NACs Will Generate An Estimated $1.9 Million Surplus This Year, So Why Did US Fencing Raise Event Fees?


nac surpluses are a major source of funding for us fencing

NAC fees alone constitute US Fencing’s single largest source of revenue (45% of total revenues), and US Fencing’s single largest source of surplus cash.

When US Fencing raised NAC event fees, I wrongly assumed that US Fencing was struggling to meet NAC expenses. So while I grumbled, I largely let it go. Ditto for the entrance fees to NACs, I bought a Supporting Membership and let it go. I even assumed that we were going to all these hard to get to places because US Fencing didn’t have enough money.

These assumptions that US Fencing operated on a tight budget for the NACs turned out to be completely wrong.

While US Fencing has voluntarily made its budgets and accounts public (US Fencing is only required by law to disclose IRS Form 990), it seems that few people have really looked at them. We mostly made assumptions about NAC finances.

The NACs have been performing very well financially for US Fencing for many years.

In the 2017/2018 fencing year, actual NAC fees paid totaled $4.5 million, a 14% over performance compared to what was projected in the management approved budget. Total domestic competition revenues (including all NAC related revenues plus regional event fees) of $5.1 million last year outperformed the projections in the approved budget by 21%. The projected cash surplus of $1.45 million for the year was also exceeded.

This year (2018/2019), US Fencing’s management budget projects $4.9 million in NAC fees (after the fee increases), $5.4 million in total NAC related revenues, and a cash surplus of $1.9 million after expenses and allocated overheads.

NAC fees and related revenues, together with membership fees, make up more than 70% of US Fencing’s total revenues, and they are the main sources of cash for US Fencing.

US Olympic Council funding (in cash and in kind) represents only 9% of total revenues. While US Fencing’s marketing and sponsorship activities represent about 11% of total revenues, most of what is generated is received in kind in the form of tournament equipment.

US Fencing’s fundraising activities through the US Fencing Foundation raised a paltry 0.7% (about $67,000) of total revenue each year in the last two years.

The US Fencing Foundation, which was set up to receive funds from large and/or recurring donors has been dormant for a long time. The Board needs to do significantly more to raise funds through the Foundation. We will address the issue of fundraising later on.

You must be asking by now:

with all this financial success from the NACs, why did US Fencing raise NAC event fees and start charging entry fees?

From supporting the international travels of Team USA and paying the salaries of the national coaches, to sending US referees to international tournaments, to hosting money losing international events in the US, to covering its payroll, Board overheads, operating and administrative expenses, US Fencing depends on the NACs and a growing membership to pay for these expenses.

While it is certainly reasonable that some NAC surpluses be used to cover overheads and payroll not connected to NACs, it is our opinion that it is unfair and imbalanced for a small sub-set of US Fencing’s membership (the NAC attendees) to be shouldering such a large percentage of US Fencing’s expenses.

While we expect that readers may have many questions about specific line items from US Fencing’s budgets and financials. we will focus on 3 key issues set out below.

3 key issues arising from the nac surpluses

  • the very small budget that US Fencing allocates to NAC venue rentals, this very small budget is potentially the main reason why NAC locations are so inconvenient.

  • a minority of US Fencing’s membership (the NAC attendees) shoulders the largest share of US Fencing’s expenses. Using NAC fees paid by rank and file fencers as US Fencing’s largest source of funding is imbalanced and unfair.

  • as a not-for profit organization, the US Fencing Board should be doing significantly more to raise funds to pay for its mission related activities

And, if you are wondering why I decided to examine US Fencing’s published financials, here’s why.

the unresolved issue of poor nac locations

The poor selection of NAC locations that collectively cost families in the West an estimated half a million dollars in wasted air fares, extra hotel nights and wasted time on bad flight connections remains an unresolved issue. My November 20th email to US Fencing about NAC locations received a short, unhelpful response, reproduced below:


I appreciate the time you took to outline your concerns with travel, scheduling and the selection of locations for National Tournaments.

