Burning Man 2017 Financial Analysis, Decommodification and Flysalen [UPDATE]

Every year we bring you a look at Burning Man’s financial performance.

This year we’re also going to take a deeper look at their major assets Fly Ranch and Decommodification, LLC.

Burners.Me Previous Financial Coverage: 2012201320142015, 2016

2017 Burning Man IRS Form 990

2017 Burning Man Annual Report

Some highlights:

  • Revenue from Burning Man event $42.8 million, up over $5 million from 2016
  • Annual Surplus (Revenue less Expenses): $3,733,876
  • Donations received almost $1 million
  • salaries (including contractors) increased $2.1 million
  • Cash and receivables: $11.75 million, up from $9.5 million in 2016
  • Total assets: $27.8 million

Sales of inventory was $1,605,516. That’s a lot of ice and coffee. Ice cost $596,177.

Medical expenses were $649,000.

Their stock donation program seems to be working, with a donation of $26,517 in marketable securities.

Most of the key personnel got pay rises in 2017, though some went down:

Overall payroll including contractors is $18,703,754 = 42% of revenues.

Grants as a % of revenues = 3.8% . Note this includes the cost of building The Man, the base structure, and partial funding of Playa art projects including the Temple.

The list of grant recipients contains many familiar names.

Burners Without Borders made 4 grants, totalling $4,900. [* this is for grants outside the US and has been disputed by BWB director Breedlove. See comments. I have asked him to provide the correct information, I will add it to the post – Ed.]

The annual Artumnal gathering took in $629,404 in 2017. About $100,000 of this went to pay for the use of the facility:

2017 Fundraising Event

This is a substantial increase on 2016:

2016 Fundraising Event

Commentary

A huge thank you to A Balanced Perspective, DS and Anonymous Burner for their contributions and thoughts.

  • Artists receive less than 2% of the budget (approx $800,000)
  • Regionals receive about 4% of the budget ($1,717,766)
  • About 9% of the budget gets piled up in the bank account as cash.

Anonymous Burner says:

The art funding is constantly presented as a central tenant of the event, but is actually getting funded like an afterthought.  Artists are the face and the creativity of the core of the event, but have to carry their art on their own backs while others claim credit for making things so great for them

What does an organization trying to “make the world a better place” through art need with so much cash, into the tens of millions of dollars? Why do they spend such a tiny amount of the money given to them by Burners every year on art? Why do the ticket revenues increase 10% a year but the art budget seems to keep proportionally shrinking?

How can they justify spending $1 million a year on insurance without providing insurance for the 10,000 or so workers on site building the city, art installations and camps? Would it really kill their vision to make $3.5 million a year instead of $3.9 million, and look after their workers better?

Why does the main “charitable” organization have to spend more on the Regional Events than they give out on grants? It’s about double the art budget. Is the purpose of Burning Man to spread Burner culture around the world through art, or is it to expand their inefficient bureaucracy? Can’t the Regional events support themselves?


Population Summary (note: includes 2018)

The number of paid participants according to calculations in the Pershing County Sheriff’s Office report was 69,493.

I filed a FOIA request to get the 2017 vendor list: 84 companies selling things other than ice and coffee.

DS has also been filing FOIA requests for information about Burning Man. He was able to get this heavily redacted information for 2017, the calculations used to pay the Bureau of Land Management’s 3% fee.

Why the need for such secrecy?

The bulk of the $4,349,723 in Permits, Taxes and Fees appears to be the 9% Nevada Live Entertainment Tax. [* see comments – Ed.]


Decommodification

One of the interesting things in the 990 is the listing of “related entities”. It includes Decommodification LLC, but the share of end of year assets is $0.

Decommodification LLC is the organization that was created at the same time as the non-profit Burning Man Project, to hold all the intellectual property. As far as we can tell, it gets paid $75,000 per year in royalties from the Burning Man Project for use of their trademarks. We have no information on what other royalties it earns, for example from sales of the documentary “Spark” or the “lines around the block” Smithsonian exhibit. Google recently commissioned Burning Man to design a $2 million art installation for their campus: where does this money go? Five lucky artists will get a share, most likely the “big names” who appear in the grants list on a regular basis. Is there a royalty component to deals like this?

