The 2010 Alltech FEI World Equestrian Games in Lexington, once lauded as likely to be the first championships of its kind to make money, apparently fell shy of that mark despite last-minute help from sponsor Pearse Lyons and FEI's president, Princess Haya.
According to its 2010 tax return, the non-profit World Games 2010 Foundation closed the year $1,386,625 in the red after receiving almost $70 million in revenue, including more than $36 million in 2010 alone.
Because the Games were put on by a private foundation, tax returns are the only financial information required to be made public. Individual contributions do not have to be disclosed.
But according to foundation chairman John Long, the 2010 revenue included a previously undisclosed extra cash injection of $3 million from Lyons, founder of Alltech, the Nicholasville-based animal health and nutrition company.
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Lyons' company paid $10 million for title sponsorship of the Games at the Kentucky Horse Park, the first equestrian championships held outside Europe.
Alltech spokeswoman Susanna Elliott said last week that Lyons would not comment on the Games' finances or the transaction.
"He emphatically still considers the Games the best business decision he's ever made," Elliot said.
Lyons has said that Alltech spent upwards of $32 million to "activate" its original sponsorship. Alltech subsequently signed on to sponsor the 2014 World Equestrian Games in Normandy, France.
Lyons "doesn't want to comment on any specifics of whether or not there was any additional funding given," Elliot said. "We're beyond 2010 now. We look back on 2010 as an incredibly successful event, and now we're focused on making 2014 as successful."
In the weeks leading up to the Games in September and October, Lyons urged other Lexington businesses to buy sponsorships, boosting last year's contributions and grants to more than $13 million, well above the previous year's $2 million.
With clients and affiliates of his company, Alltech also packaged and gave away thousands of tickets for students, helping to push attendance figures to 507,022 for the 14-day event. The total number of event tickets sold or given away topped 400,000, according to previously released figures.
Long, who is executive director of the U.S. Equestrian Federation, headquartered in Lexington, said Friday that the final tax return will be filed next spring and probably will show a deficit.
"I don't think we're going to show a profit, but I believe the loss will be under half a million" dollars, Long said. "It's surprisingly close, given the way the budgets were put together and going through the sea change of the economy, with airfare and horse shipping costs going up so much. Clearly ticket sales were affected. If we can end up within about a half a million, I think that was a tremendous effort on everyone's part."
Going in, the foundation set a $76 million budget. But it didn't quite get there.
Lyons' cash contribution came a few months before the Games and was a "big bridge," Long said.
But the help from Princess Haya bint al-Hussein, president of the Fédération Équestre Internationale, apparently was much more last-minute.
In the final weeks, as the tents were going up and equipment trucks were rolling onto the Kentucky Horse Park grounds, the foundation faced a cash crisis.
The solution: a $2 million loan from Darley, the Thoroughbred breeding and racing operation owned by Princess Haya's husband, Sheikh Mohammed bin Rashid al-Maktoum, ruler of Dubai and prime minister of the United Arab Emirates.
Sheikh Mohammed's Meydan Racecourse, which holds the world's richest racing event, the Dubai World Cup, also sponsored the WEG 100-mile endurance competition across Bluegrass horse farms. Sheikh Mohammed and his son, crown prince Sheikh Hamdan Mohammed al-Maktoum, won individual silver and bronze medals in the Lexington competition. The all-Maktoum-family team won the team gold medal.
The U.A.E., Bahrain and Qatar erected substantial pavilions on the endurance course for the comfort of guests and team members, who could relax and pray in private during breaks in the daylong competition.
Financial details of Meydan's sponsorship, announced in 2009, were not disclosed, but at the time, Games officials called Meydan a "top sponsor."
Long said all sponsorship deals carry confidentiality agreements.
The loan from Darley is separate and was in addition to the previous arrangement; although $1 million of the loan has been repaid, it isn't clear what will happen to the remainder of the debt.
"It was a corporate loan, an arms-length transaction," Long said. "It was done a month before the Games, ... two to four weeks before opening ceremonies."
After the global economic downturn in 2008, it was clear that the $2 million to $4 million surplus forecast by former foundation chairman Jim Host in 2006 wasn't going to happen. With less than a month to go after more than four years of planning, with the thousands of people and horses on the way to Kentucky, more money was needed to make final up-front payments to vendors for food, tents and equipment.
The foundation downsized virtually everything that could be — including the stands around the outdoor Rolex Arena, which were lowered to eliminate empty seats. Lyons already had taken over the cost of the stadium wrap, which became an iconic symbol of the Games. But the retrenching hadn't been enough.
"We saw it coming, but there wasn't a lot we could do about it," Long said. "It was scary."
So a loan was arranged for working capital.
"We knew we were going to have a capital crunch before the gates opened up. ... There was a request for cash as the structures were starting to be erected. The final payments needed to be made as the trucks came onto the property," Long said. "We were prepared for it — but Pearse's contribution was a big bridge. The loan from Darley was another. We believed that once the doors opened up, that would generate enough cash to repay everyone. We didn't get the head count that we thought. We had every intention of repaying this."
As the books close on the Games, repayment is increasingly unlikely, both the foundation and FEI acknowledge.
"We are discussing how we might resolve the $1 million outstanding balance with Darley," Long said Friday.
Kentucky first lady Jane Beshear, who is on the foundation's board, said in a statement: "The WEG Foundation is working toward a solution to the remaining expenses. However, the 2010 Alltech FEI World Equestrian Games were a huge success for Kentucky. The Games attracted more than $200 million in economic impact, and the new facilities at the Horse Park will continue to attract competitors and tourists to Kentucky from across the country and around the world. The World Equestrian Games gave us a strong platform from which to market our state to a wider audience at home and abroad, and helped reinforce our title as the Horse Capital of the World."
The FEI declined to provide a comment from Princess Haya on the Games or the loan. Instead, FEI Secretary General Ingmar De Vos wrote via email that his organization, which independently estimated the economic impact of the Lexington events at close to $400 million, is unconcerned.
"We are aware of the financial situation in Kentucky, but there can be no doubt that the 2010 Games were a huge success on the sporting front and on the economic-impact front, producing superb sport and having a fantastically positive impact on the local economy in Kentucky," De Vos wrote.
But FEI is not looking to extend credit.
The 2014 Normandy Games are "built on a very different model to Kentucky," he wrote. "Normandy has secured financial guarantees from the state government (of France), and the existing infrastructure at the venues in Caen and Haras du Pin means that building costs will not impact the budget to the same extent."