Hossfly

Adminn wrote:>>>>>>>>>>>Ok...I've just received from one of the RCU members a wonderful explanation of the 2001 AMA financials. You can view the webpage of his overview by clicking below.

http://www.rcuniverse.com/amafinancials.html
>>>>>>>>>>>>Long-Term Liabilities: You can see that the mortgage existed in 2000 but didn’t in 2001, so it was paid off. You can also see that the AMA issued Revenue Bonds (See Note J on page 9) which are essentially securities that bind AMA to pay interest and principal of $200K or $300K (Depending on the year) annually through 2017. The interest rate is not specified in the report because it’s variable and there was no interest expense recorded in 2001 (Page 18), so I am assuming that the bonds were issued late in the year- probably on December 31, but there may be another reason. So the bondholders own $4.2M of the assets.
>>>>>>>
Personal Editorial: I see a great deal of discussion about AMA on the various RC websites. Many individuals are very negative toward the AMA. In my opinion, this happens for several reasons:

1) There is no viable alternative to the AMA for most modelers. Alternatives eliminate contempt.

2) Many modelers really are apathetic. They simply want to fly. They need AMA to fly. So they belong to AMA. I’ll count myself in that category, for the most part.

3) //SNIP//

4) AMA has truly isolated some (Maybe many) members with the National Flying Site, myself included. Many members don’t see any value in that site. They will never visit or use it, they don’t perceive that it will influence anyone they know outside the hobby because no one they know will ever go there. It’s a huge drain on resources that could be used elsewhere. Quite bluntly, my opinion is that it was created by the AMA leadership, for the benefit of them and used by them, with everyone else’s money.

5) In many ways, AMA politics parallels national politics. To be really successful, you have to be an insider. Once you’re an insider, it’s difficult to maintain a rapport with those you are there to represent. Voting for different people to represent us simply starts the morphing to an insider all over again. And it happens quickly-everyone wants to be accepted by their peers, who are insiders.

mvigod

I suggest we all heed Horrace's words above...time has come to not sit by. It takes so little effort to fill out a ballot which will put the AMA onto a path to serve better. If you never voted before make sure this is the year that the past doesn't equal the future . Let the US presidential election teach us all that your vote DOES COUNT!

bobfox

My Feedback: (1)

AMA didn't issue the bonds to satisfy the mortgage. The mortgage balance at 1/1/01 was about $700K and the bonds were $4.2M. They may have paid off the mortgage with part of the proceeds of the bonds, but that left us with $3.5M left over.

It's like taking a second mortgage on your house for $50,000 and using $10,000 of it to pay off a loan. You still have most of the proceeds of the bonds to spend. (That Lexus will sure look nice in my driveway!!!)

Why? I'm not necessarily suggesting anything sinister, but it is a valid question. Why borrow $4.2M when you already have a horde of cash and only need $700K or so to pay off your mortgage. Heck, we could have paid the mortgage completely with the cash on hand and still had a nest egg larger than the GNP of some countries. If that was really the only reason for issuing the bonds, it was quite stupid!

Just my opinion. I'm suggesting that we don't have all the facts. People don't make stupid decisions (Well, OK, they do sometimes, but I can't believe that's the answer). Why does AMA management feel the need to have an abundance of liquid assets? There IS a reason. We just don't know it.

Bob

mvigod

Bob - maybe they like to pay more for their money they have on hand or perhaps feel they can take the borrowed money and invest it and make more with it? After all the last couple years their investment prowess proved to be stellar...

Would love an answer on this one...will we get one though???

Oh yes...people do make stupid decisions. I have seen them already made by the AMA in no uncertain terms so the likelihood that there are more is quite significant.

J_R

Marc

Part of the money went to pay off the existing mortgage. If you will recall, we also built a new building and are revamping the old one to house the museum. Most of the money from the bonds went to refinance the package. I assume there is some excess. I have no idea of the amount nor the interest rate. Do you?

A question for you. How did we do in the investment department last year? I assume it is last year your talking about, along with 2001, since we made money in 2000. Just how much did we lose last year?

