A number of comments - 1) This appears to be spending $245K (the full year's dues of 4,900 members) to get the rights to eventually deal with someone who the league apparently expects will work for free in the future, with only up to $8K of travel reimbursement per year. He will apparently be expected to be at booths promoting book sales, working next to persons that are paid for their work, and are not in any way critical to the success of the operation. 2) The critical person is 81 years old. In the future, just after the supposed 3-year payback, he will be 85 and of course older as the years go on. 3) The critical person involved gets none of the $245K. 4) The sales volume numbers given for 2019, 2020, and 2021 do not take account of the slowdown in license classes and testing, reported to me by multiple instructors and test volunteers. We should at least have been provided with the ARRL numbers. 5) The League has employed some kind of sales consultant that has been reported to have increased Amazon book sales. The Board has not received any quantified report on the cost of the consultant, the extra money paid to Amazon, and whether the idea made or lost money. This information should be provided to the Board. 6) At the A&F meeting, we were told that the proposed publications would not expire during the next three years. Simple investigation shows that the Extra Class question pool gets revised in July 2024. This means the sales and cost numbers provided are not valid. 7) Inputting "Amateur Radio license" into Amazon produces a number of interesting results. a) The ARRL publications are labeled as "sponsored," and show on a space above the main listings. b) The top two books in the main listings (not ARRL books) are also both listed as "sponsored." The K4IA book is marked as "Best Seller," as well as the ARRL Technician License Manual (listed as number 5). c) The Gordon West books first show up on page 5, or somewhere around number 80 on the list. d) The ARRL book gets 85% 5-star ratings. The K4IA book gets 85% 5-star ratings. The Gordon West book gets 93% 5-star ratings. 8) The conclusion that the purchase will be paid back in three years appears to assume ARRL staff labor is free. 9) There is no value added to Amateur Radio by this action. 10) I have not found any Southwestern Division members who believe the purpose of the League is to buy stuff wholesale and sell it retail. That is a task for private industry. 11) The idea that such a costly concept should be floated before the A&F Committee, and the committee be expected to vote approval after an hour of deliberation does not meet any standards of "due diligence." Note that originally, A&F members were not even given access to the slides and tables presented, although they were subsequently sent to ODV. 12) The Board does not have an adequate understanding of the Licensing Manual book market to be approving such a costly venture. Substantially more hard data is needed. This should be tabled until adequate financial information is provided. 73, Dick Norton, N6AA On Friday, September 15, 2023 at 10:58:47 AM PDT, Minster, David NA2AA (CEO) <dminster@arrl.org> wrote: #yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 p.yiv2737706799MsoNormal, #yiv2737706799 li.yiv2737706799MsoNormal, #yiv2737706799 div.yiv2737706799MsoNormal {margin:0in;font-size:11.0pt;font-family:sans-serif;}#yiv2737706799 a:link, #yiv2737706799 span.yiv2737706799MsoHyperlink {color:blue;text-decoration:underline;}#yiv2737706799 p.yiv2737706799MsoListParagraph, #yiv2737706799 li.yiv2737706799MsoListParagraph, #yiv2737706799 div.yiv2737706799MsoListParagraph {margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:sans-serif;}#yiv2737706799 span.yiv2737706799EmailStyle22 {font-family:sans-serif;color:windowtext;}#yiv2737706799 .yiv2737706799MsoChpDefault {font-size:10.0pt;}#yiv2737706799 filtered {}#yiv2737706799 div.yiv2737706799WordSection1 {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 filtered {}#yiv2737706799 ol {margin-bottom:0in;}#yiv2737706799 ul {margin-bottom:0in;} Let me take a shot at this Mike. First of all, the board should be focused on the cost of the goodwill value of this purchase which is $245,000. This amount will be amortized over some period of time to be discussed with our outside auditors, but let’s say it is only 3 years. Given the performance of the manuals, assuming absolutely no changes in volume after we buy them, the ROI is roughly 2-ish years. The $100,000 on inventory is meaningless as it fits very neatly into what we spend on building inventory of our own books today. If this agreement included no inventory because they had sold out of all the books, we’d go right on producing inventory and selling it like we do with every other title. If the inventory was very large, say on the order of $1 million, then the board would need to be very