There are many factors that go into the selection of a city for a national tournament. While there are numerous considerations that are taken into account in city selection and proximity to airports with numerous flight options is always one of them, other factors include convention centers with a location at or near the city center and close access to hotels of a variety of brands which has been a request from our membership as well. One of the most significant pieces of this equation is venue size. During the past eight years, as our tournaments have continued to grow in terms of the size of fencing fields with several each year topping 300 competitors in a single discipline, the space we need to accommodate them has more than doubled, meaning that the number of cities that can even consider holding a fencing national event has decreased.  

As Dan mentioned during your conversation in Kansas City, we are continuing to look at new cities as options and have several new partnerships we are excited to unveil in upcoming seasons. “

This response was unsatisfactory. A second email from US Fencing plus a phone conversation with them failed to shed any more light. I wondered if their responses were hiding another story.

If US Fencing had applied the criteria cited in their response (including numerous flight options), how on earth did we end up with the 3 hard to get to cities in Ohio, plus Milwaukee and Charlotte in 2018/2019. Did they leave out the West in their evaluation? The argument that there are limited choices of convention centers to accommodate events with 300 or more fencers made even less sense, issues with labor unions and scheduling notwithstanding.

A quick, non-exhaustive search on Google for large convention centers combined with a quick, non-exhaustive search on Expedia yielded 21 locations with very large exhibition spaces, reasonable hotel costs and easy, well priced flight connections from New York, Chicago, San Francisco and Los Angeles. Here they are:

Salt Lake City - 515,000 sf Houston - 853,000 sf (George R Brown Convention Center) Houston - 706,000 sf (NRG Center) 

Atlanta - 1,500,000 sf Las Vegas - 861,231 sf (Mandalay Bay Convention Center) Dallas - 1,000,000 sf

Detroit - 723,500 sf Las Vegas - 2,182,167 sf (Las Vegas Convention Center) Denver - 584,000 sf 

Miami Beach - 502,000 sf  Rosemont - 840,000 sf (next to Chicago O'Hare Airport)  Chicago - 2,670,000 sf

Anaheim - 815,000 sf  New Orleans - 1,100,000 sf St Louis - 523,000 sf

Kansas City - 388,000 sf Washington DC - 703,000 sf Nashville - 350,000 sf

San Antonio - 514,000 sf Boston - 516,000 sf Phoenix - 312.000 sf

Why is US Fencing not accessing more of these cities on a regular basis?

As per my experience from many years as an investment banker and investment professional, I suspected that the reasons for the poor NAC location were not entirely operational, but were more strategic in nature. There was a good chance that I would find some answers in the financials. So, along with a fellow fencing parent with a strong financial background, we initiated a closer look at US Fencing’s budgets.


Despite NACs being the largest and most important revenue and cash generator for US Fencing, venue rentals have consistently represented less than 2% of US Fencing’s budgeted total annual expenses. It looks like US Fencing management allocates insufficient money to venue rental for NACs.

Let’s take a closer look at US Fencing’s budgeted annual venue expenses for NACs:

Breakdown of Venue Expenses from NACs ( US Fencing Management Budgets )

Breakdown of Venue Expenses from NACs (US Fencing Management Budgets)

For the last 6 years, money spent on total venue rental for 8 national competitions annually has averaged 2% or less of the budgeted total revenue and total expenses. Venue rental as a percentage of total venue expenses and total NAC expenses has also dropped in recent years.

2018/2019 2017/2018 2016/2017 2015/2016 2014/2015 2013/2014

Venue Rental $ 202,000   $ 144,895   $ 157,100   $ 141,001  $ 111,501  $ 137,500

Total Annual Expenses $ 10,274,245   $  8,786,805   $ 8,359,707   $ 7,496,483   $ 7,179,456   $ 6,760,637

Rental as % of Total Expenses 1.97% 1.65% 1.88% 1.88% 1.55% 2.03%

Total Annual Revenues $ 10,424,245 $ 8,936,805 $ 8,609,707 $ 7,596,483 $ 7,468,456 $ 7,360,637