Decommodification LLC made two filings to the California Secretary of State on January 16, 2019. One was that “nothing has changed”, and another one requested that the company registration be canceled. It seems strange to me to file “no change” and “cancellation” notices on the same date, if anyone has knowledge of how this process works please leave a comment.

The current state of the company shows “cancelled” at the S.O.S. web site.

According to the US Patent and Trademark Office, the trademarks were transferred from Decommodification LLC back to the Burning Man Project on 28 April 2018 – the day Larry Harvey passed away.

The “nunc pro tunc” is a retroactive assignment to correct an earlier ruling. Was this something to do with Larry’s estate?

What happened to the rest of the intellectual property, including the rights to future royalty streams?

Were the trademarks assigned back to the Burning Man Project for free, Decommodification LLC dissolved, and the accumulated cash of 6-7 years of royalties distributed to the members? Or was some of that $12 million cash hoard used to purchase them?

These transactions occurred in 2018, so perhaps will get covered in next year’s IRS Form 990. There is no mention of them on the Burning Man web site, despite this being perhaps the most significant thing BMorg have done since spinning off their non-profit in 2012. BMorg like to claim they’re a “leader in radical transparency”, but Decommodification Inc has always been a mysterious black box.

The 2017 Form 990 values the Burning Man Project’s intangible assets at $4.23 million, but this was before the trademark transfer. This amount first appeared on the books in 2014. We believe it represents goodwill on the acquisition of Black Rock City, LLC from the Founders.

For a good read related to Intellectual Property and Burning Man, see Culture, Capital and Copycats in a Globalizing Burnerverse by Ian Rowen, which was the keynote address at the 2018 Australia and New Zealand Burner Leadership Summit.

The “Burner Look” is not trademarked, so anyone can put an art car in a desert and appropriate our culture for “cool factor” and financial gain

Flysalen

In 2016 BMorg bought a 3800 acre parcel of land known as “Fly Ranch” with big donations and paid $6.5 million. This is why the 2016 donations were more than $8 million.

Around 42:30 in the above video, they start talking about “community ownership of land”. The communist social justice component of this vision is that “living off the land is a version of Universal Basic Income”.

Five minutes into the video, they reveal that the land has been sub-divided into 53 different parcels.

Who gets a permanent Burning Man lot? Presumably the 6 5 Founders and the millionaires who put up the $6.5 million. Will the rest be auctioned off to the highest bidder, or handed out to the most favored staff, artists, and camps? I’m tipping Dancetronauts are not on the short list.

This reminds me of an earlier post, Get Your Timeshare Slot in the Sultan. There, I postulated that the “ironic timeshare sales” brochures being handed out from a booth at the Man base was actually Burning Man’s way of bringing that in as a future reality.

The Occidental Oasis “ironic” timeshare sale was going on at the same time as very real hotel sales on Billionaire’s Row

The same thing happened with hotels, where BMorg director Chris Weitz opened an “ironic hotel” at Ashram Galactica, which paved the way for the proliferation of luxury Plug-N-Play hotel camps today.

Petit Ermitage, a boutique hotel in West Hollywood, were still advertising the pop-up Burning Man hotel they created with Cirque Gitane long after the event
People now pay up to $20,000 for hotel rooms at Burning Man with flushing porcelain toilets
Photo: Lost Hotel/Facebook

Fly Vision

Some information about the original intention for Fly Ranch is available thanks to the Wayback Machine

You can see from the plan above that the property is adjacent to another playa. Hualapai Flat is land administered by the Department of the Interior’s Bureau of Land Management.

Image: americansouthwest.net

The Bureau of Land Management is planning to dispose of some of its lands.

Source: BLM Winnemucca District Program Overview 2017, Page 7

From the January 2018 report, it looks like this deal is close to being done:

Source: BLM Winnemucca District Program Overview 2018, Page 6

Who else would want empty desert playa?


The original vision for the Fly Ranch site was a sustainable community of one acre lots for employees and affiliates, with its own airstrip. This plan talks about 9 parcels of 5 acres, each with their own access roads; and 73 parcels of 1 acre each.

