American Cycling Association
Proposed change to Rule 5.4

Version: May, 20, 2009

TO: Jon Tarkington
    Yvonne Van Gent

FROM: John Bickmore

RE: There are problems with rule 5.4


The problems are:
  
    - there is no rule that defines entry fees

    - a recommendation is not a rule

    - the fees charged are not either fair or reasonable because of the price inelasticity of demand as it relates to fees charged at ACA sanctioned events.



Background:

 - a race event is a business that ( in most cases ) exists for one day, or one day in different weeks.

    - most races are a monopoly.  They are either the only race on that date, or they are so geographically removed from a competitor that competition for a comsumer is not possible

    - fees charged are price inelastic due to 
       - constant demand from cyclists to race, regardless of price, because of a very limited number of races
       - price inelasticity may be exacerbated by colusion between Organizers/Clubs
          - Explicit: communication between Organizers/Clubs has set a price
          - Implicit: an organizer/club observes the price inelasticity of the need for cyclists to race at other event(s) and raises fees, expecting demand 
                      to remain constant with the higher fees
          - in either case, price was not determined by an unconstrained ineraction between supply and demand.

    




This proposed new rule 5.4 mitigates the price inelasticity of demand by giving comsumers a direct relationship between price and the amount of service provided:



5.4.1 Organizers/Clubs can charge an unattached fee to a maximum of $5.00 per day.  The Organizer/Club must transfer all unattached fees collected to the ACA along with the race report.

5.4.2 Organizers/Clubs cannot charge a late registration fee.

5.4.3 Organizers/Clubs must publish the entry fees to be charged for each race at an event, no later than 60 days prior to the event. 

5.4.4 The organizer is not required to refund any entry fees if the organizer has fulfilled all of the race obligations. In case of dispute, the ACA Board of Directors will make the final decision on the amount of refund required, if any.

5.4.5 Cash is defined as being United States currency created by the United States Mint.

5.4.6 Entry fees defined:

       If the amount of cash in a race's prize list is less than $1000.01 then the entry fee cannot be greater than $10.00  If this race is the cyclist's second or third race at the event, then the entry fee charged cannot be greater than $5.00

       If the amount of cash in a prize list is greater than $1000.00 then the entry fee charged cannot be greater than $1.00 for every $100.00 of cash in the prize list. If this race is the cyclist's second or third race at the event, then the entry fee charged cannot be greater than $10.00

5.4.7 Any fee not defined by rule 5.4 is prohibited.



Rational:

   5.4.1 = The unattached fee is meant to force a cyclist to join a club.  The ACA receives benefit from this action, not the organization promoting the event.

   5.4.2 = Many races are cancelled in Colorado.  Also, injury can prevent a cyclist from racing.  So racers tend to not pre-register to protect their money, namely they are spending the late fee as insurance against paying an entry fee for a race they may not be in.  Thus, currently, a late fee is actually part of the entry fee.

   5.4.3 = So everyone has sufficient time.

   5.4.4 = Common sense.

   5.4.5 = To prevent cash from being defined as a coupon, or a free meal, or whatever.

   5.4.6 = Defines what is a valid entry fee and mitigates the current problem of the price inelasticity of demand.

   5.4.7 = Prevents the creation of fees not defined by the ACA rule book.