The Iditarod Trail Committee on Monday announced a funding shortfall of nearly $1 million that's accumulated over the last 12 months, forcing the race to once again slice the purse paid to top mushers.
Since the committee approved the race's annual budget of about $3.7 million six months ago, cuts of more than a half-million dollars have already been made, according to executive director Stan Hooley.
Most have been in personnel and changes to the race's Iditarod Insider video subscription service that offers an array of videos and musher interviews from along the trail from Willow to Nome.
Nobody has been laid off, Hooley said, but salaries and benefits have been cut.
"We have in fact made extensive and significant cuts to payroll," Hooley said. "But anyone who's run a business will tell you that when you cut the human side too much, you risk giving up the ability to raise money from fundraising projects.
"We're dangerously close to that."
Hooley said the race sold about 10,000 subscriptions to Iditarod Insider and that the service, available to individuals for $19.95, has grown about 10 percent annually since first introduced four years ago.
The race's financial problems accelerated in the last month, Hooley said, with the loss of another $455,000 after two more sponsors dropped out and another media partnership dissolved.
As a result, the purse for the 2010 race will be $100,000 less, he said.
That reduction follows a $300,000 cut to the 2009 purse that left some racers grumbling about the winnings that go to mushers finishing in the first 30 spots. Altogether, a purse that was $925,000 in 2008 will be no more than $525,000 in March -- a 43 percent cut.
'OUT OF MY KIDS' MOUTHS'
Mushers were reeling over the cut, said Lance Mackey, the three-time defending champion.
"Ultimately, it's taking money out of my kids' mouths," he said. "This is a huge, huge blow, not only to mushers but to the sport in general. There's a lot of us who have pretty much devoted our lives to making a career of racing dogs."
Even though the Iditarod purse is shrinking, the price of dog food and other expenses are likely to remain the same or even increase, Mackey said.
Hooley said he sympathized with the mushers' plight, but added, "We are not immune from the economic turmoil that is impacting many of our partners. I think there is the perception that we are on solid ground, but the truth is at this moment in time we aren't where we need to be."
Among the biggest recent financial blows, according to Hooley:
• The loss of the $300,000 cash deal with Original Productions, the company behind "Ice Road Truckers," and the Discovery Channel for a reality TV series on Iditarod mushers. Hooley anticipated renewal of the series that aired this year; that didn't happen.
• A cut in support by outdoors retailer Cabela's from $250,000 to $65,000. "They seem to be very challenged economically now in the retail business," Hooley said.
• Loss of another $300,000 when the cable television channel Versus did not renew a deal with the Iditarod. The cable channel aired three weekly Iditarod shows at the end of last year's race, using 120 hours of footage shot by the Iditarod Insider staff and licensed to a third party, which created programming for Versus.
• A $90,000 cut in the level of sponsorship by Chevron, a sponsor since the third year of the 38-year-old race.
The shortfall would have been greater had the Iditarod not signed a five-year sponsorship deal worth $1.25 million with oil giant Exxon Mobil in February.
At the time, Hooley called the partnership "very good news in these times.''
But even as Hooley welcomed an expanded relationship with Exxon earlier this year, he cautioned that the race, run largely by volunteers, faces a demanding future.
"We've got our challenges," he said. "Sponsorship is vital to this race," but 60 percent to 65 percent of the Iditarod's annual budget of more than a million dollars is funded by revenues generated from T-shirt sales, Iditarod memberships, race entry fees, raffles and subscriptions to the Iditarod Insider at the race's Web site.
'YOU CAN'T JUST CLOSE DOWN'
The Iditarod's four biggest sponsors -- Anchorage Chrysler Dodge, GCI, Exxon Mobil and Wells Fargo -- contribute about $250,000 a year each, Hooley said.
"The Iditarod is a community affair, it's an Alaskan thing and it does help us," said Rod Udd, president of Anchorage Chrysler Dodge, adding that support of the Iditarod has helped place Udd's dealership among the top 100 Chrysler Dodge dealers west of the Mississippi River. "We'll still support the race.
"You just can't close down because the economy is a little bit rough. We'll ride through it."
David Morris, the public affairs manager of GCI, echoed Udd.
"They have gone through this cycle before," he said. "In business, you go through these things. They'll come out of it."
Seventy-five mushers have paid $4,000 apiece -- up from $3,000 two years ago -- to sign up for the 2010 Iditarod. Typically, the top 30 finishers earn some prize money. Champion Lance Mackey took home $69,000 and his third new Dodge truck after last year's victory. Hooley said he expected all musher payouts to be cut, but the exact size of the 2010 purse has not been determined yet.
"Any time you lose $1 million in a 12-month period of time, there have to be reductions," he said. "I don't see any alternatives."
The Associated Press contributed to this report. Reach reporter Mike Campbell at email@example.com or 257-4329.
By MIKE CAMPBELL