items were read quickly and I copied them down as best I could:

Salaries and Training $35,700
Taxes 3,500
Health benefits 2,900
Personnel relocation 47,200
Repairs and Maintenance 7,200
Misc. 700
-----
$100,700

THE BUDGET

The budget is still a work in progress, not in final form. I was not
given a copy of the working document, so I copied things down as best I
could as they were read. A few major items were mentioned:

The USCF has about $300,000 in the bank. I believe this does not
include the revenue from the sale of the New Windsor building, which is
in a separate account. Note that this figure has nothing to do with the

bottom line of how USCF did this year, which was not mentioned except
to say that there was a positive result.

Hanon Russell lost a lot of money in the first year of his contract
with USCF, though some of that was related to start-up costs for
software etc. He owes $179,000 to USCF to fulfill his minimum guarantee
to USCF by
the end of the fiscal year. A conference call with him and the EB is
scheduled for Sunday morning to discuss some kind of renegotiation -
whether for this year or for subsequent years I'm not certain.

A decision has been made that the new budget will not have a line item
for revenue from B+E outsourcing. Instead, a figure (yet to be
determined) will be listed as some kind of "surplus", so that it is not
available to offset any expenses. The budget will be set up in balance
or surplus without the B+E figure being a direct part of the equation.

Some notes on a few line items:

Revenue and cost from sales of items still left in the USCF's personal
inventory will be given offsetting figures of $40,000. The value of all
these items is supposedly about $80,000 but it is thought now that none
of it can be sold at profit, thus the offsetting figures.

Membership revenue figure for 2006 will be set at $1,850,000. This
figure is based on a very accurate 2005 summary provided by Mike Nolan
from his software improvements for tracking this information.

Tournament Revenue and expenses will be broken out by tournament this
year, providing the Delegates with more detail.

Total Revenue (for this working document) was $2,829.000, not including
any figure for B+E. There will be substantial revisions done overnight
and tomorrow, as there was some uncertainty about the correctness of
some figures provided by the office. These will be checked by tomorrow.

That's about all I've got. The next open session is at 3:00 PM
tomorrow. I'll try to attend and report maybe tomorrow evening.

Once again, I caution everyone that this is not an official account. I
may have made errors both in copying figures and in interpretation.

-- Hal Terrie

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Old May 22nd 05, 02:43 AM
 
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Just curious.. how many HQ folks from New Windsor transferred to
Crossville?

Old Haasie

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Old May 22nd 05, 03:26 AM
 
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Just curious.. how many HQ folks from New Windsor transferred to
Crossville?


I have no idea. Being able to sit in on an EB meeting does not mean
there are many opportunities to ask questions and, in any case, I'm not
good enough with numbers that the right questions would occur to me. I
presume you're interested in how many employees were relocated for
$47,200. That's a good question but I didn't think of it at the time
and didn't have the chance to ask anyway.

-- Hal Terrie

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Old May 22nd 05, 04:24 AM
Mike Nolan
 
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" writes:

Just curious.. how many HQ folks from New Windsor transferred to
Crossville?


I think this question has been answered more than once, but here's the
list:

Judy Misner
Joan Dubois
Jim Johanson
Larry Pond
Alan Kantor
Traci Pond (will be moving in June)

So far the only editorial person who has expressed any interest in moving
is Glenn Petersen, but his health is likely to factor into his final
decision, since his family is in New Jersey.
--
Mike Nolan
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Old May 22nd 05, 04:55 AM
 
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So, Judy Misner, Joan Dubois, Jim Johanson, Larry Pond, and Alan
Kantor moved to Crossville. That is a pretty good core of experienced
USCF staff.
I wonder if any of them have experienced any culture shock...such
as young kids with archaic expressions such as, "yes, sir" and "no,
sir"?

Old Haasie



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Old May 22nd 05, 02:41 PM
samsloan
 
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Tyrone Slothrop wrote:
wrote:
USCF Executive Board Meeting, Saturday 5/21

Hanon Russell lost a lot of money in the first year of his contract
with USCF, though some of that was related to start-up costs for
software etc. He owes $179,000 to USCF to fulfill his minimum

guarantee
to USCF by
the end of the fiscal year. A conference call with him and the EB

is
scheduled for Sunday morning to discuss some kind of renegotiation

-
whether for this year or for subsequent years I'm not certain.


I am total in disgust. This was supposed to be some kind of

"bedrock"
promise - it was supposedly set in stone that Hanon Russell would not
welch and would pay up come hell and high water. Now what? A
renegotiation?

I am happy that his is being discussed now. Because hopefully all of
the candidates that supported Chesscafe and promised that Chesscafe
would pay up can be voted down. This is not only a "slate" issue

since
Bill Goichberg was the foremost promoter of the Chesscafe offer!


Not quite. Tim Hanke was going to give away the books and equipment
business to a guy in England who promised to pay nothing at all for the
business. Therefore, however much we get from Hanon Russel it will
still be more than what we would have gotten from the Tim Hanke deal.

Having said that, I believe that ultimately the USCF will have to take
back the books and equipment business which brought in $3.5 annually
before the give-away deal took place.