Village and Residential sites

The two communities are based on Burning Man’s Ten Principles, and this will be it’s first year-round expression. Employees and affiliates may build on a ‘Homestead’ basis, or rent or buy into the Village community at the project’s north end. For others, one acre lots may be bought for home construction in the project’s central development (and separate H.O.A). These areas will be allowed to grow incrementally, with roads and utilities phased as required. Geo- thermal electricity will serve all the lighting and cooling needs of residents (and possibly the valley’s ranchers as well), and hot water will provide all heating.

Organic vegetable farming will be developed as an economic base for the village community. Geo-thermally heated greenhouse organic farming will be operated for local needs, and for transport and sale. This can supply Reno with organic vegetables throughout the year, while creating a wholly independent economy for the community.

Source: willroger.org, via Wayback Machine

Land Conservancy

Even with limited use, the grassy banks of the vernal pools are being sloughed in by bathers, the pools gradually churned into shallow mud holes. Bathers also leave tanning lotions, insect repellants, and
other contaminants behind to ill effect. The pond waters contain a species of pupfish which are isolated by the underground source and terminal outflow.

A nature preserve requires control and enforcement, accordingly this area must be properly fenced to admit access only to indigenous animals, but excluding horses or cattle which trample wetlands. Human access must be highly regulated, with trespass, hunting and public use of existing pools and hot springs banned.

Anticipating the utter destruction of too much love, together with the projected costs of controlling and insuring against increasing liability, it is suggested that a Land Conservancy that is affiliated with Burning Man be created to manage the Geyser and wetland area.

Source: willroger.org, via Wayback Machine

Restaurant, Lodge and Conference Center

Fly Lodge and Conference Center

This will epitomize the style of Fly Ranch, and become a beacon for the greater community. A restaurant, rooms and services will be available. Fly Lodge will be available for public and corporate use, while also serving as World Headquarters for Burning Man’s Regional organizations around the globe.

Source: willroger.org, via Wayback Machine

Burning Man Board Member Chip Conley’s experience with luxury boutique hotels and AirBNB would come in handy for a plan like this.


How Much For That Oasis In The Desert?

Burning Man’s balance sheet shows land, buildings and equipment of $11.9 million; net of depreciation, $9.9 million. Schedule D, Part VI lists the value of land as $7,233,545 and buildings at $979,870. In 2015, before the Fly Ranch purchase, land was $198,000 and buildings $979,780.

According to Nevada property records, Fly Ranch only cost about $2.6M. The Washoe sales records record two transactions for $2.377M and $0.240M. The water rights came under two different transactions and appear to not have specific value attached to them. The water rights transactions gave the prior owner only about 64 acre feet of water for livestock.

There were four transactions in 2016:

1)      sale of 3,381 acres that was the majority of FR,

2)      another 276 acres that was part of the FR with the geyser

These sold the mineral rights but not the water but referred to other linked sales of water rights.

3) transfer of water rights with a carve out for the prior owner for item 1).

4) transfer of water rights with a carve out for the prior owner for item 2).

Water rights in California and Nevada are fresh on my mind after all the research I did for my last podcast episode, CryptoBeast #17 – Fire, Water, Trains, Space Lasers: California Burning. It’s an arcane subject, but if you’re interested there’s a good overview here: History of Water Rights in Nevada and the Western States. This particular statement seems to be key:

Surface water rights initiated by applying water to beneficial use prior to March 1, 1905, and which have been perpetuated or continuously used through the years are known as vested water rights

The main water rights for the hot springs, Cottonwood Creek and Little Cottonwood Creek are the rare and highly coveted “vested water rights”, granted before 1905.

My source tells me that the Burning Man event draws 12 million gallons of water per year from this property (27 acre feet).


Setting Boundaries

We recently published discussion from the Washoe County Commissioner’s meeting about the possibility of redrawing district boundaries so that Burning Man would be part of Washoe County (which gets the economic benefits from event-related tourism) instead of Pershing County (which gets a massive spike in crime rates with no economic benefits).

Fly Ranch is next to Hualapai Flat. Burning Man was held at this location once, in 1997. Hualapai Flat is where Pershing, Washoe, and Humboldt Counties meet. Fly Geyser is in Washoe County.

Is the proposed Washoe Boundary move related to long-standing plans to purchase Hualapai Flat? Is BMorg sitting on $4 million from the Fly Ranch donations to acquire this land?

I guess time will tell.