Remember, the AMA went through a period, once before, where we could not purchase commercial liability insurance for the membership. It took money to fund the self-insurance program that was done then. The lessons learned from that must be similar to the ones that those who went through the depression learned. I can remember that it was a very dicey situation then, and there was very little excess capital. The AMA teetered on the balance for a while. I think the AMA keeps cash and equivalents so that if it again becomes necessary to self-insure, the money to fund the effort is there. I am not sure what a reasonable amount for that is, do you have thoughts on that?

Have you tried asking your VP about any of this?

JR

Taildrager-inactive

My Feedback: (11)

You have to wounder to whom these bonds were sold, and what the intrest rate was compared to a commercial loan.

mvigod

JR - don't know those answers...the financial analysis was done by another member here who far better understands the ins and outs of the statement.

Question is...how prudent is it to borrow cash so you have it on hand to pay insurance claims? In other words you are now paying out claims with borrowed money if this is the case. If they were so short of cash that they needed to borrow money it shows even more how ridiculous the $10 million dollar land/building at Muncie actually was (considering less than 5% of AMA members will ever step foot on it and that 100% of the members DO NEED INSURANCE).

J_R

You need not wonder if you look at the 2001 financial statement or read the analysis of it that Marc got for us else where in this thread.

FLYBOY

My Feedback: (11)

Thats funny, when I read this, that is exactly what was going through my mind. An airline here set up a separate corperation that was private, but the airline remained public. The private company (owned by the top people of the airline) bought and leased the airplanes back to the airline at a great profit. The airline failed, leaving the stockholders owning nothing. They re-structured the airline and got a bunch of new stock holders, and are going again. The stock holders again are getting hosed and the top people in the company continue to get rich. NOTE to all the "I'm going to sue you for slander" types out there, I am not saying AMA is doing something like this! I am just stating fact. Felt I had to say that after the fiasco on a reply a couple days ago. I to agree with Marc and would like to see more info on the subject. Like any large organization, I feel AMA has lost focus and is trying to turn itself into something it shouldn't be, but as was stated earlier, the only way we are going to change it is to get the people who don't like where they are going to get active and get on the board and work to change the course. It will not happen over night and there will be a lot more resistance than you can imagine. Unfortunately, its a huge up hill fight.

Jim Branaum

My Feedback: (3)

Flyboy,
Your last 2 sentences are right on target. Most worthwhile battles are uphill at first, but you eat them the same way you eat an elephant. One bite at a time.

bobfox

My Feedback: (1)

The bonds were issued to a Development Authority. It's very likely they were low interest rate bonds and there may have been a deal to lower taxes or obtain other financial incentives by AMA.

But back up and look at the BIG picture:

At 12/31/2001, AMA had $5.3 M in cash and another $3.4M in Investments, which can quickly converted to cash. Total available funds were $8.7M after the mortgage was paid off. Now, $4.2M of that cash/investment balance came from the bonds, so AMA had $3.5M BEFORE the bond issuance and AFTER paying off the mortgage.

Now, if we already had $3.5M in cash, why borrow another $4.2M? The $3.5M is almost six months of operating expense including insurance. It seems like more than enough!

Bob

mvigod

In my opinion I feel that nobody in the AMA VP or President position qualifies for a position to run a company with $10,000,000 in annual revenues. Typical CEO's have formal training of some kind and understand how to run companies properly as they grow. They understand issues of cash flow, profits, operations and so on.

The AMA has grown from a bunch of modelers to a larger company still unfortunately run by modelers. While they may have good intentions and perhaps sometimes push their own agenda the bottom line is the AMA is ready for a $200 grand a year CEO full time. Folks...this is a 10 million bucks here and to have unpaid non professional people at the helm is no longer in anybodies interest. Go find a Harvard or Yale MBA who has CEO experience and preferably in the insurance biz and get him to be the captain (or her). No offense to anybody in there but this elephant has outgrown the current guard.

Hossfly

Sorry Marc:

I think those guys are all busy at United Airlines, US Air, American, World Com, Enron, and those places where the *Professionals* all hang out. They make millions driving those companies right down to the ashes.

