USTA SECTIONS
Executive Salaries - How Much is Too Much?
You Decide!

Many TCB readers will probably look at the below information and say, "Why are they doing this?" The answer is simple: Because nobody else is doing it. No one is holding the USTA's section feet to the fire. We showed it to a tennis parent and he said, "You empower the powerless." That is exactly what we're are doing after one league player happened to look at his section's 990 filings and wrote to me, "They're looting our USTA section."

WE EMPOWER THE POWERLESS

I don't want to go that far, though. No one is looting here, of course, because each section's Board of Directors is watching out for the good of their organization. Or are they?

One section's Board member told me they never get to know the conditions when a new ED is hired because those decisions are made by the 'good old boys" or Executive Board. In case you forgot, that's this never-changing group of 3 or 4 distinguished servants of the greater good, mostly men, who make sure they all get their regular awards, Hall of Fame induction, and President's Box tickets to the US Open.

So, we decided to be the first (and probably only) member of the tennis media that looks a little closer at section finances with special emphasis on Executive salaries and the overall health.

Most of the 990 filings we inspected are from 2019 (except, unfortunately, from Midwest) and we understand that 2020 will look a whole lot different because of COVID. However, as soon as all 2020 forms 990 have come in, we'll update that list and see how each section had come through the pandemic. Did they cut Executive salaries? Did they trim down or reach into the reserves? It'll be interesting to compare all this.

Profit or Loss? We understand that nonprofits are not required to make a profit. So we decided to not put too much emphasis on losses but still point them out here.

Definitions

We are not financial experts. However, we think we know how to read a 990 filing and trust those filings were done correctly by each section accountant. Each section's filings, except the ones for the Caribbean section, can be seen when clicking on the link IRS 990 FORM. We guess, since Puerto Rico is not (yet) a US state, they don't fall under IRS rule.

In case you are concerned, we are not at all sharing private or illegal information. Form 990 filings are public information nonprofits have to file and allow access to. Some sections have that on their website, others don't. Every state has different interpretations of the so-called Sunshine Laws, but they all state that nonprofits have to publicize the 990 filings.

 

Here's what the numbers mean:

Revenue/Expenses/Profit/Loss: Self-explanatory We looked at overall expenses without breaking them down.

Reserves: The combination of cash on hand, publicly traded securities, and other investments.

CEO/ED Income: Only salaries over $100K plus "other compensation" like bonuses were listed (Executive Income). Pension plan accruals and contributions, incl. 401 (k) are NOT included.

We believe that a section CEO or ED should not be making less than $125 or, depending on the overall financial situation, should be capped at 3% of expenses.

IPE: The ratio of Income as Part of the Expenses. Should not be more than 3% in our opinion. After all, we think since these organizations are all non-profit, money should be spent on growing tennis and not on growing a person's wealth.
COMP: We wanted to know the sum of all compensation incl. all salaries, "other" benefits, pension plans, and payroll taxes and also show that figure as a percentage of a section's expenses.

Star Rating

  • A top section that has an IPE of 3% or less, COMP below 40%, and reserves that carry their operation for at least 6 months, gets a 5-Star rating.

  • When COMP is below 30% of expenses we add 1 Star.

  • When the section COMP s over 50% of expenses we deduct 1 Star, over 65% we deduct 2 Stars.

  • When a CEO's salary is over 3.5% of expenses, we deduct 1 Star.

  • When all Executive salaries are over 10% of expenses, we deduct 1 Star, over 15% we deduct 2 Stars.

  • When the reserves fall well below the minimum needed for a 6-month survival, we deduct 1 Star. When they get close to zero we deduct 2 Stars.

Results

SECTION: Northern California

2019 REVENUE: $5,833K

2019 EXPENSES: $5,590K

2019 PROFIT/LOSS: 243K

RESERVES: 1,844K

2019 ED INCOME: $153K

CEO IPE: 2.7%

COMP: $2,509K = 44.9%

TCB SECTION RATING

5Stars.png

IRS 990 FORM

COMMENTS: Overall, the USTA NorCal section looked healthy at the end of 2019.

SECTION: Southern California

2019 REVENUE: $5,259

2019 EXPENSES: $5,591

2019 PROFIT/LOSS: $267K

RESERVES: $5,404K

2019 INT. CEO INCOME: $216K

CEO IPE: 3.9%

TOP 4 EXECS INCOME: $679k

TOP 4 EXECS IPE: 12.1%

COMP: $2,519K = 45.6%

TCB SECTION RATING

3Stars.png

IRS 990 FORM - not published yet but management sent us the 2019 Tax Filing.

COMMENTS: $216k for an Interim CEO seems too high. The good news: At the end of 2019, the SCTA looks in good shape as far as the reserves are concerned.