Rental as % of Total Revenues 1.94% 1.62% 1.82% 1.86% 1.49% 1.87%

Total Venue Expenses $ 1,230,200 $ 938,595 $ 804,274 $ 756,451 $ 762,301 $ 742,255

Rental as % of Venue Expenses 16.4% 15.4% 19.5% 18.6% 14.6% 18.5%

Total NAC Expenses $ 3,496,395 $ 2,743,390 $ 2,627,284 $ 2,177,886 $ 2,240,945 $ 2,139,053

Rental as % of NAC Expenses 5.8% 5.3% 6.0% 6.5% 5.0% 6.4%

It looks like US Fencing expects to pay an average of $5,316 per day in venue rental this year (assuming a total of 38 national competition days annually). Last year, it paid an average of $3,813 per day in venue rental. The difference in per day rental between this year and last year is very likely due to an increase in square footage of convention center space rented to accommodate more participants (and the collection of more revenues). Despite this increase in dollar amounts, venue rental remains below 2% of total expenses.

The tightness of the budget for venue rental sheds light on why NACs are held in harder to get to cities around the country. Venues in harder to get to locations experience lower demand and will offer lower rentals to attract business.

While the low venue rentals may fit with US Fencing’s overall budget plans to maximize surpluses to fund its other activities, the unhappy consequences for NAC participants, especially for those in the West, seem remarkably unfair.

Given the huge surpluses generated by NACs, US Fencing can certainly afford a more generous NAC venue rental budget that will benefit all NAC participants with locations that have good flight options from around the country.

In fairness to NAC participants, US Fencing should implement an increased venue rental budget starting in the 2019/2020 fencing year.


Before we continue with a closer look at the financials, we will explain our methodology. We exclusively use numbers from the detailed management approved budgets to make our points throughout this article. When numbers from actual performance are used, we clearly indicate so.

US Fencing discloses comprehensive financials and budgets on its website including IRS Form 990 (required by law for a non-profit organization) historical audited financials, balance sheets, detailed approved budgets and budget vs actual reports.

The audited statements and the budget vs actual reports disclose many expense items under a single category. For example, the audited statements and comparative reports do not separate the venue rental for NACs from the venue rentals for Grand Prix and World Cup events held in the US. They are reported as a single number. The same is true many of the expense items including travel expenses, honorarium and per diem paid to referees and Board members.

Therefore, to clearly illustrate the profitability of specific revenues sources, we used the very detailed management approved budgets which break out expense items and allocate them to the relevant revenue items. The NAC venue rental numbers, for example, are specifically allocated to NAC revenues as an expense. Travel expenses related to the NACs are clearly allocated to NAC revenues in the approved budgets.

Compensation for staff is allocated in the approved budgets across a number of activities. We, assume that in accordance with sound management practice, compensation expense is allocated in line with the number of hours spent by US Fencing staff on these activities.

We have summarized 6 years of US Fencing management approved budgets, and they are systematically presented below. You can download our summary HERE.

It should be noted that the approved management budgets represent strategic planning and clear intention on the part of US Fencing Board and senior management for each year’s financial performance. In accordance with sound financial and management practice, budgets are normally based on historical performance, and budgets will also reflect expectations for improved performance from, for example, increased prices. The management approved budgets are an excellent representation of what US Fencing has in mind financially.

We recognize that budgets numbers are not actual performance. However, for the purpose of this article, the approved management budgets illustrate our points extremely well. Actual performance in the last few years has exceeded budget projections, with expenses rising more or less proportionally with revenues. As such, the budgets remain a very good illustration of the points we make below.

You can download our spreadsheet summarizing 5 year actual financial performance and 6 year management approved budgets HERE

NACs are US Fencing’s biggest “cash cow”, generating very large surpluses over many years.

NAC participants have for years paid far more than is necessary to operate the NACs.

Here are the NAC revenue, expense and surplus numbers budgeted by US Fencing from 2013 to 2019.

the right thing to do with NAC surpluses

While it is reasonable that some percentage of NAC surplus be used to cover US Fencing overheads and its other activities, the bulk of the surplus should be used for improving the NAC experience. It is unfair to NAC attendees, and operationally imbalanced for US Fencing to so heavily rely on a small sub-set of its membership for such a significant part of its financial support.