Just what do you think a PAID CEO is going to do besides work to get pay raises, stock options, and finagle how to screw the pooch, such pooch being the AMA membership?

I respect your dedication and desires, however I disagree with your methods. OTOH when the AMA gets all divided up, I surmise there will be several such jobs open. Again simply an opinion, I predict those jobs are already spoken for.

mvigod

Horrace,

I respectfully disagree. If you were an investor in a new startup company that got funded with 10 million bucks who do you want to see at the helm? A bunch of RC guys who have no formal accounting and management education or MBA's or a seasoned CEO who has graduated with honors out of a top school? I know where I would put my money.

If you try to start a company to compete with the AMA today and were looking for an investor to sink $10 million in startup funds would your business plan have a non trained RC modeler to run the whole thing or are you bringing on board the proper hired guns?

I've been involved with VC's along with big and small companies in my short time here on earth and a bunch of "amateurs" (for lack of a better word) running a company as large as the AMA must come to an end and proper talent put into place.

CEO's don't all do what you claim above Horrace. It all depends on which one is hired to do the job. Some might say current management is acting like the CEO's you describe above. And for the record they are not all taken right now and some that are might just leave their current position for a reasonably decent salary & bonus. I'm not talking about getting Jack Welch but there are many talented individuals out there who really do have the "right stuff" to make the AMA into everything it can and should be.

Jim Branaum

My Feedback: (3)

Marc,
I predict that you will make the discovery that Dave Brown probably makes MORE that $200K a year in his position as CEO of Dave Brown Products. But I have been wrong before . . .

While your idea has some merit, it fails the smell test as the AMA has no tangible 'product' to put before the membership. Your solution does not appear to change that but DOES put the stockholder in the position to take profits in the form of dividends.

No, if you were going to invest $10M in an insurance company, you would want some serious insurance professionals on the job, not local politicans. Getting the AMA from where it is today to where you have indicated you think it should go as a NON PROFIT can be done. It is simly a lot of work.

David Cutler

OK, let me get this right ..

So far we have had 113 postings to this thread, and 2507 visits, and it's all in aid of a bill for $58 per year?

I bet there hasn't been such an analyzed dollar - per -week cost payment in the history of finance.

CPAs have a concept called Materiality when auditing a company. It refers to an amount of money that may, indeed, be wrong in some way, but is too small to have any material effect on the outcome of the audit and therefore is overlooked.

This, I would suggest, comes in that category.

Or have I got the wrong end of the stick?

David C.

mvigod

David,

when the time is right there may be many more views on this thread...the information is only in its creation here.

as for $58...2 ways of looking at it...it's only $58 so people say who cares. But on the other hand what if the AMA was 1 million strong and they had 58 million bucks to play with and 75% of that was spent on a personal flying field playground that less than 1% of the members would ever use including yourself? Then it's really not a matter of $58 anymore...should people still turn the cheek since that is all that came out of their pocket? What if there were 2 million members and $116 million squandered? Just an extreme example to show it's not about the measly $58. It's about just using logic to run the AMA in the direction its paying members want it to go in.

When people take notice is when it is too late...what happens if the AMA loses it's nest egg from poor management and a few big claims and then RC frequencies are in jeopardy? Some here say that big business won't come to the rescue to lobby to keep them (I disagree on this let it be known). If the AMA no longer has the resources to lobby to keep the channels and they are risk of being lost then everyone is going to look real hard at what that $58 was getting them. Too late though.

Or what if the year comes where they get slammed with 2x or 5x the number of massive claims and then one of them is yours? Maybe they self insure at that point and no longer have any money for your claim? Can any of this happen? Who knows but why not simply ensure that the total dollars the AMA gets are used wisely.

We are not examining $58...we are examining $10 million (that is PER YEAR). In 3 years the AMA takes in $30 millon. Not $58

fliers1

I wonder how much money AMA paid that consulting firm for their advice, which for the most part turned out to be:

AMA Vision
We, the members of the Academy of Model Aeronautics, are the pathway to the future of aeromodeling and are committed to making modeling the foremost sport/hobby in the world.

