Set for Survival
Reno Air Racing Association CEO Mike Houghton Discusses How Reno Almost got Sacked by September 11th, and the Road to Recovery
 
By Scott Germain - WarbirdAeroPress.com
Supporting Information by Michael and Chris Luvara 

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The Past

Over the history of air racing, world events have almost killed the sport on several different occasions. Financial difficulties, wars and accidents have repeatedly threatened air racing until the Reno National Championship Air Races were established in 1964. As history repeated itself, even the Reno air races faced the same challenges as previous venues in Cleveland, Miami, Mojave, Phoenix, Kansas City, Dallas and Denver.

Interestingly, the association that runs the air races might have been its own worst enemy in the recent past. As the environment changed, those running the association failed to adapt to it. Problems existed on several fronts. When Reno faced serious challenges and questions in the mid ‘90's, a new leader was brought onto the board of directors. His name was Mike Houghton.

As a former United Airlines executive, Houghton was initially hired to help find the right person for the job. In the end, he took the responsibility of making some drastic changes that would put the NCAR (National Championship Air Races) on a track better suited for long term survival. Houghton recently had an opportunity to explain what has happened within the Reno Air Racing Association, and what outside influences have done to threaten the survival of the event.

Houghton explained some of the history of the races and how the event has faired over the years. The first year of racing, held in the dirt at Sky Ranch in 1964, was obviously not a success in terms of finances. "However, it was a success in terms of the fans and establishing the venue," Houghton said. For the pivotal 1966 year, the board of directors underwrote the event from their own pockets to ensure the races were held. "It didn’t make a million dollars, but it did better than break even," he said.

Over the past forty years at Reno, a lot of great racing occurred around the pylons. Generally speaking, it seemed as if the fans enjoyed the races, save for the normal grousing at any event of this size. Unfortunately, the winds of change blew hard during the late 1980's into the mid ‘90's. The dark clouds weren’t just bad weather; there were problems at Reno.

"We’re like an air racing cat," Houghton said. "We’ve expended a few of our nine lives in certain endeavors over the past forty years." Houghton brought up that the race teams, fans and press had been treated rather poorly in the past, and basic accouterments that make a day in the desert survivable were not up to par. As in any business, money to survive and reinvest in the event wasn’t being generated, either.

In a general sense, Houghton and the board identified a number of problems and charted a course for the future. It wasn’t change just for the sake of change; it was a matter of survival. If one looks at mere numbers, attendance was running around 140,000 during race week in the late ‘80's. Houghton even joked that they counted race pilot Tom Dwelle every time he came through the gates. By 1996, barely 100,000 people came through the gates. The races were suffering, the local economy was suffering, the race teams were suffering and the fans were suffering.

Houghton was quick to point out that everybody involved has come together to keep Reno alive. "Through the determination of our board of directors, the race teams, and the volunteers and fans, we’ve kept it from being a footnote in history."

So what changed?

"The board lost focus on the why are we here," Houghton said. "Not everyone was focused on the day to day items. We allowed things to happened... We found, one day, that the crowd had aged. Dramatically. The local fan base was shrinking and the local sponsors had reduced. The bottom line was we had a great air race, but it was the same show. Stale... Boring... We had to refocus on the business."

Although the races are a non-profit organization, it still takes money to put the event on, pay the purse, pay the performers, pay certain staff members and reinvest for the next year. Simply put, RARA had seemingly become a boys club and nobody was minding the store.

But even when these cat lives were being expended, certain decisions were made that proved to be very wise. RARA had secured a geographic environment where the races could survive. "The board wise enough to foresee development prior to the ‘90's. They bought 2,800 acres around the airport and made a trade with the local Indians for 65 or 70 acres in the middle of the race course," Houghton said. Interestingly, the land within the course was already zoned for housing and had been prepared for building. "They had preserved the integrity of the land we needed - a buffer - and helped ensure the long term survivability of the races for the next 20 - 30 years. Those moves were critical. We also purchased certain hangars and paid cash for the grandstand."

Even with these forward looking changes, other problems were brewing. Attendance was declining and expenses were growing dramatically. By the end of 1996, RARA had a cumulative loss of $1 million dollars. Houghton said that well intentioned people were involved, but they had lost sight of their customers. Suddenly, RARA was just in the business of staying alive. They were a breath away from being another air racing footnote.

"Recover or close was the challenge we faced," Houghton stated. "Closing would have been the easiest decision, but they didn’t do that. They had the same passion that you have out there. They wanted to keep air racing alive, and keep it in Nevada."