As a not-for-profit, non-taxable entity with a social/sports mission, US Fencing’s Board must do a great deal more to raise money to pay for the activities that further its mission (more on fundraising later in this blog).

The right thing to do is for US Fencing to re-invest the NAC surplus to improve the overall experience for all NAC constituents by:

  1. Substantially increasing the budget for NAC venue rentals so that we have access to easy, well priced flight options for the majority of fencers in the country. Subjecting the rank and file youth fencers and their parents to long flights, and high flight costs, longer hotel stays and lost time is not right in the face of these huge surpluses. Better located NACs may very well save US Fencing a bundle on travel costs for referees to inconvenient locations.

  2. Utilizing a part of the surplus for stronger referee training programs. Right now, there is not a formalized system for referee training because there is apparently “no money” for such programs. “Training” is done at a very grass roots level where novice referees practice their skills at local and regional competitions, with very varied outcomes in development of referee skills. There is no “training”, just observation, evaluation and promotion. Referees are a pillar of the sport, and we would be doing our fencers and the referee community a huge service if some of this surplus were utilized to create a systematic training program to improve overall refereeing skills.

  3. Freezing NAC fees at the current level for 5 years

Membership fees are the next biggest source of surpluses

Unlike the NAC surpluses which are generated from a sub-set of the total membership, it seems reasonable for US Fencing to utilize the surplus from its overall membership revenues to pay for its overheads and international activities.

As at November 2018, US Fencing had a total of 28,491** individual members across the 7 membership categories. Of these, competitive fencers pay the bulk (71% approximately) of the membership fees collected . About 60% of the competitive membership fees are paid by fencers under the age of 18 (11,003** competitive members under age 18), representing about 43% of total membership fees paid.

Here are the membership fee surpluses budgeted by US Fencing from 2013 to 2019*:

** Number is derived from US Fencing’s membership worksheet as at November 2018.

the combined surplus from nac and membership revenues pays for almost everything else at US fencing

2018/2019 2017/2018 2016/2017 2015/2016 2014/2015 2013/2014

NAC and Related Surplus $ 1,891,755 $ 1,453,465 $ 1,449,516 $ 1,292,912 $ 1.015.011 $ 1,220,772

Membership Surplus $ 1,319,080 $ 1,377,150 $ 1,302,624 $ 1,270,337 $ 1,342,497 $ 1,132,905

Combined Surplus $ 3,210,835 $ 2,830,615 $ 2,752,140 $ 2,563,249 $ 2,357,508 $ 2,353,677

Membership fees and fees from domestic competitions generate almost 3/4 of US Fencing’s total revenues, and provide almost 90% of the cash funds to pay for the rest of US Fencing’s activities and operations including the 4 main areas headlined below.

  1. The Combined surplus helps fund Sports Performance

    Based on the revenue and expense categories listed under Sports Performance, the activities include financial support of

    • the US National teams (mostly at the Senior World Cup and Grand Prix level) and the national coaches, including travel expenses and coach salaries

    • referee travel and compensation to international competitions in fulfillment of US Fencing obligations to provide referees at competitions that the US sends participants

    • it is not clear if expenses of US Fencing officials (Board Members and US Fencing staff) travelling to international competitions as emissaries of the US are included here

    • it is also not clear if attendance by US Fencing officials at domestic and international sports conferences is included here

Despite US Olympic Council support, and registration fees collected from Cadet and Junior fencers competing internationally, Sports Performance is not a self-funding category, and generates a very large annual deficit.

There were significant increases in travel expenses (35%), honorarium and per diem payments (23%), and operating and administration expenses (40%) in 2015/2016, pushing up total Sports Performance expenses up by 61% from the prior year. Since then, Sports Performance expenses have been budgeted from this higher level of spending, and these expenses have increased steadily by 6% to 14% annually since 2015/2016.