This vision is accomplished through:

Partnerships with its valued associates, the modeling industry and governments;
A process of continuous improvement;
A commitment to leadership, quality, education and scientific/technical development; and,
A safe, enjoyable modeling environment.


AMA Mission
The Academy of Model Aeronautics is a world-class association of modelers organized for the purpose of promotion, development, education and advancement of modeling activities.
The Academy provides leadership, organization, competition, communication, protection, representation, recognition, education and scientific/technical development to modelers.

Not knocking AMA for trying, but there is really not much that AMA can do.

Take care,
CCR
http://www.kites.org/rc_instructors

J_R

Hi Marc

Your ideas are starting to come around to the more conventional ideas that have been thrown up for discussion.

I think some fact finding is still in order. I think the folks that are on the EC need to be looked at more closely before we dismiss them off hand. I would suggest that several of them already make in excess of $200,000 annually from their own business ventures. We are getting their abilities free the way things are.

Personally, I am not opposed to a highly paid CEO and/or CFO. It may very well be the case that the people that we want are on the EC now. I think you are going to find that there are a lot of us that would require that such individuals be modelers.

Before things are going to change, you are going to need to understand what happened in the past when we had a very strong Executive Director. Perhaps Horrace, or someone else, can fill that part of history in, if he can keep the rhetoric to a minimum. Regardless of what you try to do under the current structure, you are going to have to deal with Leader Members that can remember.

When the subject of the National Flying Site comes up, I think it needs to be looked at in a different light. First, the land is an investment. Regardless of the use of the land, it is sitting there appreciating. It may very well be the best investment the AMA has made.

The second part of a look at Muncie is what we have done with the land. I see it as fourfold. We have built a Headquarters building on it. We have built a museum on it. We have built a flying site on it. We lease some of it out for farming, thus generating offsetting income.

My opinion is that we need a museum. I would like to see the return of a display to the Smithsonian, where we once had one. These, are not, in my opinion, mutually exclusive. They should both exist.

I don't think anyone can claim that we do not need a Headquarters. Could it be done for less with somewhere else? Maybe, maybe not. I have yet to see any numbers that show that it is less expensive to operate anywhere else.

No one seems to have a problem with leasing some of the land for farming, so that point seems moot.

That leaves the flying site. The impression is always that millions and millions have been spent on it. I have never seen anything to show numbers near that amount have been spent. From what I have seen, MAYBE, a couple of million have been spent on it, MAYBE. Keep in mind that it has been there a while and it was not all spent at once. From what I see, we are spending something on the order of $2-$3 per year per adult member on it.

Personally, I would like to see the NATS move around the country. But... I have no illusions that we would not spend as much money doing that as improving Muncie. I just think a traveling NATS would promote the hobby better and maybe increase the membership. When we do go to governmental bodies, numbers make a difference.

Finally, Marc, before we analyze what the AMA should be, don't you think it would be wise to find out what the AMA is? What IS the AMA doing now? Maybe a trip by you to an EC meeting is in order, with a report in your online magazine reporting what you found. It would not hurt to take a second person with you to get a second view. The EC meetings are open to any AMA member.

This is a year where several VP slots are up for election. We know very little about the individuals currently in office. Although you have made a call for individuals to step up and run for office, I have not seen even one that will run. Time is running short. Either interviews with the VP's and/or some sort of call for information on RCU would seem to be in order. None of the mainstream magazines would touch the subject.

The biggest single shortfall, that I see, is that the AMA is doing a terrible job of selling itself to it's membership. So very few know what the AMA is doing that the huge majority perceive it to be doing nothing. You seem to fall within that stereotype, Marc.

JR

J_R

Marc

The more I think about doing interviews with the VP's the better I like it. It might give RCU a huge presence as a Magazine as well as being the premiere 'bulletin board'. Asking hard hitting, but, fair questions and giving RCU members a clear view of the people on the EC might even boast your membership on RCU. I do have to ask one thing.

Can you be objective in your reporting? If not, do you know someone you can trust to do it?

