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Wednesday, October 5, 2022

Comic-Con Tightens Payroll Belt Amid $7.5 Million Loss, Delayed Filing Reveals

BusinessComic-Con Tightens Payroll Belt Amid $7.5 Million Loss, Delayed Filing Reveals

Melissa Tozeski, painted as Poison Ivy, hangs out in the Gaslamp Quarter.Melissa Tozeski hangs out as Poison Ivy during 2018 Comic-Con, about 30 years after current president Robin Donlan did the same. Photo by Chris Stone

In our last episode, Comic-Con was facing financial doom — a state threat to yank its nonprofit status.

Comic-Con's IRS Form 990 for 2020 tax year. (PDF)Comic-Con’s IRS Form 990 for 2020 tax year. (PDF)

But like a superhero save, organizers of the San Diego Comic Convention met a June 6 deadline. By late May, the world-renowned event submitted its federal Form 990 — thus preserving its tax-exempt status in California.

Now comes a sequel — revelations in that 2020 IRS report.

According to its filing, Comic-Con lost $7.5 million that pandemic year on top of a $3.7 million loss in 2019.

It could have been worse.

Comic-Con lists “proceeds from settlement” of $2 million, an apparent reference to being reimbursed for attorneys and expert-witness fees by Dan Farr Productions, whose rogue “Salt Lake Comic Con” event sparked a trademark-infringement lawsuit by Comic-Con.

(A jury found “no willful infringement” by Farr but awarded Comic-Con $20,000. The San Diego-based group won the right to demand legal fees, however, and federal Judge Anthony J. Battaglia in April 2019 ordered the defendants to pay nearly $4 million.)

It wasn’t clear why Comic-Con claims only half that amount. Comic-Con officials didn’t respond to requests for comment.

In 2018, Comic-Con lost its longtime president, John Rogers, to brain cancer. Replacing him was Robin Donlan, who had risen from the ranks of a 1980s cosplayer (the villain “Poison Ivy”) and Comic-Con secretary to vice president for events. She made less than $6,000 with Comic-Con in 2000 but drew nearly $78,000 in 2019.

As Robin Doig in 1987, Comic-Con President Robin Donlan was pictured in the Chula Vista Star-News. Image via newspapers.comAs Robin Doig in 1987, Comic-Con President Robin Donlan was pictured in the Chula Vista Star-News. Image via newspapers.com

Donlan — a 1980 Chula Vista High School graduate — retired in 2020 as a teacher in the Chula Vista Elementary School District. In 2021, she had a reported annual pension of $57,094.

Now 59, Donlan was paid $103,846 by Comic-Con in 2020, said the IRS filing. That’s appreciably less than the $222,154 Rogers got in 2017 (but reduced to $212,680 his last year).

But according to tax records, Comic-Con has made salary cuts throughout its top ranks. Executive director Dona Fae Desmond fell from $234,393 in 2019 to $206,500 in 2020. Communications chief David Glanzer went from $180,426 to a base pay of $152,308 in the same period.

Donlan survived a scandal 15 years ago when Vencent “Vence” Donlan, her second husband, pleaded guilty to wire fraud and tax evasion in an embezzlement scheme and spent two years in prison.

(Robin wasn’t criminally charged, but as a “relief defendant” was on the hook to pay $5.5 million in “disgorgement and pre-judgment interest,” according to a consent filing.)

The 2020 tax report also saw Desmond’s daughter — Comic-Con chief experience officer Maija Gates — draw a base pay of almost $170,000.

“Two related board members* and the schedule L disclosure of compensation to the daughter … raise questions about the organization’s approach to conflicts of interest,” says Brian Mittendorf, an accounting professor at The Ohio State University.

He told Times of San Diego: “It would be interesting to know how they’ve dealt with the potential for conflicts of interest” and wondered if they had a written policy.

Gates, who has worked for Comic-Con since 2000, won’t show up in its 2022 tax filing, however. In March, she became an event director at ReedPop, based in Norwalk, Connecticut, and Brighton, England.

(ReedPop feeds the same fan base as Comic-Con, describing itself as the “leading producer of pop culture events in the world. New York Comic Con, PAX, C2E2, Star Wars Celebration, MCM Comic Con, ECCC, Keystone Comic Con, BookCon and more!”)

Delving into IRS details, Professor Mittendorf says Comic-Con’s deferred revenue liability of $16.7 million is large — especially when compared to $1 million listed in the 2019 filing.

“Is this due to prepayments for things related to the convention?” he asks.

Mittendorf also observes: “They don’t list any independent contractors on page 8. Given they run a major convention, I’m surprised they didn’t have any such contractors. But they do have a large payroll so maybe they do a lot in-house.”

Comic-Con’s 2020 payroll of $4.7 million — including officers, directors and employees — was potentially lightened in 2021, though.

In April 2021, according to the federal government, Comic-Con won a $1.28 million SBA loan in the Paycheck Protection Program, covering at least 82 employees. It wasn’t known whether the loan through JPMorgan Chase Bank was or will be repaid.

Lloyd Hitoshi Mayer, professor of law at Notre Dame Law School, also reviewed the latest tax filing.

“The information in the 2020 Form 990 does not raise any tax exemption issues from my perspective,” he said. “The big non-tax issue is the more than $7 million loss for the year, which significantly reduced SDCC’s net assets.”

Its net assets were $17.8 million, compared with $24.8 million in 2019 and $30.6 million in 2017.

“That is not unexpected given COVID and the resulting cancellation of Comic-Con International,” Mayer said via email. “If SDCC had a similar loss in 2021, it is not surprising that it is looking for new sources of revenue.”

In April, Comic-Con announced the hiring of IMG as its first-ever licensing agency.

IMG senior VP Ricardo Yoselevitz said at the time: “Through its annual conventions, it’s clear that Comic-Con has become a powerful consumer brand without even trying. We are honored to now be working with them to identify products and destinations that create new ways and avenues to engage this passionate community, while further reinforcing Comic-Con’s position as the leading curator of this form of popular art and culture.”

IMG didn’t respond to questions on the status of licensing deals.

Recently based at 1500 State St. in downtown San Diego, Comic-Con’s current home is unclear.

“They … moved out of their fancy new offices last year that they’d just moved into,” said someone in the know who asked not to be identified. “I know they basically moved in, pandemic happened, and a year later or so they got rid of the offices and everyone had to go get their things.”

In three weeks, Comic-Con again takes over the San Diego Convention Center and environs. Organizers are auctioning badges (the event’s name for tickets) for as much as $610 to benefit the Comic-Con Museum — and perhaps its bottom line.

*Correction: An earlier version of this report said employee Colleen O’Connell was married to treasurer Lee Oeth. She was never married to Oeth.

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