SECTION: Pacific Northwest

2019 REVENUE: $5,690K

2019 EXPENSES: $6,423K

2019 PROFIT/LOSS: $733K

RESERVES: $6,471K

LAST PROFITABLE YEAR: 2015

2019 CEO INCOME: $294K

2019 COO INCOME: $228K

2019 GM INCOME: $177K

CEO IPE: 4.6%

TOP 5 EXECS INCOME: $1,004K

TOP 5 EXECS IPE 15.6%
COMP: $3,080K = 48%

TCB SECTION RATING

1Star.png

IRS 990 FORM

COMMENTS: Executive incomes look excessive and not justifiable. The entire section looks top heavy. The only good news here: with $6.4Mio in reserves, money management looks good.

SECTION: Pacific Northwest

2020 REVENUE: $4,021K

2020 EXPENSES: $4,700K

2020 PROFIT/LOSS: $678K

RESERVES: $4,968K

LAST PROFITABLE YEAR: 2015

2020 CEO INCOME: $263K

2020 COO INCOME: $206K

2020 GM INCOME: $195K

CEO IPE: 5.6%

TOP 3 EXECS INCOME: $665K

TOP 5 EXECS IPE 14.1%

COMP: $3,331K = 70.8%

TCB SECTION RATING

1Star.png

IRS 990 FORM

COMMENTS: Executive incomes still look excessive and not justifiable during many years of losses (although some of the Execs may have been axed in 2020.) One Exec income increased during 2020!

SECTION: Southwest

2019 REVENUE: $1,635K

2019 EXPENSES: $1,389K

2019 PROFIT/LOSS: $245K

RESERVES: $793K

2019 CEO INCOME: $111K

CEO IPE: 8%

COMP: $577K = 41.5%

TCB SECTION RATING

5Stars.png

IRS 990 FORM

COMMENTS: We discounted the 8% IOE because we think a section CEO or ED should not make less than $120K. Overall, the USTA Southwest section looked healthy at the end of 2019.

SECTION: Texas

2019 REVENUE: $6,358K

2019 EXPENSES: $6,227K

2019 PROFIT/LOSS: $131K

RESERVES: $2,659K

2019 ED INCOME: $221K

2019 DIR INCOME: $130K

CEO IPE: 3.55%

TOP 2 INCOME: $351K

TOP 2 IPE: 5.6%

COMP: $2,329K = 37.4%

TCB SECTION RATING

4Stars.png

IRS 990 FORM

COMMENTS: Overall, the USTA Texas section looked healthy at the end of 2019 although we think Executive income looks excessive.

SECTION: Hawaii Pacific

2019 REVENUE: $1,613K

2019 EXPENSES: $2,278K

2019 PROFIT/LOSS: $665K

RESERVES: 0

2019 ED INCOME: $108K

ED IPE: 4.7%

COMP: $711K = 31.2%

TCB SECTION RATING

3Stars.png

IRS 990 FORM

COMMENTS: We can only hope that the "No Assets" part of their 2019 tax filing was done by error since they had almost a million dollars in assets at the beginning of the year, including $386K in cash. If it's true, this may well be the worst run section of the USTA.

SECTION: Intermountain

2019 REVENUE: $3,111K

2019 EXPENSES: $3,105K

2019 PROFIT/LOSS: $6K

RESERVES: $600K

2019 ED INCOME: $134K

ED IPE: 4.3%

COMP: $723K = 23.3%

TCB SECTION RATING

4Stars.png

IRS 990 FORM

COMMENTS: We took one star away because of very low reserves and one star for IPE over 3.5%. We added one star for COMP below 30%

SECTION: Missouri Valley

2019 REVENUE: $3,376K

2019 EXPENSES: $3,425K

2019 PROFIT/LOSS: $49K

RESERVES: 1.112K

LAST YEAR PROFITABLE: 2010

2019 ED INCOME: $115K

ED IPE: 3.4%

COMP: $1,351K = 39.4%

TCB SECTION RATING

4Stars.png

IRS 990 FORM

COMMENTS: Relatively low reserves cost them an extra star.

SECTION: Northern

2019 REVENUE: $1,929K

2019 EXPENSES: $1,729K

2019 PROFIT/LOSS: $200K

RESERVES: $733K

2019 ED INCOME: $121K

ED IPE: 7%
COMP: $923K = 53.4%

TCB SECTION RATING

3Stars.png

IRS 990 FORM

COMMENTS: Relatively low reserves and COMP over 50% cost them two stars.

SECTION: Southern

2019 REVENUE: $13,139K

2019 EXPENSES: $11,605K

2019 PROFIT/LOSS: $1,534K

RESERVES: $11,896K

2019 ED/COO INCOME: $307K

CEO IPE: 2.6%

COMP: $2,578K = 22.2%

TCB SECTION RATING

5Stars.png

IRS 990 FORM

COMMENTS: It's hard to argue about an executive salary when that section is doing so well and the person also functions as COO.

SECTION: Midwest

2018 REVENUE: $11,053K

2018 EXPENSES: $11,169K

2018 PROFIT/LOSS: $116K

RESERVES: $2,269K

TCB SECTION RATING

IRS 990 FORM (2018)

COMMENTS: The second largest USTA section has low reserves which lost them one star. However, they gained one star with COMP below 30%. Question is: Why is the 2019 filing not available? Should we have taken a star away for such laziness? Is there more to that story?

