Breeders' Cup, NTRA Release Separate Annual Reports

The National Thoroughbred Racing Association and Breeders' Cup Ltd. on Oct. 12 publicly issued separate annual reports for the first time since the two groups formed an alliance in 2001, a move that is both graphic evidence of the evolving relationship between the two prominent industry entities and an answer to calls for more transparent business workings within the two organizations.

The Breeders' Cup report, which consolidates financial statements for 2004-2005, is believed to be the first such document publicly-published by the group that was formed in 1982 to organize the famous series of races bearing its name.

As a non-profit organization, Breeders' Cup has regularly filed a Form 990 with the Internal Revenue Service, a public record that includes financial numbers, but not with the detail and commentary included in a typical annual report. Rumblings to make Breeders' Cup more of an open-book have grown louder in recent years, particularly with the influx of certain new board directors such as Satish Sanan and B. Wayne Hughes, among others.

"I am all about openness and transparency--it is so critical in today's light, particularly when we are in charge of managing money of the various constituents, such as the breeders," said Sanan, who, along with his wife Anne, co-owns Padua Stable near Summerfield, Fla. "There are potential liabilities when you are handling other people's money. It's our fiduciary duty as directors to spend that money wisely."

The NTRA and Breeders' Cup had since 2001 operated under the umbrella of a joint operating agreement, but that relationship was altered in July, when it was announced, among other changes, that the groups will operate under separate budgeting and accounting functions and reduce employment numbers by 40%.

Greg Avioli, who serves as interim CEO of the NTRA and interim president of Breeders' Cup, said finer points are still being hammered out on a proposed two-year agreement detailing how the two entities will interact in the future, in areas such as television and sponsorship initiatives. The original agreement terminates at the end of the year.

"We just have to iron out the details, assigning a lot of personnel and equipment to one group or the other," Avioli said. "The basic concepts were put into place (in July), but there were a lot of complex discussions that followed."

The Breeders' Cup annual report said the organization had total assets of about $40 million and revenues of more than $38 million in 2005, the latter coming almost exclusively from two sources: foal and stallion nomination fees totaling $16.96 million and Breeders' Cup Championship fees totaling $17.61 million.

The NTRA and its subsidiary NTRA Investments, which claimed combined assets of about $31.2 million at the end of 2005, had operating revenues of $77.65 million, with about half of that total coming from Breeders' Cup revenues.

The two reports were audited by separate national accounting firms, Ernst & Young for the NTRA and Crowe Chizek and Co. for Breeders' Cup. Downloadable copies of the reports can be found at the following link: