Analysis: 2013 Burning Man Project Financials

It’s been about a week since BMOrg finally released the IRS Form 990 for the Burning Man Project, for 2013. They made a great fanfare on their blog about how this heralded a new era of transparency for them, but now that they are a non-profit, they are required by law to release the 990 details publicly. In fact, there is very little in the way of new transparency from the Org. It’s about a year now since Larry Harvey promised us a “clean, well lighted suite of rooms”, and we don’t appear to be any closer.

The big news they revealed is that each director was paid $46,000 to pass over their share as a partner in the tontine Black Rock City, LLC. A tontine is an archaic corporate structure with military origins, used to finance the opium-trading vessels of the British East India Company and to organize the Freemason’s Hall in London. What it means is “last man standing”, basically if you leave you can’t come back, and the last one alive gets everything. A most unusual structure for a dance party, begging the question who was advising them back in 1996-97 when they commenced the corporatization of the event.

They don’t have the money yet – it is accounted for on the books of the Burning Man Project as a loan to related parties. They may have been paid out in 2014, we won’t know until 2016.

BMOrg had the business valued by 2 different professional assessors. One came in at $4.5 million, but this was discounted by 35% because control of the business was split 6 ways. They restructured the business and came up with a sale price of $7.39 million. The transaction appears to have been structured in such a way that the 6 directors have donated most, but not all, of the value to the Burning Man Project. This may net them a tax deduction of $1,185,667 each (I’m not a professional accountant so, if my friends from Xero North Sydney are seeing this, or any who are, please chime in).

Ostensibly, this seems very altruistic of the 6 Founders, emphasizing a commitment to Gifting, Civic Responsibility, and – dare I say – Decommodification. However, before we get too excited in handing out the accolades, there are many things about this transaction that remain a mystery, and will not be revealed to us for at least another year. One wonders why this is, if they are turning over a new leaf of transparency?

bm trademarkThe most significant area where transparency is still lacking, is Decommodification LLC. Before giving away their share in the ongoing profits of the Nevada event, they sold the main assets of the business – its trademarks, ownership rights of photos and art, and other intellectual property. Who did they transfer these to? Themselves. That’s why Decommodification, LLC exists, and they are charging the Burning Man Project for the use of their trademarks. Once again, something which had been speculation on our part, is now officially confirmed by BMOrg. The annual royalty fee is $75,000. This license is exclusive, and sub-licensable. It seems that it would cover use of the trademarks in all events worldwide, including by regional subsidiaries. We don’t know how much Decommodification, LLC is obliged to pay Black Rock City, LLC for acquiring these assets, and how much the Burning Man Project is expected to buy them back for in the future.

This fee is based on the valuation of the trademarks by the independent appraisers

It seems extraordinary to me that these expert appraisers would value the Burning Man trademarks, an internationally famous name responsible for at least $30 million a year in revenue, at $75,000 – 0.25% of sales.

In 2018, these Intellectual Property intangible assets will be transferred by Decommodification, LLC back to the Burning Man Project – unless the Directors vote unanimously against that. This is by no means a done deal yet. Will the transfer be a gift, or a sale? Larry Harvey and Danger Ranger both expressed slightly different opinions on the Voices of Burning Man:

    • Speaking for myself, I don’t see why we should be compensated for the transfer of the trademarks. I can say with complete confidence that it will not be a big payday; this has never been our intention.

Last gift? Does this mean they won’t even be attending any more, once the Project has been officially handed over to its Foundation?

The gift of Black Rock City, LLC was valued at “cost” of $7.39m. This is most likely balance sheet assets minus liabilities.

LLCs are different from Incs, in that they don’t have stock. Instead, the partners share in the spoils of the business. LLCs can distribute cash to the partners. We know nothing about what happened between Black Rock City, LLC and the Founders, before they gave their shares of the business to their non-profit foundation. Did they get a payout, on their cut of the profits accumulated over nearly 30 years of putting on this festival? And can this payout be offset by a tax deduction, from the donation of their partnership slot to the non-profit?

We also know nothing about the various salary payouts over the last few years. All we have to go on is the marked jump from $2.8 million to $7.2 million, which our reader A Balanced Perspective incorporated in his guest post calculations on the cash-out. [An addendum to that post follows this article. He feels that these disclosures from the new transparency may invalidate his earlier assumptions; my personal belief is that it is too early to say, as almost all the details of the transaction are still being kept secret].

Also still an unexplained mystery, is the million dollar+ “Other” amount – the difference between the fees paid to the BLM (according to them), and the “BLM and Other” line item on the Afterburn Report. This is the festival’s largest expense after payroll.

Let’s take a look at the combined entity, Burning Man Project (incorporating Black Rock Arts Foundation):

Screenshot 2015-02-03 16.45.22

My updated spreadsheet shows that the combined “Burning Man Arts” entity has become much more expensive to maintain, expenses almost doubled from 2012 to 2013. The largest expense is salaries, with CFO Jennifer Raiser taking home $111,000, paid staff $172,000, and “management fees” of more than $300,000. They also spent $45k on travel and $17k on conferences – this is apparently in addition to the $425k and $100k spent on these by BMOrg (source: Afterburn report).

In 2016, we will see the Form 990 for 2014, the first year that the Burning Man Project and Black Rock City LLC were totally integrated. No-one outside the company has seen the top line revenue numbers for Burning Man, which we understand to be $30 million from comments made by Marian Goodell. Will these sales be reported as sales of the Burning Man Project, or will they just show a single line item for the net profit of Black Rock City LLC? If it turns out to be the latter, we’re really not getting anything new in the way of transparency and opening up the books.

The Reno Gazette-Journal, in a story headlined “Burning Man Founders Sold Festival for $276k”, looked at the numbers, and spoke to BMOrg’s Communications Director Megan Miller:

“It is definitely incomplete information”…While all of the information required from the Internal Revenue Service is in the documents, Miller said, Burning Man cannot yet disclose revenue information from this past year’s festival, nor the one prior since the organization currently is undergoing an outside audit for 2013 and 2014.

All of this missing information that Burners have been seeking should be available before this year’s end, Miller said.

“Coming soon”…11 months away, at least.

“None of the finances were shared before. We didn’t share how the transaction happened, who was paid what. We thought this was a good opportunity to share,” Miller said.

They still haven’t shared how the transaction happened, or who was paid what. They have simply shared the information they were required to by law, as they did the previous year. They share more information about the finances in the Afterburn reports, than in this Form 990.

…all profit made from the festival will flow directly into the nonprofit’s coffers. Burning Man is required as a nonprofit to use any surplus funds to further its worldwide mission of expanding minds through art….

According to one appraiser, the shares were worth $1.23 million each, though another appraiser estimated that each share was worth closer to $809,000, according to the 990 form filed for 2013.

…Since becoming a nonprofit, Burning Man is focusing more on fundraising for its grant programs, including the “honorarium” program that funds projects for artists who want to create art for the playa, the playa being the desert flat where the main event is staged.

We do not yet know if they have increased the size of the individual Art Grants, or are going to award more grants than in previous years.

Burning Man this year discontinued its donation ticket sales, in which Burners could opt to purchase a ticket for more than the previous $380 value to help someone else buy a ticket at a discounted price.

I think the Reno Gazette-Journal’s new Burning Man beat reporter Jennifer Kane, who has not actually been to the event yet, has got her VIP Donation Tickets mixed up with her VIP Pre-Sale tickets. Donation tickets are out, after 1400 were sold at $650 last year. They claim that the Pre-Sale enables lower income Burners to get a discounted ticket, despite the clear mathematical difference between a $410 premium for Pre-Sale and a $200 discount for Low Income. If VIP tickets were there to enable those who can’t afford it to attend, at $800 there should be double the number of Low Income tickets. Pre-sale sold out quickly, bringing the non-profit a cosy $3.3 million cash. Nice way to start the year!

“This is the beginning of what we hope to do a lot more of,” Miller said, noting that the Burning Man organization will be posting its forms annually on its website in an effort to be more transparent.

I hope that the long-awaited transparency turns out to be more than just publishing the information they are required to by law. Compliance is not the same thing as openness.

Having said that, I commend the Founders for choosing to keep the cash in the business to fund more Art. I hope that this will continue into the future.


A Balanced Perspective writes:
The BMOrg’s donation of the BRC LLC to the Burning Man Project, and the process the BMOrg utilized is very honourable. The Burning Man’s Nonprofit Financial Information Released, and the 990 form of 2013, are a first step towards ‘a well-lighted suite of rooms’. Larry, Marian, Danger Ranger, Harley, Will, and Crimson deserve our immense gratitude upon their donation. But, there is much more information required for ‘a well-lighted suite of rooms’.
I must apologise for parts of the cash out posts and my other comments. While I was correct in regards of what occurred, of that they donated the BRC LLC to the Project for near to $0, I was very wrong in regards to the numbers from their donation of the BRC LLC, dba Burning Man, to the Project at the end of 2013, and the 2014, 2015, and 2016 numbers, my numbers were way too big. I estimated the tax deduction in due of the donation was $30 or $45 million, utilizing a market value method of valuation of 1x or 1.5x of sales, but they utilized the cost method of valuation, of assets upon the ledger minus the liabilities, resulting in solely $7.4 million of deductions upon tax levies. I do not understand the rationale of why the profitable $30 million revenue stream was valued at solely $0, but, it is very honourable of the BMOrg to donate the BRC LLC to the Project for such a low deduction upon tax levies.
I estimated $1 million for 2014, 2015, and 2016 for licence of the Burning Man(TM) name and trademarks in due of the missing $1 million they wrongly stated, in ‘Where Does Your Ticket Money Go’, they paid towards the BLM as a usage fee within 2013, but they will licence the name and trademarks to the Project for solely $75,000 each year. I apologise for being wrong in this manner, what the BMOrg did in donating the BRC LLC to the Project, and taking solely $75,000 each year for the licence of the trademarks, is very honourable.
In addendum, by appearance, they will solely take near to $1 million each, if even that, and, perchance, a very big tax deduction for the other part, as payment for the Burning Man(TM) trademarks within 2018, which is very honourable. I estimated they would take $2 million each for the trademarks, with a high number of $3 million each, I was wrong in this estimate. I based this estimate upon the continuation of their estimated pocketing of $4 million each year of 2010, 2011, 2012, and 2013, based upon the difference in the afterburn reports from the payroll number and what employees, by simple maths, were in actuality paid. This results in an estimated $16 million take towards their pockets, in total, from 2010 to 2013, which remains a valid estimate, whether they took this as salaries, or as distributions of retained earnings, prior to their honourable donation of the BRC LLC to the Project. Might any person desire to dispute this, tell us where is the missing $4 million of payroll, when they stated towards us payroll increased from $2.8 million in 2009, to $7.2 million in 2010, with solely 30 employees to pay, and contractors being on a different line in the ledger, and paying little towards temporary labourers.
This lowers my estimate of their cash out, from near to $40 million, to within the mid-twenty million dollar range, from 2010 until 2018, I apologise. But, we are not of the knowledge of the amount of cash they took towards their pockets prior to their honourable donation of the BRC LLC to the Project, they do not desire to tell us, thus, this is solely an estimate.

I do not understand the rationale as to why the BMOrg delayed 10 months in disclosing the information we have been requesting upon their cashout. It would have been easy peasy for them to state this the prior March (or May, or July, or September, or November) when queries upon payments towards them, and towards their Decommodification LLC, were presented. I might understand of them stonewalling any query upon how much cash they took towards their pockets prior to their honourable donation of the BRC LLC to the Project, but I do not understand the rationale as to why they did not answer the queries upon the donation and upon the years after the donation. The first step in proper public relations is to get in front of an issue, of which, they did not do. Two simple paragraphs were all that might be required, with the statement of that it was preliminary and unaudited.My desire is, now that their honourable donation of the BRC LLC to the Project is complete, and ticket sales were increased from $12 million in 2010, to $30.5 million in 2015, and their cash out is near to completed, is that they might cover all costs of the awesome artists (of which, they do not plan to do within 2015), present to the artists a fair contract, pay all DPW a very fair wage, and provide full transparency, this spring, as to where the ticket money in actuality went within 2014, and is planned to go in 2015, in the place of stating towards the artists, and towards DPW labourers, of that ‘we do not have the cash to pay you’. In addendum, support the mutant vehicle owners, sound camps, and other camps providing entertainment, by gifting them several thousand free tickets to the event, this is solely fair.

The Burning Man Project is a 501(c)3 taking donations, my belief is they owe the donors of art, labour, cash, and stock, to the Project, and to the profitable subsidiary corporation of which they have near to total control, much more information as to where the money did go, and as to where the money is to go, in addendum to their conflicts of interests, purposed towards the DONORS being of the ablility to make an informed decision as to whether they might desire to make their donation of their art, labour, cash, or stock.

‘A Balanced Perspective’

All We Want For Chri$tma$ Is Your Money [Update]

image: Susan Averello/Flickr (Creative Commons)

image: Susan Averello/Flickr (Creative Commons)

Remember Burning Man? That unique experimental city, free from the commodification of commercial transactions? Well, now that the owners have transferred it into a complicated corporate combination of tax-free and for-profit companies, that seems to be a thing of the past.

Welcome to Burning Man 2.0 – where new revenue streams are the raison d’etre. The latest one? Taking a cut of our spending on Christmas presents. Taxing our gifting.

While most of us were enjoying our Thanksgiving turkeys, grateful to family and friends and counting our blessings, Burning Man’s Minister of Propaganda Will Chase was counting the cash. Looking at all the money that was about to be spent for “Black Friday” and “Cyber Monday”, and wondering – “how do we get a piece of that action?”

He posted at Voices of Burning Man a plea to use Amazon’s Smile feature, to divert funds away from needy charities and give it to BMOrg’s non-transparent non-profit.

The post immediately encountered criticism, and was quickly yanked from the site, replaced with a heartwarming Halcyon story about taking his Mom’s Virginity. One of our eagle-eyed readers spotted it and saved it. We wrote about it here: Boycott Commodification – Or Just Give Us Your Money.

We thought they pulled it because they realized it was a lousy move, and inconsistent with the Ten Principles. Taking a percentage of peoples’ Gifting, WTF? Sadly, though, it now seems to have been more about keeping negative comments off their precious new site.

Yesterday, they sent out a “Special Edition” of the Jackrabbit Speaks newsletter. Was it wishing us Season’s Greetings and a Merry Christmas? Was it thanking us for everything we’ve done for them over the years, all the art and talent and spectacle we’ve brought to the Playa, to help their Directors fill their Commodification Camps?

Nope. There’s not a Merry Christmas or Happy Hanukkah to be seen. Not even an invitation to buy above-face value tickets as Christmas gifts, to help the poor. It’s all about them.

This time, they sent it out as an email, no doubt to mute criticism of further acts of Commodification from a corporation that increasingly appears to be focused on the almighty dollar. It’s more of the same thing as before. “Give us your money. And give us a cut from your Christmas shopping too”:

Now is the time for Burning Man to grow its capacity to have a transformative global impact. With your generous support, we will make the Burning Man experience accessible year-round and across the globe; nurture the network of Regional Contacts who build our community; provide more grants, training, and support to creators of radically interactive art and events both on and off the playa; and fund civic programs that teach communities the power of collaboration.

Together we can turn our growing potential into programs and experiences that will help transform people’s lives throughout the world. But we need your support to make it happen.

How will they transform peoples’ lives? So far, by speaking for a few minutes about themselves in panel discussions at conferences, and helping get an art car into Zappo’s HQ lobby. It’s very meta: “we do good in the world by telling people that we do good in the world”.

Burning Man’s gone through a significant structural change in the last year, and that’s created some confusion as to who’s who and what’s what … so who are we now?

The short answer is that we are proudly Burning Man. Burning Man Project is simply the legal name of the umbrella organization for all of our programs and activities, including Black Rock City, LLC (which runs the annual event in Nevada) and the Black Rock Arts Foundation (now Burning Man Arts).

A bit confusing right? So for simplicity’s sake, we call the whole thing Burning Man, representing all that we are, all that we do, and all that we hope to create in the world. And when we say ‘we,’ we really mean YOU. In fact, we created the non-profit to support and proliferate the wide variety of Burner-initiated programs and projects we saw springing up spontaneously all over the world.

Oh great. We can call it Burning Man now. And donate more money to them while we’re at it, in the name of transforming peoples’ lives.

“Support and proliferate” is an interesting synonym in BMOrg- speak for “sue and claim credit for“.

What about the significant structural change that saw the main assets of the business being transferred to Decommodification, LLC? That doesn’t get a mention. Should we consider this private, for-profit, non-transparent company “proudly Burning Man” too? I mean, it’s the thing that actually “owns” Burning Man. When we give to Burning Man, are we helping its owners, or Burners?

Damn right, it’s confusing. Perhaps sending our money to them will somehow help make it less confusing. Or – here’s a thought – maybe if they provided the transparency they’ve been promising for years, instead of propaganda, spin, and misdirection, we could look at what’s really going on for ourselves and be less confused.

While ticket sales cover the cost of producing the event in Black Rock City, all donations support our year-round programs, projects and initiatives. And since Burning Man is, in its totality, now recognized as a non-profit, all donations are tax exempt.

If you read the fine print, they actually say donations are tax deductible to the amount recognized by law. The burden is on the giver to figure out what that means.

As for ticket sales covering the cost of producing the event in Black Rock City? As recently as last weekend, BMOrg CEO Marian Goodell said that their annual budget is $30 million.

Thanks to their recent revelations, we can recalculate ticket sales:

bm ticket calcs dec 2014

Revenues will be at least a couple of million dollars higher than this, because it is solely based on official ticket numbers. It does not include Exception Tickets that are sold at the gate and last-minute Bitcoin ticket sales. The only official number we have for how many tickets were re-cycled by Burners through STEP is a statement from BMOrg on July 17; STEP kept running for a few weeks after that, so there may have been more, leading to more handling fees. The vehicle passes were not a requirement from the Feds and are not transparent, so we have to take their word that they only sold 35,000. So far we haven’t heard a single instance of someone being turned away at the gate because they didn’t have a pass.

On top of these revenues, Burning Man also sells ice, energy drinks, coffee, merchandise, gas, propane, takes a cut on fine art sales, earns a percentage from movies and their soundtracks…and accepts donations.

They say that “ticket sales cover the cost of the event”. What does it cost to put on the event? We have covered this in some detail for 2013 and 2012, taking the numbers from their Afterburn reports.

BMOrg’s Afterburn chart breaks down their expense into “Event-Related” and “Year Round”. We don’t have information for 2014, and won’t for probably another half-year; but we know that despite the sale of at least 69,735 tickets, the population was 65,992 – down from 69,613 in 2013. It seems unlikely that it could have cost them more to support less people, so the costs are probably comparable between 2014 and 2013.

Total “Event-Related Expenditures” for 2013 was $11,232,928 

Total “Expense categories that include both event-related and Organizational” was $11,169,506

As you can see, $28.6 million of ticket sales is more than enough to cover the costs of putting on their annual crowd-sourced event. Most of the cost of Burning Man, including the art, music, art cars, costumes, and spectacle, is actually paid for by Burners, in addition to the money we give the bureaucrats in ticket sales.

The largest single event-related expense Burning Man has is their fees to the Federal Bureau of Land Management. They have to reimburse the agency’s costs, as well as pay a 3% cut of their revenues. For 2013, this amount was $3,450,000. The BLM also gets a 3% cut of revenues from the 45 licensed vendors who are conducting commercial transactions on the Playa. There is an unexplained “Other Usage fees” discrepancy of $1,072,952, which we have speculated is the license payment to Decommodification, LLC, and BMOrg have never bothered to clarify.

The largest “both event-related and Organizational” expense is payroll and contractors: $8,194,389.

The next largest is lawyers and accountants: $1,427,177.

What do all these people do all year, except picking the theme, trolling and doxing their critics, and inventing ever-increasing ways to stick their hands into our pockets?

Jackrabbit repeats their claim:

Together we can instigate cultural change in the world.

While the costs of operating the annual event in Black Rock City are covered by ticket sales, the work we do through our year-round programs is supported by community giving.

In 2013, Donations to Nevada schools and other Local Organizations was $199,329 (funded by ticket sales)

2013 Grants given out by BRAF were $101,556 (funded by the Artumnal party)

We’ve covered the merger of Black Rock Arts Foundation into Burning Man Arts in Art World Rocked by Burning Man’s Latest Move and 2013 Charity Results Released. Basically, these non-profits seem to accumulate more cash than they distribute out in grants.

Admittedly, we’re shooting in the dark a little here, because BMOrg’s transparency leaves a lot to be desired. We’re comparing 2014 ticket sales and unknown extra revenues, with what information we do have about 2013 expenses.

The latest plea for cash suggests Burners find out if their employer has a donation matching program. Bank details are provided for you to wire your funds directly to them. This statement also raised some eyebrows from Burners:

Bank: Wells Fargo
WellsTrade account number: [snip]
DTC number: [snip]
First Clearing/Wells Fargo Advisors

Yes, they don’t just take cash – you can give stock to them as well. This could be useful, for example if you invested $10,000 in a start-up, which got a subsequent funding round at an increased valuation, meaning your stake on paper is now worth $20,000; but perhaps the startup is seeking more funding and has a questionable future, so you want to give the stock to BMOrg. Writing off the investment at a loss probably has to be done at cost price ($10k), but donating the stock could perhaps be done at market value ($20k). As always, I’m not an accountant or lawyer, get your own advice – I’m just pointing out a hypothetical way that this new offering from BMOrg could potentially help Burners. I guess they figure that with so many tech people coming, they might as well get a share of all the startup action they can get their hands on (for free, of course).

Some Burners thought that this meant you could buy stock in “Burning Man”. This is not possible in “The Burning Man Project”, which is a 501(c)3 non-profit. It acquired 100% of Black Rock City, LLC, which is the operator of the annual Nevada event. Black Rock City, LLC has a license from Decommodification, LLC to use the Burning Man name and logo in its marketing and sales activities. Can Decommodification sell stock? Unknown, but unlikely – since most LLC’s don’t have stock. The Articles of Incorporation and Bylaws of Decommodification, LLC are secret – we don’t know if it is possible for them to add new members or sell the company (and thus all the assets of Burning Man). Apparently Danger Ranger created some sort of “deadman trigger” in this company which means that its assets are transferred to the Burning Man Project in 3 years unless the Directors vote otherwise; however, we have to take his word for that, since they are not sharing any of this documentation with Burners.

Interestingly, in doing the research for this story, I found out that one of the members of Black Rock City, LLC is now yet another private, secretive corporation:  “NV Event Production Co”. If anyone has any information about who is behind this entity, please share.

Finally, the “Special Give Us Your Money Edition” of the Jackedrabbit asks us to give them a cut of our Amazon purchases:

If you’re in the throes of getting your holiday shopping done, maybe consider making some good stuff happen with your purchasing power?

If you shop on Amazon, do it through AmazonSmile, and Amazon will donate .5% of your sale price to the Burning Man Project, supporting our year-round efforts to share Burning Man culture with the world. You get your stuff, and more people get to experience Burning Man. Win win.

How does this make “good stuff happen”, or “more people get to experience Burning Man”? Veteran Burners who want to go already struggle to get tickets if they’re not on some special list, and the recent mainstream marketing in The Simpsons and the Daily Mail is not going to help with that. It’s hard to see how giving money to this tax-exempt structure will.

I nominated Reallocate for my Amazon Smile. They’re a real charity, all Burners, doing really good things. In 2013, for every $1 given to Reallocate, about $10 of engineering time from its volunteers was applied to help needy charities with technical expertise.

If you want to do good, donate your money to causes that actually are doing good.

Ho, ho, ho. Merry Christmas and Happy Hanukkah, Burners – I hope you have a wonderful holiday season and a fantastic New Year.


[Update 12/14/14 8:18pm]

It’s not Gifting, if they have to ask for it. Larry Harvey said:

in the culture created by Burning Man, the value of a gift, when rightly given and received, is unconditional. Nothing of equivalent value can be expected in return; this interaction shouldn’t be commodified

Larry Harvey in The Atlantic:

Gifting, says founder Larry Harvey, emerged as the preferred system because “participants were unwilling to distance themselves from others through economic transactions.”

“Burning Man is like a big family picnic,” he told me. “Would you sell things to one another at a family picnic? No, you’d share things.”…

“People give because they identify with Burning Man, with our city, with our civic life,” he says. “The idea of giving something to the citizens of Black Rock City has enormous appeal to them because it enhances their sense of who they are, and magnifies their sense of being. That’s a spiritual reward.”

He says gifting—defined as the act of giving without the expectation of anything in return—alters the notion of value.  

“What counts is the connection, not the commodity,”

The spirit of Christmas is not asking for presents.

One of our readers pointed out that since SherpaGate and DangerGate, we’ve added a lot of new audience members who may have missed our earlier coverage of the Burning Man 2.0 non-profit.

Related Posts:

We’ve looked at the efficiency of their charities before, here:

The Art of Giving went through everything Burning Man Project (BMP) has done since they came up with it 4 years ago.

Art World Rocked By Burning Man’s Latest Move looked at the merger between BRAF and BMP, and the poor track record of both charities in giving grants out to the causes they support, versus accumulating cash in the bank and spending it on overheads.

2013 Charity Results looked at the performance of BRAF from the latest IRS filing. We’re still waiting on the 2013 IRS Form 990 for BMP.

Art Versus Money looked at the terribly one-sided Arts Grant contract, that seems to treat artists with contempt.

Charity Versus Tax-Free considers the idea that “non-profit” is not the same as “charitable”, and looks at some of the clauses in the organization’s new Bylaws that don’t seem consistent with Directors running lavish Commodification Camps.

Burning Man’s Gift Economy And Its Effect On Mainstream Society talks about the hypocrisy of BMOrg claiming credit for the charitable efforts of Burners, and pretending they gave financial support to charities that they actually didn’t – including a couple that were substantially funded by myself, and received $0 from BMOrg who promoted them as examples of “all the good Burning Man is doing in the world”.


image: Flava Claus/Flickr  (Creative Commons)

image: Flava Claus/Flickr (Creative Commons)

Exploring the Other: 2014 Edition

Burning Man requires its Regional Events to have transparent financials, donate to their charities, and obtain a license to use their trademarks. For themselves, the requirements are not so strict. Sure, they have to disclose the activities of their non-profits to the IRS. And they share numbers with us in their Afterburn reports. The Afterburn numbers are not audited as far as we can tell, and are not a complete financial statement. Significantly, Revenues are left out. Also significantly, very general category headings are used for expense items. We know that Decommodification, LLC, a private, for-profit company, owns all the rights to the trademarks, images, videos, soundtracks, fine art, and other intellectual property of the event. We believe that Black Rock City, LLC pays royalties to Decommodification, LLC, to call their event in the Nevada desert “Burning Man”. But there is no line item for this payment. How much are those royalties? That’s a secret.

cartoon_accounting_2In order to estimate it, some forensic accounting is required. It may not be perfect, but it’s better than nothing. And Burners.Me is the only site on the Internet that is even trying.

