Chairman's Report

July 2007

A myriad of challenges and responsibilities face your Board of Directors and management everyday.  Maintain a registry with the highest integrity so necessary to AKC breeders.  Support and supervise the nearly 20,000 AKC approved events held every year.  Lead the fight for improving the health and welfare of our dogs.  Provide support and leadership in combating ill-conceived legislation which negatively affects our sport and our dogs.

To accomplish these goals it is necessary to have a modern and efficient organization.  Our annual budget of over 65 million dollars requires careful attention.  As I have said before, our not-for-profit organization is not a business, but it must run in a business-like manner.

All of our efforts to direct and grow the sport of purebred dogs are only possible if we generate the funds to support it.

For many years the income from registrations paid for almost the entire budget of AKC.  That has changed dramatically.  In 1981 registration revenues accounted for 96% of AKC’s revenue.  By 2006 that figure had dropped to less than 50%.

In 1946 we registered slightly over 200,000 dogs.  We peaked in 1992 with just over one and one half million.  In 2006 we registered 870,192.

We estimate that perhaps 20% of the dogs registered become involved in the sport.  From that figure it is easy to understand that the registration dollars from those who did not involve themselves in the sport contributed mightily to support those that did.

With a decreasing registration it is becoming apparent that not only must the Board and management develop new sources of income, but also that the sport itself must be prepared to contribute more to participate.

It is possible to analyze our revenues by placing them in three groups: 1) Core revenue from the sport, 2) Core revenue not sport-generated, and 3) Alternative revenue. Core revenue, both sport and non-sport, is generated from AKC programs and services, such as registration, event and recording fees, magazine subscriptions, and pedigree sales, etc.  Alternative revenues include sponsorships, licensed products and credit card royalties.

While the great bulk of our annual budget expenditures are directed to the sport, we estimate that only 25% of our income is generated as “Core Income from the Sport.”

Our reality is that the sport must share a larger portion of the costs of our sport.  We must continue to address our declining registration problem. We must aggressively pursue alternative revenues. At the same time we must continue to be severely disciplined in our expenditures.

When we achieve new alternative revenue, it is with the realization that this type of revenue is always less certain on a continuing basis than core generated income.  What sells today may not sell tomorrow.

I have shared with you these thoughts and figures because to understand what AKC is capable of doing one must appreciate the bottom line of our budget.  Both the Board and management are optimistic that AKC has a bright future firmly committed to our tradition and goals and supported by a strong financial position.

Sincerely,


Ron Menaker
Chairman