AFTERBURN REPORT 2004
The story of spending by the Burning Man Project in 2004 can be told in two chapters. The first and most prominent story concerns land, property, and all of the attendant cares that go with it. Our total expenditures in 2003 equaled $7, 287,335. This total increased in 2004 to $8,557,308 - a difference of $1,269,973. The lion's share of this increase relates to land development. Money spent on developing our Nevada properties, zero in 2003, ballooned to $656,142 in 2004. Likewise, in 2003, no funds were invested in real estate purchases, but in 2004 we spent a total of $247,103 for this purpose.
Together these two categories add up to $903,245. This figure alone accounts for three-quarters of our increased spending in 2004. When added to expenditures for machinery and equipment (up by $52,655) and mortgage payments ( $48,798), these elements approach five-sixths of the Project's increase in expenditures. In other words, most of our increased spending in 2004 is accounted for under the heading of Asset Acquisition in the accompanying chart of expenditures.
The back-story of these numbers relates to very expensive improvements undertaken on our Work Ranch in Washoe County, Nevada. In order to comply with zoning and building requirements mandated by county officials, we initiated in a very ambitious construction program. This more or less heroic effort -- working against tight deadlines - is detailed in the Nevada Properties section.
While improving property that the Project already owned, we also acquired real estate in the town of Gerlach, where Burning Man's desert headquarters is located. These purchases were undertaken because county regulations did not allow us to affordably house members of our Department of Public Works (DPW) on the Work Ranch. In response, we purchased two properties located along the Main Street of this little town. These included the Black Rock Saloon and the site of Gerlach Hot Springs. The latter is occupied by a disused building equipped with showers and a small outdoor pool. In the end, the cost of improvements that would make it possible to house workers at the Hot Spring property was far beyond our means Still, the property provides a good location near the edge of the great Black Rock Desert, hot spring water is potentially available, and possibilities for the site's future development remain enticing. In 2004, however, our DPW crew was housed at Gerlach Estates, a trailer park at the back of the town, leading to increased rental costs. The former saloon was developed as a very welcome recreation center for the DPW.
The second chapter of the story that explains our spending relates to the Burning Man Project's internal organization, its headquarters in San Francisco, and spending directly for construction and services in Black Rock City. In 2004, an opportunity arose to rent the downstairs unit of our two-story office building. An additional 10,000 square feet of office space seemed like quite a chunk to bite off, but we eventually realized that Burning Man's expanding mission and the resulting influx of volunteers and office workers were already crowding what had seemed a spacious facility 2 years previously when we signed that lease. This downstairs area also included a shop facility that can be made available to artists. After some negotiation with our landlord, we leased the entire ground floor, and it is now nearly filled by industrious activity. This transaction increased our San Francisco building rental costs from $136,254 in 2003 to a total of $218,367 in 2004.
The Project's labor costs remained stable in 2004. Labor totaled $2,221,932 in 2003, as against $2,085,743 in 2004. These numbers combine the categories Outside Services/Independent Contractors and Payroll in the accompanying chart. The net reduction in expenditure was due, in part, to streamlining our staffing of DPW, combined with a more efficient use of labor in that department. These savings also reflect a reduced need for workers at our Work Ranch in 2004, since much of our clean-up was accomplished in 2003. Other categories in our budget crept upward in 2004, partly due to the increasing cost of building materials and the general cost of inflation. However, by electing not to increase the Project's budget for art honorariums in 2004, we were able to offset these and other costs.
We also spent more in areas directly relating to the growth of the event and its community, such as portable toilets, fire and safety services, and printed materials and mailing. Most notably, we spent $263,191 more than in 2003 for dust abatement. This change was due to increased watering of a greater number of roads and the purchase of an environmentally friendly, biodegradable, sucrose-based dust palliative used on Gate Road. This stock of material will be used in future years. Lastly, our fee paid to the BLM, calculated according to the number of days participants attend the event, increased by $104,152 to a total of $707,808 in 2004.
Overall, we managed to survive a year in which unpredictable land development costs, many of them requiring painstaking negotiation, abruptly confronted us. We achieved this success by improving budgetary processes and oversight, combined with increased fiscal discipline exercised by our managers. By carefully managing our funds, we expanded our office in San Francisco, remained solvent, and paid all of our bills. As has so often been the case with a growing organization - and one that continues to expand its mission at an accelerating rate -- 2004 was a squeaker. Despite a lack of surplus, we acquired assets, required no loans in order to continue operations, and were ready to begin another round of ticket sales at the beginning or 2005. Burning Man burns money, but we've learned to burn it cleanly as it fuels our growth.