[Update Feb 7, 2019 2:11pm]

The plot thickens, with this post saying that Burning Man was under contract to purchase Fly Ranch in 2009, and real estate developer Build SF helped organize their corporate restructuring to provide “personal financial security” for the 6 Burning Man founders.

In 2009, the BUILD partners were introduced to Larry Harvey and his partners at the Burning Man Organization. Burning Man was in contract to acquire a 4,000-acre ranch in the Nevada desert on which they planned to move the annual Burning Man event as well as develop a desert art center. 

BUILD facilitated a transaction that allowed Burning Man to adjust its corporate structure, manage tax requirements, protect trademarks, establish a permanent office, and provide personal financial security for the six Burning Man partners. Real estate provided an elegant solution for these complex, multi-dimensional challenges, while preserving and honoring the basic precepts of Burning Man. We are proud of the part we played as advisors to Burning Man in establishing a clear path and solid foundation for everyone’s long-term benefit, including the event itself.

I have another trusted source who drew the “intellectual property in a separate company” structure on a napkin for CEO Maid Marian. I will ask their opinion on this.

[Update Feb 13. 2019 4:06pm]

Breedlove head of BWB has updated us with some more detail:

It’s interesting to see the difference between Part III 4c & Schedule F Part 1. I don’t quite understand how they split the difference between those two sections.

What I can provide you with is that we gave 4 grants through our Civic Ignition Process coming out at 4,900$ and 21 grants through our Annual Community Micro-Grant Program coming out at 18,800$. Between the two programs that totaled $23,700.
(https://www.burnerswithoutborders.org/projects/bwb-community-grant-winners-2017)

We also provided grants for Hurricane Harvey Disaster Relief at $21,317.12

There was also a series of Fiscal Sponsor funds that were raised and given out. One of those being the $30,363 for the Camp Epic Santa Rosa Fire Relief (which is in one of your screenshots above)— but I don’t have the ability to pull up all those numbers at this time.

I’m also realizing while going through my data that it isn’t the easiest to find some of this stuff unless you know where to look. So taking a note on improving our reporting systems for the future– I appreciate the opportunity to look at how we can do better at reporting in a more transparent and better to find way.

#LimoCrash Investigation On Lift The Veil

A lot of things don’t add up about this limo crash. I started a Twitter thread gathering all the information and stories about it that I thought were interesting. It’s a rich tapestry, one that you won’t find anywhere else on the Interwebz. Why do so many mainstream media stories add so many details, and yet no mainstream media stories incorporate all these fascinating details? Are there seriously only like a dozen or two real journalists left in the wild?

So far I’m up to #120 noteworthy items in my thread. As I find more, I will keep adding it to this thread. It’s the craziest story I’ve found since I first got online in 1994. Which is really saying a lot!

The Twitter thread starts here and ends here (as I write this)

I did a 90-minute interview with Lift The Veil on it today. YouTube went down right as we were going live. YouTube was down for 90 minutes. The electricity  circuit breaker in my office went out at the same time also. #CoincidenceTheory, of course. Either that or this is the Front Lines of the Internet.

Thanks to my genius friend for the tip. Sometimes a little really means a lot 🙂

 

Easy Way To Get Tickets

Panicking because you missed out on STEP and OMG? Keen to go and check out the debut of the new, ultra-loud Dance Music Zone? Looking to hear the crackling of the flames at the Man base without pesky DJs trying to gift you tracks? All those and more could be yours…if only you had a ticket.

Well, Burners, it’s not hard. In fact it’s pretty easy.

Go to http://stubhub.com and type “Burning Man” in the search.

As I write this there are 434 tickets for sale (from $999), and 157 vehicle passes (from $333).

The Burnier-Than-Thous, of course, will tell you that you can’t do this. It’s against the unwritten rules! It’s Un-Burnery. Real Burners would rather not go to Burning Man, than pay $900 for an $800 ticket.

Hey, if you want to be one of those, then by all means go for it. Have fun being a Burner who never goes to Burning Man any more, it’s a fast growing group.

For any other Burner who wants to go to Burning Man, my advice is just go. Buy one of the hundreds of tickets still left on sale. You’re not paying that much more above face value, now that BMOrg have conveniently set face value at $819 plus a vehicle pass, bus ticket, or airport entry tax.

What of the argument that paying more for tickets fuels scalpers?

