A guest post from our reader A Balanced Perspective, updating his post earlier this year.
The BMOrg Cash Out of 2010-2017, $35-$47 Million, an Updated Estimate
by A Balanced Perspective
I penned The Great BMOrg Cash Out of 2010 to 2016 – $28 Million to $45 Million, Est post in May. This post is an updated estimate of the BMOrg’s cash out based on knowledge gained in the prior few months.
Despite numerous requests to prove anything incorrect within the original post, no person proved anything incorrect, except I didn’t include the cash from images and trademarks licensing revenue streams; I was naive in the belief of California 501(c)3 laws requiring disclosure of the BMOrg’s large conflicts of interest; DPW labourers are employees, not contractors as I believed, but the cash they were paid is not sufficient to change the estimate; and the other Burning Man Project (the Project) board members were elected for terms of two years, not one year. I penned the post upon this rubbish solely from a belief in fair play, a belief of the awesome Burning Man community, and all awesome Burners whom contribute to throwing the incredible crowd sourced parties, must be treated, by the BMOrg, in a fair manner.
In the manner of the prior estimate, this estimate is based upon simple maths on their statements, their numbers, and their corporate records.
Click on the numerous links for the supporting statements, numbers, and corporate records. Might any person might prove any number or statement to be incorrect, please do so within the comments on this site.
Please disclose if you have signed any contract to be a representative of the BMOrg, or if you are a member of their social media crew. I’m much obliged, Elizabeth, for editing my draft, and to a brace of our brilliant mates for their assistance towards an improved understanding of the financial maneuvers.
A summary of their $35 million to $47 million cash out, mostly tax free, capitalistic cash out, based on simple maths on their afterburn reports, the Scribe’s brilliant SFBG reporting, Decommodification Incorporated and Clarification of Decommodification posts by burnersxxx, on their corporate records, and Larry Harvey’s statements.
Background and Organizational Summary
Black Rock City LLC (BRC LLC) was incorporated in 1999 with Larry Harvey, Marian Goodell, William Roger Peterson, Crimson Rose Elliot Peterson, Michael Danger Ranger Mikel, and Harley Dubois as owners. They are permanent Project board members, per the Project’s bylaws. Marian is the Project’s CEO and/or President, Larry is the Project’s Executive Director, William Roger Peterson as the Project’s Director of Nevada Relations and Special Projects, and Harley Dubois is the Project’s Transition Manager and Black Rock City Manager. I refer to these six as the BMOrg within this post, in due of they are in near total control over their for-profit and non-profit corporate entities. Their precise salaries and positions upon the Project may be obtained by viewing and copying the minutes of the Project board meetings, physically available to any person venturing to their Alabama Street headquarters, as per CA 501(c)3 law and page 36 of the Project’s bylaws.
At the conclusion of 2013, they donated the BRC LLC, which does business as Burning Man, and manages the Burning Man event, to the 501(c)3 non-profit Project, and thus obtained a huge tax deduction in return. The BRC LLC is presently a for-profit subsidiary corporation of the 501(c)3 Project, all profits from the Burning Man event flow up onto the Project’s ledger.
The Great BMOrg Cash Out of 2010 to 2017
2010:
a) Over $4 million of salary. Payroll increased from $2.8 million in 2009 to $7.2 million in 2010, with solely 30 salary employees, temporary salary labourers (DPW), and the six LLC owners to pay as Senior Staff. The contract labourers were paid solely $231,783, and legal and consultants were paid $1,468,000. In 2009, the contract labourers were paid $161,000, thus the increase of payroll isn’t DPW being switched from contract labourers to payroll, it’s a legitimate $4.4 million increase year over year. Thus, unless the salaried employees were paid, on average, over $90,000 each, or the pay of DPW labourers increased far over $500,000, the six prior BRC LLC owners took over $4 million of payroll towards their pockets. Kudos to Woody for providing a spreadsheet clearly illustrating the huge increase of their salaries from 2009 to 2010.
2011:
a) $4 million of salary from $7.1 million of payroll
2012:
a) $4 million of salary from $7.8 million of payroll
b) $100,000 from licence of images. Decommodification LLC, their pass-through royalties company, was formed in November 2010. The BMOrg, previously through their BRC LLC, has been taking 10% of the revenue from licensing of images since 2002. It is believed the 10% levy, a site fee, or a percenage of profits is now going to their for-profit licensing royalties company, Decommodification LLC.
2013:
a) Over $3 million of salary from $7.0 million of payroll.
b) $300,000 from licence of images, primarily from Spark: A Burning Man Story, to their Decommodification LLC. I’m not of the ability to estimate a value upon their income from their Youtube channel, their Ignite! site, print, or upon other potential sources of image licence revenues, thus, I didn’t include other potential revenues in this estimate.
c) $1,000,000 from the licence of their Burning Man(TM) name and trademarks )'(, paid to their Decommodification LLC. The Burning Man(TM) name, and other trademarks, were previously transferred from their BRC LLC to their Decommodification LLC. The BMOrg stated $4.5 million was paid to the BLM, but the BLM, upon being queried, stated they received $3.5 million. Since the original afterburn line was “BLM and other usage fees, and in due of their false statement, I’m estimating the missing $1 million was a usage fee for licensing the Burning Man(TM) name and trademarks. The BMOrg is encouraged to inform us, and the Reno Gazette Journal, where’s the missing $1 million?
d) End of 2013, $1 million to $4 million of cash and properties. They donated their BRC LLC to the 501(c)3 non-profit Project, gifting the event back to the community, as was repeated throughout Spark, though first the BRC LLC was likely stripped of cash towards their pockets, and property towards Black Rock City Properties LLC, of unknown ownership. The cash was likely not a large amount, most profits from prior burns were apparently taken as salaries and trademark licence levies. We won’t know the amount of cash stripped from the BRC LLC ledger prior to the donation, despite Larry stating otherwise, we’ll only know, sometime in 2016, the cash remaining on the ledger post the donation.
They obtained brilliant advice on this donation. They are already taking most of the cash profits from seven years of the Burning Man(TM) event towards their pockets, so how might they gain even more cash? Their donation of the BRC LLC towards the 501(c)3 Project results in their cash out being mostly tax free, perhaps a tax deduction of $30 million to $45 million, 1x or 1.5x sales, due to the future revenues of the BRC LLC from the Burning Man(TM) event, and comparable valuations from purchases of EDM rave festivals. Perchance, they deferred salary from prior years to 2013, terming it a loan, and obtained the benefit of gaining more cash tax free.
2014:
a) $4 million to $6 million from 2014 ticket sales, held in reserve, or held in escrow, for the purchase of the Burning Man(TM) name and trademarks from their Decommodification LLC in early 2017. That’s when Larry states they will be paid for their value, that’s when they will officially cash out. I estimated $4 million of each year of 2014, 2015, and 2016, in due of that was their, by simple maths upon their numbers, prior salary, it would be unreasonable to estimate a smaller number. The $6 million high estimate is due to the Burning Man event revenues increasing from $12 million in 2009, the year prior to their salaries were first increased to over $4 million, to nearly $30 million in 2014. Thus, $6 million is not an unreasonable estimate. This results in a total payment of $12 million to $18 million for the Burning Man(TM) name, logo )$( and other trademarks in early 2017.
The BRC LLC places the cash in reserve, or escrow, each year, but it’s not a completed deal. The value of the Burning Man(TM) trademarks increased since the price might have been set in 2011, and the acceptance of this amount is subject to a vote by the six former BRC LLC owners, though their vote does have to be unanimous to not accept the cash. Financial maneuvers might also occur, perchance donating Decommodification LLC to the 501(c)3 Project for additional tax deductions, after the assets of Decommodification LLC are stripped away to yet another LLC, in the same manner as the BRC LLC was donated to the Project, after the trademarks and other assets were stripped towards their Decommodification LLC.
Mandatory conditions were attached upon the donation of the BRC LLC to the Project, as is the usual for large donations, and some of the conditions are reflected within the Project bylaws, updated at the time of the donation. Burners have not been informed of these conditions, and the plan, might be something Burners don’t expect at all.
b) 500,000 to $1 million in salaries. They are entitled to reasonable salaries for their positions on the 501(c)3 Project. As stated prior, their precise positions and salaries are available on the Project board meetings minutes.
c) $1 million for licence of the Burning Man(TM) trademarks. The $1 million amount in 2013, perchance was decided during the middle of 2013, thus the licence levy might be higher than $1 million for the complete year of 2014.
d) $500,000 to $800,000 for licence of images of Burning Man, primarily from Spark: A Burning Man Story, distributed on Netflix, Showtime, and other channels. The ticket terms state the licensing of images at Burning Man, i.e., images of the art, mutant vehicles, theme camps, and Burners, is controlled by the BRC LLC, and Decommodification LLC. There is no rationale their for-profit Decommodification LLC is within the ticket terms, other than to take licensing revenues towards their pockets.
Thus, by this simple estimate based upon their numbers and their statements, in 2014 Where Your Ticket Money Goes is $85 to $130 of each ticket is directed towards their pockets, in place of towards awesome Burners throwing this crowd sourced party.
2015:
a) $4 million to $6 million from 2015 ticket sales, held in reserve, or held in escrow, for the purchase of the Burning Man(TM) name and other trademarks from their Decommodification LLC in early 2017.
b) $500,000 to $1 million in reasonable salaries.
c) $1 million for licence of the Burning Man(TM) trademarks, paid to their Decommodification LLC.
d) $400,000 to $800,000 for licence of images of Burning Man, paid to their Decommodification LLC.