"We had become arrogant," he said. "So we made big changes in our attitude. It took one person to step forward and put forth the effort; we were going to make some nasty changes that people were not going to like. Jack Walther did that. He was the only one willing to spend some time to lead the organization out of the depths of hell. In addition to his own business, he would have weekly 7 am meetings to get things done. We also made a difference by changing faces on the board. If somebody didn’t care, or put in the work, they were asked to leave."

The biggest change within RARA was with their attitude. "Survival will do that to you. If you want to survive, you will change your attitude. I hope that the fans can see that, over the past few years, we’ve changed our attitude. We want air racing to survive, because there is no other place to go," Houghton said.

The leaders within RARA returned to Business 101. By their own admission, they had to run the races as a business in order to survive. "You’ve got to talk to your customer," Houghton said. "The participants, the stakeholders, the fans and the race teams; talk to them and listen to them. Look back and study what you did right and wrong, and make the changes. We had an attitude of ‘we’ve always done it that way. Why should we change it?’"

"Because it almost tanked us, that’s why!," Houghton stated. "We needed to learn how to use our ears. Everybody knew we knew how to use our mouths..."

"Some people weren’t happy with the changes, but hopefully, after we’ve gone through the pain and agony of those changes, people will like what we’ve done. We had been an independent organization for so long, it was difficult to change. But once we began to listen, we learned some things:

1. We were very arrogant. We were difficult to work with on all fronts. The fans were critical of us, the press was BRUTAL, and the relationship with our participants was combative at best.

2. We also learned that race fans will put up with almost anything to see the only game on Earth. They were, however, literally dying on us. The average age was late 50's to early 80's and still aging. The core fan base was shrinking, and nothing was being done to cultivate new fans.

3. Trial by new customers... The food was bad, the show boring and the exhibits focused only on the ex-military aviation fan. We had a reputation of a great air race and the worst food in the world. You can’t do that to your customers. I look back and marvel that we didn’t kill any of our fans with our food.

4. Casino support was low. By not talking to this potential good support base, we didn’t realize that they saw us as a long, tiring day that they would spend money to bring a customer out to. The customer would spend all day out there in the hot sun, drinking beer and having a great time. Then they’d get back to the casino at 6 pm and go to bed! Well, they didn’t want them to go to bed. They wanted them to gamble! We needed to look at how we could help that experience change.

5. General cash sponsorship. Five years ago, what would you guess our cash sponsorship was? (We are a three million dollar event.) Would you believe $40,000? That’s what it had slipped to. We had sponsors willing to write checks for $40,000 to watch us race. That’s not a lot of money. But we had done a horrible job at giving people a reason to come out and watch the races. We can’t run an event any more without great sponsorship support.

6. We also realized we were giving away and losing more of our product than we were selling. As an example, the free press had reached 900 members without any accounting for coverage. We had more Brownie and Hawkeye disposable cameras out at the pylons than good cameras. There was also a problem with counterfeit wristbands and cost controls were not in place. We also had more groups and individuals stealing money from us; because we were out there having a good time.

"We needed to change - right now - if we wanted to survive. We did make many changes at all levels in the organization, but the most import was attitude. We needed to rally everyone that was involved or we were going to die," Houghton stated. As already mentioned, many changes were made in the board of directors. "If you didn’t want to come out for the week and get dirty and make it happen, you were out. We had a 70% change on the BOD. Fortunately, there were enough people out there that believed racing needed to survive, and thankfully they have stuck by us through the changes."

Improving it for the Fans

One facet of improving the fan experience is based on a change in food vendors. There are now 32 different food vendors that have their names on the booths - a idea that fosters pride in their product within their own community. "Our customers have said we did the right thing; edible food at a fair price. Everyone comes to an event expecting to get ripped off, but if you rip them off and it’s a good product, they’re happy," Houghton said. "We’re not quite holding a gun to their head, but they’re a captive audience.

RARA also changed their static exhibits for the customer. "Not necessarily the air race fan, but the customer," Houghton said. "We’ve had to look at a broader base of customer, because the core race fan was getting real old and they were getting smaller in number. We had to bring more people out, so we looked at the exhibits, the airshow, and the shopping a little differently. You know, we’re not in the air race business. We’re in the entertainment business. We’ve got to give people a good entertainment experience. If we do that, they’re going to enjoy it and tell their friends and they’ll come out."