We have covered this time and time again. First of all, scalpers aren’t even a significant problem. That’s not just Burners.Me telling you that, it’s Larry Harvey:

Source: Larry Harvey, Voices of Burning Man, December 2012

Source: Larry Harvey, Voices of Burning Man, December 2012

I have kept an eye on the ticket prices on Stubhub during the year. After the OMG sale, the number of passes and tickets available went up, and so did the prices. Vehicle passes briefly hit a peak of $520, but have now started to plummet.

Screenshot 2015-08-10 11.31.39

If scalpers DID get some of those OMG tickets, then if you buy them, you are ensuring that a real Burner goes, instead of some safari tourist bucket-lister Broner schmuck.

Otherwise, the increase in tickets available for sale must only be from Burners finding out at the last minute they can’t go. STEP is closed, so how else are they supposed to sell their tickets? Especially if they live a long way from Black Rock City. These Burners need our support, and it’s our duty to help ensure those tickets go to other good Burners. Buy their ticket, help yourself, help a Burner.

And what about the rules? Well, statements from BMOrg over the last 12 months seem to show that they’ve significantly softened their tone about the secondary market. Even they realize that it’s basically the only way that most Burners can ensure they get tickets.

Screenshot 2015-08-10 11.51.09

Source: Voices of Burning Man, Feb 2015

They’ve gone from “it’s against our community’s ethos so don’t do it”, to “it’s the reality of supply and demand and technically legal and many do it and we’re certain it’s not scalpers“. How can they be so certain? Perhaps they have some inkling of who is actually selling these tickets. To the rest of us, the whole ticketing and queueing system is a mysterious black box.

From the Jackrabbit Speaks:

  • For 2014, the total allotment was 35,000 vehicle passes. We never sold out. Just over 34,000 were purchased in all of our sales combined. Just before the event there were lots of passes on the secondary market, and in the end, only about 27,000 vehicle passes were actually used.
  • Since Black Rock City will be roughly the same size in 2015 as it was in 2014, this year we’re limiting the total allotment to 27,000

Following the “reality of supply and demand”, releasing fewer Vehicle Passes for 2015 has naturally led to vehicle passes being much higher on the secondary market all year.

I predict the Early Bird sale sells out quickly next year, and I’m sure cracking the 1 G mark has crossed the minds of the non-profit ticket pricers.

As the above graph shows, thanks to StubHub there have been hundreds of tickets available all year long. There are other sites too.

eBay has plenty of tickets and vehicle passes. Tickets seem to be around $600-$800 and vehicle passes are in the $250-$450 range.

Vivid Seats have tickets from $892 and vehicle passes from $338. Tickpick have tickets from $899 and vehicle passes from $344.

Please note: there are plenty of Burnier-Than-Thou narcs out there trying to tell on ticket sellers to BMOrg. Why they do this is beyond me, but Burners.Me is not responsible for anybody scamming anybody else in ticket sales. Caveat emptor, and caveat venditor too.

Someone is making a lot of money from these sales on the secondary market. But is it professional scalping crews, gaming the system? Burning Man are certain that it isn’t. How can they be so sure? Is there some way that insiders can get their hands on more than 1 ticket? Volunteers, staffers, Directed Group Sale beneificiaries? They get to keep a ticket for themselves, and sell one to pay for their trip…if someone had 4 tickets and vehicle passes, they could clear more than $5000.

The two tier price structure of $800 and $400 for the same ticket seems tailor made to boost prices on the secondary market. The staggered timing of the ticket releases also seems geared to fuel it. And watching what BMOrg have done over the years since they introduced the ticket lottery, every single move seems to have had the effect of bumping secondary market prices higher for longer. This is one area where BMOrg seems to really have excelled in the effectiveness of their decision making.

At any time, to really stop scalping, they could just link tickets to IDs. Of course, that would completely destroy the model I just outlined. It would be great for Burners, but much harder for anyone who got tickets via one of the various internal handouts to make money on the side. So we’re told we can’t have it, and some weak excuse is made up for why. Actions speak louder than words, in this case the actions seem to be about secondary market prices. We haven’t seen any evidence of money from the Vehicle Pass sales going to improve road safety, but they certainly have been a re-seller’s wet dream, fetching up to 1000% returns.