Sam Sloan

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Old May 22nd 05, 06:44 PM
Mike Nolan
 
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"samsloan" writes:

Having said that, I believe that ultimately the USCF will have to take
back the books and equipment business which brought in $3.5 annually
before the give-away deal took place.


Sam apparently cannot read the USCF's financial reports. The USCF's gross
B&E sales were above $3.5 million only twice, in 1994-95 and 1995-96.

After having slid down to about $3 million in 1999-2000 and $2.5 million
in 2000-01, in 2001-02 sales plummeted to $1.8 million, largely because of
a revised marketing/catalog strategy that concentrated on high volume items.

Frank Niro rebuilt B&E to $2.8 million in 2002-03, but my financial analysis
of the USCF's operations concluded that B&E had a breakeven point of around
$3 million in sales. Because of a lack of detailed data, that analysis
didn't include some possibly allocatable marketing costs, such as the
pages allocated to B&E in Chess Life every month, so an argument could be
made that the breakeven point was well above $3 million in annual sales.

B&E dropped back down to $1.9 million in 2003-04, though that only includes
10 months of sales because USCF Sales (aka Hanon Russel) took over B&E on
April 1st. However, the holiday sales in 2003-04 were well below what they
had been in the previous year, largely due to USCF's financial problems.

At present the USCF has neither the capital resources nor the personnel
(especially in marketing) to run its own B&E business. For that reason,
the Board is being prudent in working with Hanon Russel to try to make
the USCF Sales arrangement successful for both partners.
--
Mike Nolan
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Old May 23rd 05, 02:06 AM
[email protected]
 
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BEDROCK PROMISE

I am total in disgust. This was supposed to be some kind of

"bedrock" promise. Tyrone Slothrop

Taking back the book and equipment business, as Sam Sloan
advocates, will be a very long road for the USCF. Well-nigh impossible
at this point in time.

I opposed outsourcing to begin with and then, though banned by
Hanon Russell from ChessCafe, I supported Bill Goichberg's deal. If
Hanon makes good on his contract this year, then it will still have
been a good deal for a short period.

Sam: the problem is that expertise has been lost big time. There
is no way that the tiny though very expensive building being planned
for Cross-to-Bear could handle a sales program.

My guess is the Cafe will more or less get total control of the
sales program andpay a great deal less for it. End result:
destruction of a key area of Federation expertise in sales, no way to
get it back, no building to support lost expertise if there were a way
to resurrect a sales program.

We are an organization effectively without a sales arm in the
basement of a church in the middle of some mountains in Tennessee. The
major functions of the USCF will be to publish Chess Life and control
the rating system..

That will be defined as success eventually by ALL SIDES. So, Sam,
be ready -- I hate to say it -- for disappointments from people you are
now supporting.

There is plenty of blame to go around on all sides.

Hanon Russell surprised me. I thought he was a careful, savvy
lawyer and businessman, which he may still prove to be. But I failed
to understand he had little idea how to advertise. His ads for the
product line were primitive compared with the work done nearly a decade
earlier by Al Lawrence.

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Old May 23rd 05, 12:12 PM
Chess One
 
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wrote in message
oups.com...
BEDROCK PROMISE

I am total in disgust. This was supposed to be some kind of

"bedrock" promise. Tyrone Slothrop

-------

My guess is the Cafe will more or less get total control of the
sales program andpay a great deal less for it. End result:
destruction of a key area of Federation expertise in sales, no way to
get it back, no building to support lost expertise if there were a way
to resurrect a sales program.


If HR Enterprises has a short-fall of $150,000+, and his net-margin is 20%
[from a gross-margin of say 45% on B&E] then he will need to sell 5 x $150k
more books just to break-even.

We are an organization effectively without a sales arm in the
basement of a church in the middle of some mountains in Tennessee. The
major functions of the USCF will be to publish Chess Life and control
the rating system..


In order to maintain an out-sourced B&E vendor for another year, I imagine
the only things the board will think attractive to HR Ent. will be (a) to
reduce this year's obligation, and (b) to also reduce subsequent years by
either lowering the minimum, and/or the overall margin paid USCF.

There is no off-setting market growth from USCF's market, with 10,000 fewer
members at the end of the year than the start mostly in youth categories,
but also in the adult range where club-affiliates are aslo reduced from
2,000 to less than 1,400.

That will be defined as success eventually by ALL SIDES. So, Sam,
be ready -- I hate to say it -- for disappointments from people you are
now supporting.

There is plenty of blame to go around on all sides.

Hanon Russell surprised me. I thought he was a careful, savvy
lawyer and businessman, which he may still prove to be. But I failed
to understand he had little idea how to advertise.


The amount of the short-fall seems greater than even this big reductions in
USCF members can explain. Either the initial figures presented him were
questionable as perhaps not revealing the full extent of the downward trend,
or some false sense of transference of loyalty USCF to ChessCafe was
uncritically accepted.

His ads for the
product line were primitive compared with the work done nearly a decade
earlier by Al Lawrence.


Conclusions drawn by this experience reveal the exact Small-Tent-On-Erie
model that we have been discussing in the Fide group since Christmas. The
USCF becomes the BMCF and administers just ratings and a magazine. This will
no doubt also be proclaimed as a triumph or rationalization of income and
expense.

Whether the BMCF would still qualify for its non-profit status if it now
applied is very uncertain.

Phil Innes



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