2018 ED INCOME: $227K

2018 CFO INCOME: $150K

2018 COO INCOME: $125K

ED IPE: 2%

TOP 3 INCOME: $502K

TOP 3 IPE: 4.5%

COMP: $2,843K = 25.5%

5Stars.png

SECTION: Florida

2019 REVENUE: $5,736K

2019 EXPENSES: $5,446K

2019 PROFIT/LOSS: $290K

RESERVES: $8,163K

2019 ED INCOME: $142K

2019 COO INCOME: N

2019 DIR INCOME: $134K

CEO IPE: 2.6%

TOP 2 EXECSINCOME: $276K
TOP 2 EXECS IPE: 5%

COMP: $3,299K = 60.6%

TCB SECTION RATING

4Stars.png

IRS 990 FORM

COMMENTS: Overall, the USTA Florida section looked healthy at the end of 2019 but COMP over 60% cost them one star.

SECTION: Mid-Atlantic

2019 REVENUE: $6,134K

2019 EXPENSES: $6,064K

2019 PROFIT/LOSS: $70K

RESERVES: $3,541K

2019 CEO INCOME: $301K

2019 COO INCOME: $167K

2019 DIR INCOME: 120K
2019 DIR INCOME: 104K

CEO IPE: 5%

TOP 4 INCOME: $694K

TOP 4 IPE: 11.4%

COMP: $2,815K = 46.4%

TCB SECTION RATING

4Stars.png

IRS 990 FORM

COMMENTS: This section is top-heavy. The CEO's salary is excessive.

SECTION: Middle States

2019 REVENUE: $3,553K

2019 EXPENSES: $3,348K

2019 PROFIT/LOSS: $205K

RESERVES: $3,202K

2019 ED INCOME: $182K

ED IPE: 5.4%

COMP: $1,321K = 35.2%

TCB SECTION RATING

3Stars.png

IRS 990 FORM

COMMENTS: ED salary a little too high for a section that's losing money.

SECTION: Eastern

2019 REVENUE: $4,904K

2019 EXPENSES: $4,703K

2019 PROFIT/LOSS: $201K

RESERVES: $3,087K

2019 ED INCOME: $189K

2019 DIR INCOME: $118K

CEO IPE: 4%

TOP 2 INCOME: $307K

TOP 2 IPE: 6.5%

COMP: $1,705K = 36.3%

TCB SECTION RATING

4Stars.png

IRS 990 FORM

COMMENTS: The section looks healthy but the ED salary is a little on the high side.

SECTION: New England

2019 REVENUE: $3,786K

2019 EXPENSES: $4,036K

2019 PROFIT/LOSS: $250K

RESERVES: $2,649K

2019 ED INCOME: ???

ED IPE: ???

COMP: $1,642K = 40.7%

TCB SECTION RATING

4Stars.png

IRS 990 FORM

COMMENTS: Unfortunately, the full 990 filing was not publicly available which cost them an extra star. The 2018 ED income was $137K which would have meant the IPE was 3.4%.

As you can clearly see, John Callen is not looting the Southern Section with his income. We think he's not being paid enough. Under his leadership, tennis made some extraordinary progress in the South.

Going into this study we fully expected the Florida section to come out with 5 Stars. But when we saw their COMP of 60.6% we were troubled and asked ourselves, what are their 55 employees doing all day? Comparable sections with similar revenues show numbers way below those in Florida. Generally accepted guidelines for nonprofits state that payroll including all related expenses should not be more than 20% of revenue. We decided to regard 30-50% as acceptable for USTA sections.

Would be interesting for a workflow consultant to come in and examine why most sections need so many employees to do the job and whether it can be done with fewer people. The money saved could go into - you guessed it - grassroots tennis.

  • Congratulations to Northern California, Southern, Midwest, and Southwest, for receiving the new (and hopefully soon coveted) TCB 5-Star rating.

  • For Pacific Northwest, we're asking: Is that what they call Mission Incapable?

  • For all sections, we can't wait to compare those numbers with your 2020 filings.

 

We would have loved to see programming fees itemized in each 990. It seems easy to hide shenanigans in such numbers. By shenanigans, we mean dollars spent on not growing tennis or fees paid to Board members or staff without disclosure. We're not saying this is happening but we're planning to enable all section staff members to anonymously rate their section in certain criteria very soon. That way we will find out what's potentially happening there. More information about this next month.

We want to encourage section staff that is not happy with our analysis to come forward and let us know. We'll post every letter in our next issue without editing. And if you like what we're doing, let us know, too.

 

Don't forget:

We are asking all Pacific Northwest Section players, providers, staff, club owners, did you know that your CEO took home $294K incl. "other income" and your COO $228K? What are these people doing all week to justify that money? Then there is some GM who took home $177K (and that salary was increased in 2020 to $195K incl "other income"!) Does the full PNW Board know about this? Are you OK with that?

 

And your top 5 executives earned over a million dollars combined in 2019. That's a whopping 15.6% of all expenses. FOR 5 PEOPLE? Ouch!

WE EMPOWER THE POWERLESS