Increases in funding from the US Olympic Council have not even come close to keeping pace with the substantial increases in the costs of supporting Team USA at international competitions. US Fencing uses the substantial NAC surpluses to fund these deficits. Presumably, the increases in NAC fees and the imposition of entry fees were designed to cover the increased deficits generated in Sports Performance.

Here are the Sports Performance revenues and expenses budgeted by US Fencing from 2013 to 2019.

The activities within the Sports Performance category align with US Fencing’s mission to “achieve sustained competitive international excellence.” While we admire and support Team USA fencers, and wish them every success, the funds to support international competitive endeavors must come from more diversified sources, and not just NAC and membership fees.

These activities should be substantially paid for with funds raised through the development (fundraising) activities of the Board. It is inappropriate to have rank and file fencers fund these activities through NAC fees, especially when the costs of travel and other costs connected to NACs are already onerous for many families.

2. the combined surplus helps fund international events in the us

This category is a fairly recent one and relates to the Grand Prix and World Cup events hosted in the US. Despite generating some revenues, they are insufficient to cover the costs related to hosting these prestigious events.

It is concerning that Event Expenses are projected to jump by 57% in 2018/2019, while revenues generated from running these international events in the US are projected to drop by 25%. Presumably, US Fencing raised NAC event fees and imposed entry fees to cover this gaping hole in funding for international events hosted in the US.

Here are the revenues and expenses relating to International Events in the US budgeted by US Fencing from 2013 to 2019.

Again, these activities seem to align with US Fencing’s mission “to grow and promote the sport of fencing in the United States” and to “achieve sustained competitive international excellence.” . And again, these activities should be paid for with funds raised through the development (fundraising) activities of the Board. It is inappropriate to have rank and file fencers fund these activities through NAC fees.

3. The combined surplus helps fund Sponsorship and Marketing

These 2 activities also generate deficits. The most significant and important item here is the supply of tournament equipment (in kind) for the NACs and international competitions held in the US from major sponsors like Absolute Fencing Gear. The rest of the revenues generated look like a mish-mash of uncoordinated activities, seeking to generate money.

The loss of revenue from Royalties and Partnerships, and an 11% drop in Sponsorship revenues combined with increased expenses contribute to a growing deficit (46%) in Sponsorship and Marketing in 2018/2019. Again, NAC surpluses have helped to cover the funding gap.

Here are the Sponsorship and Marketing revenues and expenses budgeted by US Fencing from 2013 to 2019.

4. The combined surplus helps fund us fencing overheads

The main categories of overheads include:

  1. General Administration

  2. Executive Office

  3. Board of Directors and Committee Members

The total overheads add up to slightly over $1 million annually. Membership fees are sufficient to cover these overheads with some money left over to cover the other deficits.

  1. General administration

This is, of course, a cost center, which can reasonably be paid for with the proceeds of membership fees.

These are General Administration expenses budgeted by US Fencing from 2013 to 2019.

2. Executive office

US Fencing is required by law to disclose the compensation it pays to senior executives. And, again, it is reasonable to cover this cost center with the proceeds of membership fees.

Here are the Executive Office expenses budgeted by US Fencing from 2013 to 2019.

3. Board of Directors/Committee members

Another overhead cost that can be reasonably funded with surpluses from membership revenues.

Here are the Board of Directors and Committee Members expenses budgeted by US Fencing from 2013 to 2019.

development (fundraising)

The cost of promoting and supporting US international competitiveness is a very expensive. Relying so heavily on the NACs to plug the funding gaps to support these international endeavors is unwise. US Fencing cannot expect to be able to raise NAC fees indefinitely to plug these funding gaps.

For US Fencing to fulfill its strategic mission of international competitiveness, the Board must raise substantial funds to do so. Based on the amounts raised to date from its development activities, it is quite clear that fundraising has not been a priority for the Board.

Worthy causes like promoting fencing as a sport, and supporting athletes who make the US a fencing powerhouse should be funded by more diverse sources of funds including substantial funds raised from donors who are passionate and supportive of the cause.