Is such a project financially out of the question?

JR

TopShelf

My Feedback: (4)

Back to the subject of payed professinals running the AMA, isn't the Excutive Director usually the paid professional that helps steer the volunteers in organizaitons like the AMA?

mvigod

JR,

The Muncie Palace according to the AMA numbers was a $10 million dollar project. Read the analysis or have a CPA go over the last 3 years of AMA's financials to explain as best as he can...That is alot to spend on a flying site that less than 5% and probably less than 2% even will ever see or step foot on in their lifetime. Call it one mistake or one of many but it was a huge error in my opinion.

In these other threads I've explained how the interest alone on that money could have paid for digs for the entire staff including utilities each year. That would have left $10 million in reserve if needed as well. The magnitude of that blunder is enormous.

Maybe the AMA will spend $10 million dollars so I can have my own personal flying field and runway here in new jersey? Does anyone else want the AMA to purchase and build out an extravagant flying field for them in their own state so they can actually use it? Sure...unfortunately they only built one palace in the middle of nowhere.

J_R

Marc

The point I am trying to make is that the flying site itself has not cost anywhere near $10 million in improvements. Land may be as good or better an investment than stock, bonds, or CD's. How much was spent on developing the FLYING SITE?

I have let one thing you keep claiming go by several times. How many flights a year do you think the average EC member takes at Muncie? In talking to some of them, I would bet the answer is well under 10. In some cases, it is none.

One of the things that YOUR analysis pointed out was that the AMA does, indeed, have about $8 million in cash and near cash. Just how much is enough? If things got tight, I imagine that the land could be sold, just as the stocks or bonds could be sold. You make it sound like the AMA is squandering the money, never to be seen again. In fact the assets are in excess of $18 million, as per the analysis YOU had done.

Re-read the analysis that YOU had done. You can not lump "Muncie" into one all inclusive thing. If you think we do not need a museum, then that is another issue. Say so. If you think we do not need the Headquarters in Muncie, come up with alternative numbers. The land must be looked at as any other investment. The amount actually spent on the flying site is another matter, and is a debate in and of itself. Throwing out $10 million is not an objective viewpoint when the flying site comes up, period. You MUST take out the HQ and museum and the cost of the land to make any objective analysis.

Try looking at it this way: if the land was all being farmed, and producing revenue, would that make a difference in your analysis?
Land is land and has value , and is not intrinsically a model airfield.

To your last question: personally, I think it is a terrible idea to have sites in all of the states, regardless of how much money we have. You live in a geographically small state and it might have some value to you. Those of us in larger states would not use a state site any more than we use Muncie. Why would I drive even 2 hours to fly when I can drive to a dozen fields in less than an hour? The only reason would be to compete.

I am not fond of the National Flying Site. I just do not see it as the huge drain on resources that you do.

JR

J_R

In the case of the AMA, I would characterize the paid position of Executive Director as running HQ and directing the paid employees there. Joyce Hager (the ED) is the boss, as far as those at HQ are concerned. There are some exceptions, where the expertise of the individual makes them more autonomous and more in line with serving the will of the EC. Carl Maroney comes to mind in that role, along with Jay Mealy and Wes De Cou. There may be others.

Joyce serves at the pleasure of the EC. They approve her contract and she is accountable to them.

In the AMA the volunteers start at the top in the form of the EC and trickle down. The EC members themselves are volunteers. Committees and their members serve at the pleasure of the President. AVP's, Frequency Coordinators, etc, serve at the pleasure of the District Vice President. It's not clear who many "work" for, such as those that volunteer time for the museum.

Just for what it is worth, being an AMA volunteer is pretty thankless. Very few are known to more than a few others. Maybe we should read MA a little more, where they get what little attention they do get, and thank them once in a while. It's nice for the EC to notice they are there, but, to have 95% of the people they are serving not even know, rates more acknowledgment and a pat on the back when we do get a chance to meet them in person.

JR

Dave Bowles

My Feedback: (7)

Please correct me if I'm wrong, but wasn't the AMA formed specificly for the promotion and organizing of Model Aircraft competition ?