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GENERAL NOTES
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In the August 2021 article "USTA SECTIONS - Executive Salaries - How Much is Too Much? You Decide!"
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published in Tennis Club Business (TCB), the precursor to Racket Business, I wrote, “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 doing after one league player happened to look at his section's 990 filings and wrote to me, "They're looting our USTA section."
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I have to reiterate that I am not a financial expert. However, I'm pretty sure I know how to read a 990 filing and trust that each section's accountant did it correctly. The filings for each section, except the ones for the Caribbean section, can be seen by clicking on the link 990. (Note: 990 filings for nonprofits are public information.)
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This month, we are publishing 8 of the USTA sections as Part 1 of our Performance Report. Northern California, Southern California, Pacific Northwest, Southwest, Texas, Hawaii Pacific, Intermountain, and Missouri Valley.
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Next month, we’ll publish Part 2 with Northern, Southern, Midwest, Florida, Mid-Atlantic, Middle States, Eastern, and New England.
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Caribbean - mainly Puerto Rico
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The reason our list only includes 16 of the 17 USTA sections is that Puerto Rico is not (yet) a US state and thus they don't fall under IRS rule. That means there is no requirement for them to file a 990.
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Navigating the numbers
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We made some adjustments to make our findings more realistic. First, we decided not to look at the “Reserves” anymore because a small incident called COVID-19 wreaked havoc on some reserves. We also adjusted our thinking that a CEO/DE’s income should be no more than 3% of expenses to 5%, but that person should also not make less than $160,000 per year, including “other” income.
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Revenue, Expenses, Profit/Loss: This section is self-explanatory. We examined overall expenses and divided them into subcategories. Since nonprofits are not required to make a profit, we decided not to emphasize losses too much but to mention them here.
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IPE: The ratio of CEO/ED Income as Part of the Expenses. It should not be more than 5% 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.
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Executive Compensation: The sum of all compensation incl. all salaries, "other" benefits, pension plans, and payroll taxes for section staff earning over $100,000 annually. We are posting the total dollars as well as the ratio as a percentage of a section’s overall expenses.
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Total Compensation: The sum of all compensation including all salaries, "other" benefits, pension plans, and payroll taxes for all section employees. COMP: We wanted to know how much of the total expenses is total compensation.
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Star Rating
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Starting point: Every Section starts out with 5 Stars.
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A section that has a CEO income of 3% of expenses or less, gets 1 extra star
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When a CEO's salary is over 5% of expenses, we deduct 1 star - unless the CEO makes less than $160,000.
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A section with Total Compensation (COMP) below 40% of expenses, gets 1 extra star
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A section with Total COMP below 30% of expenses, gets 2 extra stars
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When the section’s Total COMP is over 50% of expenses we deduct 1 Star, over 65% we deduct 2 Stars.
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When the Executive Compensation is over 10% of expenses, we deduct 1 Star, over 15% we deduct 2 Stars.
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When the Executive Compensation is below 7.5% of expenses, we’ll add 1 Star.
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Revenue increase of over 40% and maintaining proportional expenses adds 1 Star
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