Last month, right before the event, Burning Man added a page to their site explaining “where does my ticket money go”. The page appears to be an “orphan”, which means it is not linked to by any other page there. The Reno Gazette-Journal somehow found this page, describing it as an “announcement”, and used it as a reference for their story “Where does your ticket money go?”. The Journal said:

Burning Man announced today where ticket sales money goes to shed light on why tickets cost what they do

We looked for the announcement on their web site, their press page, their blog, and in their JackRabbit speaks newsletter – couldn’t find it. Some claimed they posted it to Facebook, but it doesn’t appear in their official feed. The page seems like it was added to the site for the purpose of the RGJ story. It is filed under “What is Burning Man?”, but that page has no link to it.

Water please, he's got mud on his advertising!Was it really an announcement, designed to shed light? Or was it a ruse, designed to muddy the waters and confuse the language, figures, and facts used in public discussions of the event?

The story raised an issue with us here. Both Burning Man, and the RGJ, were claiming that “BLM fees were $4.5 million”. The entry in the Afterburn accounts says “BLM and Other”. So what is the Other? And how much are the payments to them?

We have speculated that “Other” is Decommodification, LLC. Payments to them may be lumped together in this figure, and may also be included in “Taxes and Other Licensing Fees”. We said:

the reason that the word “other” is significant in the original report is that in 2013, this category jumped from $1.8m to $4.5m – with no explanation given for the gigantic leap ($2,654,919 gain). “Taxes and Licenses” jumped from $154,994 to $1,021,851, also without explanation ($866,857 gain). At the same time, “Decommodification LLC owns the rights to everything” (or words to that effect) is now on all the tickets. Coincidence? Well the fact that BMOrg is trying to gloss over it by using increasingly vague language makes that seem even less likely.

…What is interesting here is the subtle use of language to mask truth. The carefully chosen words “BLM and Other Usage Fees” are repeated and slightly distorted, through a technique sometimes called “Chinese whispers”, to become “BLM manages the event…2013 fees”.

The distorted information has been picked up and repeated by many other sites: Las Vegas Sun, High Country NewsRedditRon’s Log, Yahoo Finance, the Black Rock Beacon.

So who is correct? Burning Man themselves? Mainstream media newspapers? Or little ‘ole us, puny and pesky “social media bloggers”?

It’s us, of course. RGJ is wrong, and BMOrg are either misleading us (accidentally or deliberately), outright lying, or (to be charitable) are merely ignorant and the left hand doesn’t know what the right hand is doing.

How do we know? Because we went to the source. The Federal Bureau of Land Management.

Here’s what BMOrg said:

The Black Rock Desert is public land, but we don’t get to use it for free. It also takes a lot of equipment and hours of labor to put things together out there. The following are just a few highlights of costs we incurred in 2013:

  • The space we use is managed by the Bureau of Land Management (BLM) and our 2013 fees to them totaled $4,522,952.

Here’s what the RGJ said:

The following are some of the costs Burning Man said it incurred in 2013:

Bureau of Land Management (BLM) manages the land the event is held on: 2013 fees totaled $4,522,952;

Here’s what Gene Seidlitz, chief of the Winnemucca-based Black Rock Field Office of the BLM, and the guy responsible for the Burning Man permit, said in response to our enquiries:

Burning Man is required to pay fees and costs to the Bureau of Land Management (BLM) as part of a Special Recreation Permit (SRP) issued by BLM to Burning Man each year.  Fees are set by Congress and are currently 3% of revenue related to the SRP.  For Burning Man this includes 3% of ticket sales, ice & coffee sales and other miscellaneous revenue.  The funds go toward BLM’s overall program management within the Winnemucca District with a priority in the Black Rock Field Office.

Burning Man also reimburses (cost recovery) BLM for all reasonable and justifiable costs related to BLM’s administration of the SRP.   Processing includes, but not be limited to, the following: coordination, administration and approval of any necessary NEPA compliance; consultation with appropriate Federal, State, Tribal, and local officials; preparation of the administrative record and resolving any protests, appeals and litigation that might result from the proposal, preparation of all decisions and authorizations resulting from those decisions, monitoring the construction, operation and termination of any resultant authorization; and other necessary processing actions consistent with a final decision.

It seems that those costs jumped, big time, between 2012 and 2013:

In 2012 BLM did a comprehensive analysis of the 2011 operations after the event and determined the BLM needed and would enhance the BLM planning and implementation in 2013 to ensure public health and safety for an event of 70,000 participants in a remote environment was adequately addressed.  As a result BLM’s costs increased from $1.2 million to $2.8 million that year. This was the largest jump in BLM’s costs in the history of Burning Man. Before and since the cost increases have been more incremental and were the result to inflation, growth of the event, etc.