concerned about our ability to sell off the inventory within the period of time each book aligns with its respective FCC question pool. This is not the case. The additional costs that are being contemplated such as legal review of an agreement and the shipping costs of the books are all ‘cost of doing business’ and again should not be a concern of the board within the scope of this opportunity, especially given the small amount of money these expenses entail. In terms of business performance, on a macro level, here is 2019-2021 for which we do have numbers from the first round of talks with them: 2019 ARRL Tech 24,029 units GW Tech 7,362 units ARRL Gen 10,805 units GW Gen 2,925 units ARRL Extra 5,577 units GW Extra 1,262 units ARRL TOTAL 40,411 GW TOTAL 11,549 2020 ARRL Tech 21,823 units GW Tech 10,112 units ARRL Gen 10,044 units GW Gen 3,928 units ARRL Extra 6,494 units GW Extra 1,629 units ARRL TOTAL 38,361 GW TOTAL 15,669 2021 ARRL Tech 21,911 units GW Tech 5,658 units ARRL Gen 10,369 units GW Gen 3,492 units ARRL Extra 8,026 units GW Extra 2,017 units ARRL TOTAL 40,306 GW TOTAL 11,167 He did not provide 2022 and 2023 actuals preferring to only make those available during due diligence. As you can see, on average, he’s around 11,000 books versus our 40,000 and there is evidence of the market performing with zero-sum characteristics. We have no reason to believe that there is any risk to continuing with this trend. I’m not going to suggest for a minute that Gordon West has the historical or legacy value of a name like Hiram Percy Maxim. As discussed at the A&F meeting, this opportunity was originally pursued to buy market share and associated earnings. There is no intent to turn this into protecting someone’s legacy. That said, and I’m sure you know this from your Marketing experience, the BRAND Gordon West will far outlive the MAN Gordon West. If that’s what our intention is. And it is. We will be working to get much greater visibility to Gordon, have him be more engaged at the club level regarding them conducting courses for licensing, being involved with our future live license training sessions, and moving forward with the assurance that the book content is not dependent on Gordon. Eric Nichols, who we have worked with in the past as an author, will be providing most/all of the content for the manuals going forward. So we are managing the short term risks pretty well with a view to the longer term by treating the name Gordon West as a BRAND. I don’t think life insurance at his age and with his limited involvement in the current books is warranted or could even be underwritten. Corporate Keyman policies are usually written based on some multiple of salary. Gordon is not an employee. If the board felt like this is something we need to investigate, we certainly can, but I believe I would have a tough time giving compelling data to an underwriter that would support such a policy. As I understand it, all of us are headed into uncharted waters for this organization. We have written agreements to acquire the rights to publish a newsletter (NCJ), and the rights to provide archival access to another amateur radio magazine on our CD’s (Ham Radio), but I cannot find anything that shows that the CEO brought a business opportunity to the board and have it approved. Given the size and scope of our book business, I view this as a very small purchase, that is low risk, that will provide in excess of $100,000/annum to our bottom line, and that gives us the opportunity to use the potential of this “Instructor Series” of books legs into other aspects of education under the Gordon West brand. I hope this information is helpful. And I reiterate: confidentiality is an absolute on this as we are under and NDA. Thanks David From: arrl-odv <arrl-odv-bounces@reflector.arrl.org> On Behalf Of Michael Ritz Sent: Friday, September 15, 2023 12:00 PM To: arrl-odv@reflector.arrl.org <arrl-odv@arrl.org> Subject: [arrl-odv:35191] Re: Special Board Meeting - Monday, September 18 Wow, now it's closer to $400K (or higher, once our legal and internal costs are added), than $200K. My first question, plus what I brought up before that was only partially answered by David: Where are thehistorical sales data for the Gordon West products? One measly quarter of data does not a trend make..... Are long term sales of his products trending upwards, or have they been trending downwards? What data was provided to support the future sales figures, or is this a SWAG? How does this forecast compare with forecasts for our 2023-2026 sales for our own license manuals? How accurate have our past forecasts been regarding our own manual sales? If I'm expected to perform our fiduciary duty I need to know that what we are buying here is not just to keep Gordon West's legacy alive.... A three year timeframe to just get our money back, when Gordo could expire within