2016:
a) $4 million to $6 million from 2016 ticket sales, held in reserve, or held in escrow, for the purchase of the Burning Man(TM) name and trademarks from their Decommodification LLC in early 2017,
b) $500,000 to $1 million in reasonable salaries.
c) $1 million for licence of the Burning Man(TM) trademarks, paid to their Decommodification LLC.
d) $400,000 to $800,000 for licence of images of Burning Man, paid to their Decommodification LLC.
Early 2017:
As penned within this estimate, the Burning Man Project, or its BRC LLC subsidiary, is scheduled to purchase the trademarks from Decommodification LLC, including the Burning Man(TM) name, )$( logo, and additional trademarks, such as Decompression(TM) and Decommodification(TM). That’s when they’ll be paid for their value.
Thus, $35 million to $47 million of cash is directed towards minting them, mostly tax free. Upon averages, each of the six former BRC LLC owners will pocket as much cash as was commissioned by them for all the art, including the temples, in the entire history of Burning Man, which is less than $7 million, per the afterburn reports.
Not a shabby capitalistic pocketing for a bottom up crowd sourced party that awesome Burners have thrown for two decades upon our theme camps, mutant vehicles, art projects, and the labours of thousands of Burner volunteers.
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Opinion – A Fair Manner Forward
The BMOrg must:
a) Disclose the details of their cash out to numerous people whom donate cash, art, and volunteer labour to the 501(c)3 Project. The BMOrg must also disclose their large conflicts of interest to thousands of donors gifting art, volunteer labour, mutant vehicles, sound camps, theme camps, and others providing entertainment to ticket buyers. Tickets sold by Black Rock City LLC, dba Burning Man, a subsidiary corporation of the Project, is the primary source of cash going into the pockets of the six people controlling these corporations. They are firmly in control of the Project, and most are also on the BRC LLC board. I believe it dishonourable of them to hide, from donors, the cash directed to their pockets through bureaucratic processes, misdirections and omissions, and false statements, while remaining firmly in control. I’m of the opinion they must act in the manner people believe a 501(c)3, licensed by the State of California, and receiving donations, must act.
b) Disclose the mandatory conditions attached to the donation of the BRC LLC to the Project. Burning Man states, “Over time, however, it is likely that the event will evolve in ways that support the efforts of the non-profit in more distinct ways than are currently apparent or even yet explored“. It is fair for Burners to know, and have great input, into the 100 year plan.
c) Place independent Burners, whom truly represent the awesome Burning Man community, on the Project Board, in place of your mates, fund managers and corporate executives.
d) Distribute most tickets through the awesome Burning Man communities, in place of over the Internet. Rebuild the Burner community in this manner. If people desire tickets, they might obtain tickets by making connections within the Burner community by contributing to the bottom up crowd sourced parties. Permit volunteers to purchase several tickets for their mates. Gift several thousand tickets to mutant vehicle owners, sound camps, theme camps providing entertainment, and artists, whom contribute mightedly towards throwing the crowd sourced party on the playa. Permit them to sell the tickets, at listed price, to their campers and others to defray the costs of their incredible gifts to the community, and of providing entertainment to the BMOrg’s ticket buyers.
e) Negotiate a fair contract with the awesome artists, collectively. Fair is not divide and conquer, nor reimbursing artists solely 30% to 40% of their costs, solely $12 of each $380 or $650 ticket sold to Safari Camps.
f) Pay those whom labour, for more than a brace of weeks, a fair wage. Might you pay an additional 100 awesome DPW arses an hourly wage of $15 for two months, it is $500,000, solely $8 of each $380 or $650 Safari Camp ticket. Add in another $4 per ticket for raising the wages paid towards the DPW to a fair value.
‘ABalancedPerspective’
[Update 12/1/14 2:49pm]
Within this estimate, I estimated for 2010, over $4 million of salaries were paid towards the six prior BRC LLC owners, in due of the payroll rising from $2.8 million in 2009, to $7.2 million within 2010, with solely 30 salary employees, as Larry stated to the sfpublicpress.
The BMOrg, upon their new burningman.org website, states they, at present, have 70 employees or contractors labouring for the Burning Man Project. Except, the estimate of their cashout for 2014 to 2017 does not have anything, in the least, to do in regards of the number of employees or contractors at the present time. Their cashout, of 2014 to 2017, is payment for their Burning Man(TM) trademarks in early 2017, licence of their Burning Man(TM) trademarks each year, licence payments, from others, for images of Burning Man, and salaries in due of their positions upon the Burning Man Project. All above, except salaries, by appearance, are in due of contracts penned prior to 2014.
Please view the post, above, for this information, with payment towards them, of an estimated $85 to $130 of each ticket sold for the 2014, 2015, and 2016 burns