So did the BLM charge Burning Man $4.5 million in 2013, or less?

BLM charged BRC approximately $2.8 M  for costs and approximately $685,000 were the 3% revenue for 2013

Did the BLM do anything to enforce the Vehicle Pass restrictions, or was this something Burning Man came up with?

BRC instituted the vehicle pass program.  This was not something that BLM enforced.

We wondered if the 35,000 vehicle passes were counted in any way by the authorities. It appears not, so it was up to BMOrg to issue them and regulate itself. If they sold more than the stated limit of 35,000, their punishment would be to have more profit forced upon them. If enterprising BMOrg insiders wanted to make some cash on the side, all they needed to do was sell a few vehicle passes on the black secondary market. From the moment they were released, they were for sale for 4-5x face value on Stubhub, and remained at a premium right up until the week of the event. We’ve heard no stories of people being rejected at the Gayte for not having vehicle passes, so I think we can safely assume that they sold more there to whoever required them. Whether or not the new vehicle tax did anything about the environmental footprint of the event (which we were told was the reason for the initiative) is unknown; it definitely was a nice $1.4m+ cash drop to the bottom line for BMOrg (which we speculated was the reason for the initiative).

2014 vehicle pass pricesComing back to the BLM figures, we have:

Costs: $2,800,000

Revenue share: $685,000

At 3%, this means the event revenues were $22,833,000.

We said:

According to the official numbers, in 2013 there were 61,000 tickets sold ($23.23 million). This includes a last minute release of 3000 “OMG” tickets, when the BLM approved a population cap increase. Also according to the official numbers, 69,613 attended the event. What gives? Did anyone at BMOrg make money from the unexpected 8,613 extra people (ticket value: $3.3 million)? Or were these tickets handed out for free to volunteers, who sold them on Stubhub or STEP for personal gain? How much was made from gate sales?

At the time, we were pooh-poohed, “there are no gate sales”. Of course there are, and it has now come out from independent sources that they are called Exception tickets.

In theory, the BLM revenue share should also include sales from ice, coffee, gasoline, propane, Plug-n-Play camps, and any of the other things for sale on the Playa – in 2013, there were 44 licensed vendor permits issued for Burning Man. We have estimated ice and coffee sales as above $1 million annually.

Either BMOrg gave out 1000+ free tickets that they were supposed to sell, in addition to the 8,613 free tickets from the population cap…or there is some discrepancy in the revenues being reported to the BLM.

Could the discrepancy come from the 3000 “Holiday tickets” ($650 – this year, sold at the end of January), and 4000 Low Income tickets ($190)? Back in the day, there was a suggestion that Burners paying the enhanced price were subsidizing the low income Burners. If you count the $650 tickets as $380 (the difference being a donation off-Playa to BMP, perhaps), and keep the Low Income at $190, you get $22,420,000 – which allows for a further $413,000 of additional on-Playa revenues. It seems like ice and coffee alone would be more, and the BLM is supposed to get a share of gross revenues, not net.

In a speech in Tokyo earlier this year, BMOrg CEO Marian Goodell said their revenues were $30 million a year. If she was referring to 2013 – and why wouldn’t she be, since 2014 hadn’t happened yet – then there is $8,167,000 that BMOrg makes off-Playa, in addition to the annual Black Rock desert event. Where does this money come from? It’s hard to imagine it’s from donations, since according to the Burning Man Project’s IRS Form 990, their funding for 2012 was $591,672.

The true figure for “BLM fees” in 2013 is $3,485,000.

Which means “other” is $1,037,952.

Where does this money go?

We have no direct proof that it is to Decommodification, LLC, but I can’t think of any other candidates. The State of Nevada imposes a 5% “live entertainment tax”, but Burning Man and EDC are exempt as outdoor festivals. There are separate line items for taxes, anyway. “Taxes and Licenses” also made a massive, unexplained leap: from $154,994 (2012) to $1,021,851 (2013) – an $866,857 gain. Possibly, some or all of this increase could be going to license the trademark in addition to the Mysterious Other. We know now that Decommodification, LLC permits them to call their 30-year old party “Burning Man”, by licensing “their” intellectual property back to Black Rock City LLC. It seems strange that BMOrg would mis-state their own figures by 23%, and the way the Where Does My Ticket Money Go “announcement” was made is suspicious.

To put the Mysterious Other in context, it is more than the payments for art ($830,280) and donations to local charities ($199,329) combined.

As always, if anyone has any further information, explanation, or details, please share.