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ASL 2025
A VISION FOR THE FUTURE - WHILE HONORING THE PAST



A Painting of the League, Part 1: Introduction and Finances 


November 25, 2015

Dear League Member,

I hope you put down your charcoal, paint and materials during the next few days to read, discuss and think about your upcoming vote for League President and Board. I do love drawing, painting, and sculpture, and I'm also a busy investor and entrepreneur in New York City, but I am particularly concerned about the League election this year. I know Members have received many emails recently, but I feel the 140 year old Lady League, now shackled in banded beams and scaffolding, is weary and warrants serious attention before her December 2nd sentencing.

The upcoming vote is not just about electing a President and Board for a year. The vote will also play a pivotal role in determining: if and how the League's constitution and bylaws are changed; whether plans continue for major $30+ million dollar construction; and whether the necessary experience and talent is put in place to significantly improve fundraising and reduce the growth of the annual operating losses. It is very probable that the election outcome will significantly determine the League's financial risk profile, character and mission for many years or decades to come. 

I have had several careers, but for the past 15 years I have primarily been an investor and analyzed hundreds of companies and institutions and made predictions about their future. Almost every day I analyze and think about possible investments and predict their future success by researching the management team, financials, competition, technology, products and services. Although the League is a non-profit institution, it must have good management, financials and services if it is to compete long term with hundreds of excellent charitable organizations for donations from sophisticated high net worth individuals and foundations. I've analyzed the League because, not only do I care for it as a Life Member, I needed to decide whether the League should be a significant beneficiary of my estate. 

In this letter, I will primarily focus on the League's finances during the past ten years that Sal has been President. When analyzing financials it is very important to not just look at one year in isolation, but look at many years side-by-side to see trends and relationships. I'm going to present a few color tables and charts that show financial trends and relationships over the past ten years and will offer some opinions based on my experience. My analysis is dependent upon the accuracy of the League's annual financial reports. I don't know how many of their past reports were independently audited and how often the accountant and auditor were changed. 

The League now has about $82M (M=million) in cash and investments. About $53M of that $82M came from two asset sales of air and cantilever rights. The League has about $1M in short term liabilities and the following discussion assumes liabilities remain about $1M going forward. I assume going forward there will not be significant property and art work sales that generate significant League revenue. I'm not going to discuss what the sale of the remaining League lot, property and air rights are worth. The $82M represents about $20,500 in cash and investments for each of the approximately 4,000 Members.

Disproportionate Growth in
Administration Expenses Now $520,000 Annually

Every month at the League students pay tuition, instructors teach, and employees improve the website. These kind of activities are 'operations' and create revenue and expenses. Let us examine the two largest operating revenue categories and the two largest expense categories. The two largest operating revenue categories (in other words, what brings the most money in) are: Tuition; and Donor Contributions. The two largest operating expense categories (in other words, where money is being spent) are: Administration salaries, payroll taxes and fringe benefits (referred to in this letter as 'Administration expenses'); and Instructor expenses. Instructors at the League are independent contractors, not salaried employees. Below is a 10 year table and chart of these four categories.




The numbers from the table are displayed on the chart in 4 solid colored and jagged lines. The Donor Contributions solid line in mustard yellow is the most uneven. The dotted lines represent the best linear fit of the corresponding colored solid lines (software can be good at drawing some types of lines). The four dotted lines help us to more clearly see the trends and are represented by linear formulas that can be used to estimate the future. 

The Instructor expense dotted line in green is growing slower than the Tuition revenue dotted line in red, faster than the Donor Contributions revenue dotted line in yellow, and significantly slower than the Administration expenses dotted line in blue