this timeframe seems pretty risky to me. Can we get some sort of life insurance on Gordo to cover our bets on this? 73; Mike W7VO On 09/14/2023 10:24 AM PDT Fred Kemmerer <fkemmerer@anita-fred.net> wrote: I’m attaching the slides that explain the transaction that we are considering. This will be the material that we will review during our upcoming special board meeting. I’m happy to answer any questions that folks might have in advance. In case the attached file does not pass through the ODV reflector, here is a link that folks can use to download a copy of the material – https://www.dropbox.com/scl/fi/ss05gqaj4f1jx7dxwwby1/ARRL-Publishing-Asset-A... Please note that the ARRL has entered into an NDA with the seller that explicitly restricts any communications about the potential transaction outside of the ARRL board and ARRL officers. Best and 73, Fred Kemmerer, AB1OC (603) 413-5400 Mail: ab1oc@arrl.org ARRL New England Division Director From:arrl-odv <arrl-odv-bounces@reflector.arrl.org> on behalf of David Minster <dminster@arrl.org> Date: Wednesday, September 13, 2023 at 1:34 PM To: "Famiglio, Bob, K3RF (Dir, AD)" <k3rf@arrl.org>, "k5ur@aol.com" <k5ur@aol.com>, "arrl-odv@reflector.arrl.org" <arrl-odv@arrl.org> Subject: [arrl-odv:35187] Re: Special Board Meeting - Monday, September 18 This is an extremely simple transaction. No one is being asked to rubber stamp anything, as the participants and observers in the A&F Committee meeting the other night would agree. Careful time was taken to answer the committee members questions. The headlines that each Director needs to consider are: - This is the purchase of a small set of assets from a larger publishing company - This purchase was initially intended (some 2 years ago) to allow us to purchase market share and a stream of income from a reliable, large player in the space - As a business opportunity developed in the A&F Revenue Subcommittee, it was established that ARRL hosted live licensing courses that are interactive would provide another potential stream of income AND the program already utilizes these licensing manuals - The balance of the agreement which would be up to $100K in the purchase of printed books is well within the scope of inventory purchases we make now to operate our retail business and should be of no concern or consideration by the board. The fundamental decision that each Director needs to make is: - Does a small acquisition (<$250K) of this licensing manual business make sense from an investment perspective with a return of less than 36 months? Perhaps Fred Kemmerer can share the slides from the A&F meeting the other day.
From the discussions I have had, I believe that this has widespread support from the directors – and the support is appreciated.
David From: arrl-odv <arrl-odv-bounces@reflector.arrl.org>On Behalf Of Famiglio, Bob, K3RF (Dir, AD) Sent: Wednesday, September 13, 2023 11:18 AM To: k5ur@aol.com; arrl-odv@reflector.arrl.org <arrl-odv@arrl.org> Subject: [arrl-odv:35185] Re: Special Board Meeting - Monday, September 18 If we are to be asked to vote on a purchase of all or part of an ongoing publishing business, we need to see the details in advance in order to digest them, form questions for the meeting and consider how to vote. Rubber stamping someone else’s recommendation is not a good practice exercising the duties of the office of a director. If a proposed agreement has a significant price tag and has been rough drafted for discussion, that also will be helpful to review terms and conditions. Our league has been down this road in the last decade or so with respect to contract approvals which did not turn out well because the devil was in the details not considered or identified. Let’s jog our institutional memory in that regard. A few days to study the proposed transaction terms before a vote is necessary. Anyone else agree or are we not expected to approve an agreement to proceed yet? Bob Famiglio, K3RF ARRL Atlantic Division Director 610-359-7300 www.QRZ.com/db/K3RF From: arrl-odv <arrl-odv-bounces@reflector.arrl.org>On Behalf Of k5ur--- via arrl-odv Sent: Tuesday, September 12, 2023 6:24 PM To: arrl-odv@reflector.arrl.org <arrl-odv@arrl.org> Subject: [arrl-odv:35184] Special Board Meeting - Monday, September 18 Hi all: Thus far I have 13 Directors requesting a special Board meeting regarding the request of the A&F Committee concerning a business opportunity. Therefore, we will have a special Board next Monday, September 18, at 8:00 PM Eastern time. Zoom info will be provided prior to that time. Thanks. 73, Rick - K5UR _______________________________________________ arrl-odv mailing list arrl-odv@reflector.arrl.org https://reflector.arrl.org/mailman/listinfo/arrl-odv _______________________________________________ arrl-odv mailing list arrl-odv@reflector.arrl.org https://reflector.arrl.org/mailman/listinfo/arrl-odv
