REHR letter to AERC directors

["Joan Ruprecht" <ruprecht@tidepool.com>]

AERC Board Members November 26, l998

1960 Heritage Oak Place, Ste. 9

Auburn, CA 95603

Dear AERC Board Member:

This letter is in reference to the Board's decision to require membership or payment of a non-membership fee for Limited Distance (here after referred to as LD) participants. We are writing as the officers of the Redwood Empire Endurance Riders, a regional endurance organization managing four rides per year and consisting of over 100 active and successful riders. Our members have been AERC officers, AERC committee chairpersons, and national champions. Currently we have seven members listed in the West Region point standings and four listed for national awards, with our president serving on the LD committee. We are concerned that the Board’s decision referred to here will have a significant negative affect on the sport of endurance riding, AERC, ride managers and LD rides.

The initiating impact of the policy decision is to raise the cost of entering LD rides by a significant amount, in most cases by about 20% ($10/$50) for a 25 mile ride, even more for 10 to 15 mile fun rides. The result of this will be to decrease participation in LD rides. This result is incontestable. The first law of economics states that there is a negative relationship between price and the quantity demanded so an increase in price produces a decrease in the number of demanders.

How large the decline will be is determined from the elasticity of demanded. For necessities, the demand is inelastic so the fall in quantity is small. The demand for 50 mile ride entries is an example because these people are hooked and thus into points and miles and thus are willing to accept higher prices rather than not participate. The elasticity is high for most LD riders as they are, for the most part, not a committed group, being new or only loosely connected to the sport. The result of a large price increase will be a larger decline in the number of LD riders (e.g. with elasticity equal to 1.5, a 20% increase in price produces a 30% fall in riders). For ride managers, fewer riders mean less ride revenue since ride management does not share in the additional fee revenue. It all goes to AERC.

Given the fact that a large proportion of the costs of putting on a ride are fixed, reduced revenue is much more of a problem for smaller rides that for the larger ones. For small rides like the ones our club puts on, the revenue from LD riders is the difference between breaking even and bankruptcy. The end result of this policy change will be fewer LD entries, fewer economically viable rides, fewer recruits into the sport and, eventually, fewer rides.

Why have we inflicted these negatives on ourselves? The major reason is a budgetary one. While LD is one of the fastest growing segments of endurance riding, it generates relatively little AERC revenue. With AERC facing budget deficits, LD appears as fertile ground for revenue enhancement. This revenue obsession is legitimized by asserting that LD riders are not paying their fair share, that they are getting an undeserved free ride. This view is incorrect for two reasons. First, most LD riders are newcomers and, therefore, do not yet care about accumulating miles and points so they do not see AERC as doing anything directly for them. Second, the incremental cost to AERC of serving these riders is close to zero. In addition, this position represents a short run view neglecting the long run reality that LD is the mechanism for recruiting committed endurance riders, future dues paying members. So even free-ride LD participants yield a positive net revenue return.

The newly imposed fees may or may not improve AERC's budgetary position. In the short run, revenue will be increased if the new fees exceed the fall in revenue produced by the decline in the number of riders and thus the decline in per rider fee collected by AERC. In the longer run, AERC revenue could well decline with an elastic demand as the number of entries fall and ride managers give up offering rides.

Compounding the problems associated with changing the membership requirements for participating in LD rides is the Board's suggested change in the definition of LD to be any distance less than 50 miles. The major driving force behind this change is the Board's unhappiness with the existence of unsanctioned LD rides. They feel that the ride managers of such rides are "cheating on AERC" from a revenue and perhaps other standpoints. Being ride managers, we understand that some managers feel the need for the sanctioning and per rider fee money to help cover their costs and their wish to avoid the trouble and hassle involved in AERC reporting. Since requiring membership or an in lieu fee threatens the financial position of ride managers and adds to their administrative burdens, it seems obvious that both changes promise to exacerbate rather than solve the non-sanction problem. Our discussions with ride managers certainly support this conclusion. The immediate reaction we often received was suggestions of various ingenious ways of circumventing both policy changes.

Given the above mentioned impacts on entry numbers, ride revenue, rides offered and the growth rate of the sport, the Board should not have passed such an important policy change without consultation with and input from the Limited Distance Committee, the Ride Mangers Committee and the membership. We do not know what can be done now that the damage has been done except to begin a reasoned if ex post discussion of the issues.

Thank you for being attentive to our views and concerns.

Sincerely yours,

Uri Driscoll Mark McGowen Elaine Kerrigan

 

Karen Fredrickson Ted Ruprecht

CC: Ride Camp, "Endurance News", Sue Grahl, Chair of the limited Distance Committee, Paulette Brehob, Chair of the Ride Managers Committee