Although many other changes also took place, RARA had to convince sponsors that they event was healthy. That effort paid off with a bump in corporate sponsorship to $500,000 per year. "That goes toward the bottom line of the races," Houghton said. "It makes a big difference. We also needed to convince the community that what they give, they get back. We’ve been here all this time, and you didn’t notice us? Because we were arrogant and we were having too much fun on our own. But we’re a part of the community; we are a part of them. We will support them, but we want them to support us, too. If we go away, that is a big bite out of the community."

The event has also become active within the community in order to bring out younger fans and build an aviation interest in them. Between 6,000 and 9,000 local kids have been guests at the races in the past few years. RARA has also started another organization to preserve the history of the races, and there are plans for an air racing museum at Stead in the future. The addition of the Rolls Royce Heritage Trophy also fosters interest in aircraft restoration and preservation and broadens the exhibit base for the fans.

September 11, 2001

Houghton paused and then said, "It’s a good thing our race cat has 9 lives. 2001 was a perfect example; we thought we were on easy street at that point. Like everybody else in this country, we suffered a devastating blow. What happened on September 11th is something we will all never forget. Individually and collectively it has made an indelible imprint on our lives."

"From our perspective as an organization, it almost annihilated us. On Sep 11th, we had invested almost $2 million out of pocket to get the races ready. We were grounded. There is nothing more agonizing than being ready to go and not being able to do it. I think what happened brought us all together. As a group, we all cried together after we had to cancel the races. What we were facing was the potential end to the Reno Air Races. We were $2 million in the hole. We made some people mad because we didn’t give them their money back right away. My obligation, as the CEO, is to the organization. It was to make a last ditch effort to ensure we had one last gasp. We were fortunate," he said.

"Our volunteers, our sponsors, our vendors, and the fans stepped up to the plate and minimized our losses. Our vendors for last year gave us a break. Let me put it this way; if a vendor did not give us a break, they weren’t a vendor last year...," he said. "Our fans gave us a break. A number of sponsors said ‘Just keep the money. We believe in you and we want you to come back."

"We ended up losing $1.2 million, and believe me, for a non-profit organization, that’s a devastating blow. We had dug out of a hole for the last five years. But the good thing is that everyone stuck with us for five years, and we were in a position to sustain ourselves and survive for that long. It wasn’t easy. Thank you for your help. You made a difference. Your support made a difference," Houghton said.

It Was Close

How close did RARA really come to not putting on Reno 2002?

He continued, "It wasn’t until the middle of December, 2001 that we thought we’d make it. To make a long, long story short, 2002 was the best year we’ve ever had. We had more sponsors step up, had more fans show up, more ticket sales, and more donations. You know what? We had more fun. Through adversity we’d all pulled together. There is nothing better than having a successful year. Fun and success are synonymous."

"I am always asked, ‘Why didn’t was have insurance for protection if the event cancelled?’ Our insurance company has assured us that if we had paid the $700,000 yearly premium that would protect us from an event cancellation, that $700,000 would not have covered us because of an act of terrorism. So, the fact that we didn’t spend that money each year was a good deal. So, in 20/20 hindsight, I was brilliant!," Houghton laughs.

Houghton went on to recite some figures. He said that they are the result of everybody from RARA and the fans pulling together. Reno 2002 had 220,000 customers; which reduces to 100,000 different people coming through the gates for the week. The previous number was 68,000 in 2000. "We thought that was awesome," Houghton said. The races contributed $60 million to the local economy, a fact the local residents came to realize when the terrorist attacks ground the planes and forced the races to cancel the previous year.

"Our local people came out and supported us, and made it a great year," he said.

There is still some bad news, however. Houghton said that RARA reduced their accumulated net loss dramatically, but they aren’t out of the hole yet. "We’re in a good solid position, and we’re healthy, and we’re investing it in next year. 2003 in the 40th anniversary of the races, and we’re dreaming of a $1m race purse. We look at a successful year that will help us continue to preserve air racing for generations to come. Each year we’re going to questions what we’re doing. We’re going to make the pleasant and painful changes we need to make to help us survive."

In closing, Houghton said there is a tomorrow for air racing. "We’ll have six race classes this coming year, and the USAF Thunderbirds will be at Reno celebrating their 50th Anniversary. Sponsors will be also expanded. We think we’ve made the right steps over the past few years. We believe there is a long, long, potential history to air racing."

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Story and Photos Copyright 2003 by Scott Germain - WarbirdAeroPress.com. All Right Reserved.