US Fencing’s development (fundraising) activities don’t appear to comply with “best practices” of fundraising for non-profit organizations, Its’ fundraising efficiency is poor, ranging from 8% to 26% over the years. The best fundraising organizations spend no more than 30% of funds raised on fundraising, and have fundraising efficiency of 70% and higher. Some even manage 100% fundraising efficiency because they have sponsors who pay for their fundraising efforts.

US Fencing must improve its fundraising efficiency and fast track its fundraising efforts to pay for activities that promote its overall mission. These actions must be a very high priority for US Fencing.

With the addition of the right Board members, it would be reasonable to expect the Board to target raising between $1 million to $2 million annually to pay for its international activities. The US Fencing Foundation is a great vehicle through which the Board can activate its fundraising efforts.

For fundraising purposes, a good Board member is someone who is passionate about the cause, can write big checks to support the cause, and that Board member is well-connected enough to encourage others to follow his/her lead in writing checks in support of the cause. Are there fencing alumni who can play this role on the Board? US Fencing’s recent call for Board nominees with a track record as fundraisers while a good start., it looks like the call failed to yield anyone with a fundraising track record as a Board nominee.

With so many World Cup, Grand Prix and Olympic fencing medals earned by Team USA, these elite fencers could play the role of ambassador to potential donors, and help raise funds alongside the Board.

US Fencing can also be much more pro-active about organizing other fund raising activities with the help of volunteer committees. The US Foil teams, both men’s and women’s hold regular annual fencing clinics with the Olympians at Summer Nationals. We note that the US Epee team has started similar clinics. These events have been very popular and hugely successful. They benefit the US Teams and inspire all the young fencers who attend. Kudos to the organizers of these events.

Reynold Levy’s book, “Yours for the Asking: An Indispensable Guide to Fundraising and Management” is a helpful guide for the US Fencing Board and senior management, along with the article 10 Fundraising Responsibilities of Every Board Member.

Here are the Development revenues and expenses budgeted by US Fencing from 2013 to 2019.

bottom line

The NAC fees were raised and entry fees imposed this year to provide additional money to plug the funding gaps in US Fencing’s international activities budget and overheads. A surplus at last year’s levels would not have covered this year’s deficits, hence the need to raise fees.

This hand to mouth existence without effective fundraising leaves US Fencing trapped in a perpetual cycle of raising NAC fees.


Prudence and fairness suggest that US Fencing should diversify its sources of funding immediately.

US Fencing’s over reliance on NAC and membership fee surpluses to fund its activities hugely limit its abilities to adopt new technology, create a much needed referee training program, select better locations for NACs, pay better honorariums to referees and armorers, hire additional qualified staff, create fencing scholarships for deserving student fencers, and grow the sport of fencing domestically within less privileged communities. US Fencing is hamstrung in its ability to do more.

The pursuit of international success in fencing is an expensive endeavor, and the Board must do much more to raise funds to support these activities. It is hugely unfair to ask a minority of the membership (NAC attendees) to fund substantial portions of US Fencing’s expenses in this pursuit.

From the amounts raised to date from its development activities, it is quite clear that fundraising has not been a priority for the Board. Significantly improved levels of fundraising by the Board will free up cash surpluses from the NACs to re-invest in the NACs themselves.

With the addition of the right Board members, we can reasonably expect the Board to target raising between $1 million to $2 million annually through its development activities.

right way to use the nac surpluses

A substantial percentage of the NAC surpluses should be re-invested to benefit NAC constituents through:

  • increases in the venue rental budget so that NAC locations offer genuinely decent flight options from all around the country in a geographically fair way.

  • allocation of funds to create stronger referee training programs to keep up with the rapid growth of the sport and raise the overall quality of refereeing.

  • freezing increases in NAC and membership fees for 5 years

In fairness to its overall membership, US Fencing should fix the percentage (possibly not to exceed 30%) of the annual NAC surplus that it can use to fund overheads and other activities. The remainder of the surplus must be used to improve the NAC experience for all constituents.

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