WEG Was $5 Million in the Hole the Year Before the Games

Equestrian games had shortfall one year before events began at horse park

The year before the Alltech FEI World Equestrian Games took place, its organizing committee was $5 million in the hole, according to federal tax documents filed Monday.

During 2009, the World Games 2010 Foundation reported $23 million in assets and $28.6 million in liabilities. Most of the liabilities came from deferred revenue such as planned ticket sales and sponsorships.

The Games took in $21 million in revenues from ticket sales, luxury accommodations and the trade show and exhibits, and had actual operating expenses of $8.7 million in 2009, according to their IRS filing.

Its sponsorship wound up costing more than triple its original $10 million price tag, but Alltech's founder expects his company's investment in the World Equestrian Games to offer quite a return, leading to $100 million in new business by this time next year.

It's the endgame of a sponsorship that surprised many when it was announced in June 2006, given Nicholasville-based Alltech's small number of equine products and relatively low profile. It also was a major learning experience for the company, founder Pearse Lyons told the Herald-Leader. "It has been absolutely worth it," he said early this month.

The foundation operated the Games, which took place this fall, with a budget largely derived from tickets sales and corporate sponsorships. The overall operating budget for the Games was originally estimated at about $76 million. However, Games officials refused to disclose any details about their budget.

The IRS 990 form for 2010 — the only public disclosure required — won't be reported until next year.

"The bulk of the foundation's revenues and expenses occur in fiscal year 2010," Games CEO Jamie Link said in an e-mail.

Officials said the global economic crisis had greatly affected expected revenues. Despite overall ticket sales of 411,000, the Fédération Equestre Internationale, the governing body of horse sport, has said it provided 1.3 million Swiss francs — a little more than $1.3 million U.S. dollars — to the foundation once the Games were under way.

"There were some cash flow issues during the Games, which is not unexpected for an event of this scale and complexity, and they were resolved on-site," FEI spokeswoman Grania Willis wrote in an e-mail.

Link declined to detail what the financial issues were during the Games.

The 2009 expenses included:
■ $672,151 to Proteus On Demand Facilities of Austell, Ga., for temporary structures;
■ $412,500 to NBC Sports for event broadcasting;
■ $338,408 to Red 7 E of Louisville for marketing;
■ $279,899 to Ticketmaster for administering ticket sales;
■ $272,172 to the Patina Group of Chicago, Ill., for catering.

The tax form lists about $3.7 million in individual donations, but the names and addresses of the contributors have been redacted, which is apparently allowed under IRS rules. Link confirmed the list was for sponsorship revenue in 2009, which "includes both sponsors and other contributors/customers who, in return for their contributions, received WEG recognitional benefits, tickets, etc."

Conley Salyer, a Lexington attorney who specializes in non-profits, said that if a corporation gives sponsorship dollars in return for having their name advertised as a corporate donor, that can still count as a charitable donation.

"It would not appear as anything other than the fact they're a sponsor," he said.

A breakdown of revenues that came into the foundation included nearly $13 million in ticket sales, $2.7 million in hospitality, which included luxury tickets and dining, and $2.4 million from exhibitors at the trade show and various exhibits.

Other costs included nearly $1 million in salaries, and $8.7 million for operations, competitions and other event expenses that were not detailed in the form.