Daily Archives: August 26, 2014

Burning Man Budget Brouhaha

By Mitch

Once upon a time, when many Black Rock City legends were still true, the Burning Man Organization decided to come clean about where your ticket money went. So it placed a financial table on the website that showed annual expenses — not telling you where the cash came from — but then, back when the millennium was young, it could only have come from ticket sales and the odd T-shirt.

As Burning Man has grown, so has its budget. But while Black Rock City’s expansion has been mostly symmetrical, its spending seems to have bled into other dimensions.

This year’s budget shows astronomical rises in two categories.

Usage fees paid to the Bureau of Land Management rose 142 percent to $4.5 million, while tax and licenses increased more than sixfold to $1 million. For the severalth year in a row, the Bmorg hasn’t had time to explain its accounts, though the Beacon asked on July 23.

On Aug. 11, the Bmorg posted on Facebook a link to a page on its own website called “Where Does My Ticket Money Go?” The page is placed in the “What Is Burning Man?” part of the website, but there’s nothing that seems to lead you to it other than the Facebook post. (And now: this link.)

The page doesn’t add much to the printed budget — certainly not in the way of explaining the outsized increases in the two categories above — though it offers an apologia for the $380 that most Burners paid for tickets this year by comparing it to some other festivals, which cost about the same but run for fewer days. Big deal.

There are no reductions large enough to counterbalance the mystery increases, though you may be happy to learn that water for dust abatement fell by almost half, to $262,693. Some of the numbers may show one-time effects of costs shouldered while Bmorg and Pershing County battled over the event’s future in court, a case that has now been settled. Details were vague.

The base fee paid to the BLM for use of government land is 3 percent of adjusted gross income, which includes tickets and whatever else the Bmorg charges for, possibly including fees for media projects like fashion-magazine shoots and joint-venture films. Given what the Bmorg told us about 2013 ticket sales, the $26.8 million of expenditures would have resulted in a $3.6 million loss, and at least the seventh straight unprofitable year, so there must be other revenue streams aside from tickets.

Incidentally, the Bmorg had been paying $15,000 to $18,000 a year in interest from 2010 to 2012, but nothing in 2013. This could indicate a potential source of income from possible sale of a property.

For several years, Burning Man has been moving toward nonprofit status, a process too convoluted and opaque to discuss in a newspaper this thin. Strictly as a matter of speculation, what might be buried in the numbers is a siphoning of money to an entity called Decommodification LLC, which controls the Burning Man trademark and is owned by six long-serving Black Rock City overlords. The not-for-profit event essentially pays the former directors of the for-profit company for the privilege of putting on the event. In the reader’s comments section of a March 3 Burning Blog post, Founder Larry Harvey said it would take at least three more years before the intellectual property is contributed to the Burning Man Project, making Black Rock City not for anyone’s profit.

It is possible that these Bmorg grandees are funding their retirements after years of living on the once-modest income you could derive from working for the Man. For six people of a certain age, the sum that would make a financial adviser happy would be somewhere in the $10 million range. Put another way, you can withdraw $40,000 to $50,000 a year from a $1 million retirement fund and be fairly confident of not outliving your assets. So if they’re pulling an annual $2 million out of event, that means four to six years of that level of drain.

One last bit of numerology: The cost per person of producing Burning Man was roughly $250 a year from 2004 to 2009 and then it jumped to about $380 from 2010 to 2013. Since budget planners would logically work backwards from their expected revenue, you might suppose that when they started planning the not-for-profit status seriously, they decided to boost ticket prices and the size of the event to feather their nests.

This also fits with a population jump to 51,525 in 2010 from 43,558 the previous year and a subsequent march toward 70,000. It also came as the Bmorg payroll climbed to more than $7 million from less than $3 million.Usually, when an event expands, the cost per person should go down rather than up, since some costs are more or less fixed and others benefit from economies of scale.

None of this seems especially shocking or distasteful. Larry & Co. have created something unique and profound. But if you’re going to post your budget for the world to see, it ought to make sense – or it looks like you are hiding something.

This article is an extended version of the story that ran in the Gate Edition of the Black Rock Beacon.