Friday, February 5, 2010

Farmers Market - Financial Trends

Almost every sector of the city is in fiscal difficulty. The Ann Arbor Farmers Market is not an exception. The following bar chart of the Market expenses illustrates some of the reasons. The graph shows operating expenses only, any large one time expenses such as replacing the lighting are not included

The Market was operated by an independent contractor to the city until about 2000. During this period the Market operating expenses averaged a little over $50,000 and were fairly constant.

After 2000 the Market was transferred to the Parks Department and the cost of operation has steadily increased. The budgeted cost of operation for the current fiscal year, not shown, is over $150,000. The largest single cost is personnel, however the city imposes IT and municipal fees which total about $30,000

The following bar chart shows the Market income. This is the income from operation. The primary source of income is rental to the vendors of the Farmers Market, but income from all use of the facility, such as special rentals is included. Payment the facility receives from the DDA as parking lot rental is not included since the intent here is to compare revenue from operations to the expense of operation.

Clearly the revenue has not increased as fast as expenses. Back when the Market cost $50,000 to operate the income was about $60,000. Last year the cost of operation increased to over $140,000 but revenue was only a bit over $80,000.

A particularly ominous trend is the downward decline in revenue since 2004. Stall fees were increased in 2004. This caused income to initially increase to over $100,000, but it has since decreased. I believe that the number of vendors at the Market decreased. I do not know if this was cause by the increase in stall fees or was a deliberate attempt to reduce crowding.

Stall fees were raised about 20% this year, fiscal 2010. This can only be expected to increase revenue to about $100,000. But fiscal 2010 expenses are budgeted at $150,000. Clearly this trend cannot continue very long. More disturbing, if the revenue increase anticipated for 2010 is followed by a slow decline as it was in 2004 the Market will be much worse off than before.

The data for the bar charts came from the audited financial statements of the city of Ann Arbor. The 2010 fiscal budgeted amounts are from a hand-out sheet distributed at the February 2010 meeting of the Market Commission.