I don't agree with everything Mr Arthur writes to Mr Menaker here (ex. the admitance of unregistered dogs - I think there is a time and place and the AKC should expand it) but I agree with the vast majority of it. The letter is very long, but worth the read.
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Dear Mr. Menaker,
In the September 2008 Chairman's Report, you expressed concern about losing revenue to the “retail sector”. I understand the American Kennel Club (AKC), like any organization, can not sustain itself while hemorrhaging red ink. But your anxiety and resulting philosophy concerns me greatly. I can’t imagine you are unaware that responsible breeders never sell to retail outlets, even though they know well that the returns on any given litter will never exceed the expenditures to produce it. Yet they continue out of pure devotion to their breeds. The AKC, however, has seemingly reduced the fancy to little more than figures on a balance sheet.
I’m sure you realize that producing quality puppies and chasing the marketplace are not parallel directions, but rather, are diametrically opposed concepts; one based on increasing quality, the other on revenues from greater volumes of inferior goods.
We all recognize fuel costs have soared, food prices have all but leapt off of the countertop, and the whole economy is sluggish at best. But increasing revenue is not the only option, as most financial challenges are best met by cutting expenditures and offering a better product. Sadly, you seem to be seeking the former with no reliance on the latter.
As you say, “The declining registrations and associated core revenues, if allowed to continue, will fundamentally change our organization going forward. Make no mistake, the very future of the AKC and our sport is at risk.” Loss of income and core revenues means only one thing; your customers are finding a better product elsewhere. You state that the AKC was a premiere brand. Courting the commercial market does nothing to restore your brand’s value. Walmart has an enormous market share but you’ll never find Rolex watches at their jewelry counter. If you want to restore the AKC’s reputation, you mustsupport superlative breeders instead of chasing the industrial market. Quality breeders will never risk associating their reputation with the likes of Petland.
At one point, you state, “there are at least 30 All-Breed registries in addition to the AKC, whose combined registration numbers exceed that of the AKC.”
The truth is, there is only one other credible all-breed “registry” in the U.S., the United Kennel Club (UKC). The others are pseudo-registries, with nothing to
offer reputable breeders. Becoming like them only cheapens the AKC’s value. (See “The Problem With Papers”.)
Yet you persist, “If this trend is allowed to continue, if we do not stop the hemorrhaging of declining registrations, we will no longer be the premier registry in the world, let alone in our country.” I’m afraid you have misunderstood the public’s desire for the quality superior breeders produce. If by “premiere” you mean being the biggest registry in the world, then “hemorrhaging” is a problem. If however “premiere registry” means being the world’s best, then the obvious conclusion is that you can never also be the biggest. It’s a matter of quantity or quality. In this market, you’re either the biggest or the best. That, sir, is your true dilemma.
You said “Management has been directed by the Board to aggressively pursue all dogs eligible for AKC registration. We intend to reach out, communicate, and educate those in the retail sector as to why an AKC puppy is the gold standard and why they should be registered with American Kennel Club. In achieving this objective we intend to continue to ‘raise the bar’ by vigorously enforcing our
policies. This action is essential to protect and preserve our leadership.”
This is in fact, a complete oxymoron! The “retail sector” is the puppy mill industry, noted for the least quality possible. You intend to educate THEM? I believe you have tried ever since you became CEO but they have no interest in
AKC’s “gold standard”, which is bronze at best because of your unfettered efforts to cater to them. They will never replace quantity with quality, and in the meantime you have denigrated the work done by reputable breeders. As you seek to enfold the pet production market, it signals the public and the dedicated breeder that the AKC is not the Neiman Marcus of our sport, but rather the canine version of K-Mart.
You can’t “raise the bar” by lowering it! AKC tried to woo back the industrial pet market with special inducements not offered to show breeders. That too backfired. The millers didn’t need AKC but your actions so soured premier breeders that many left the sport. I know it is a quandary for AKC. If you enforce policy and uphold commitment to the original AKC mission statement,
registrations would reduce even more as many retail breeders would not be able or willing to meet your requirements. But that also identifies the heart of the
issue. Will AKC be the biggest or the best?
You assert “As the pre-eminent and only not-for-profit registry, we live our values everyday with our commitment to the integrity of our registry and the excellence of our inspections program.” It appears that you intend to
register any dog that the owner states has an unbroken line to registered ancestors. Where is the assurance of integrity in that? Can you not see that once pups are placed, even reputable breeders have little to no control over their future propagation? More than just a few of us have experienced situations where someone has violated a contract, took their AKC registered dog(s) – including those with limited registration – and bred them in a corrupt manner or registered them with a puppy mill registry. Some even switch sires or add ghost puppies to litter paperwork. I know DNA profiling was meant to prevent that, but it occurs regardless. And once you open the door to puppies from unregistered litters, then both Limited Registration and DNA profiling become meaningless, along with the AKC stud books.
The new registration service offers absolutely nothing to your core breeders. Instead, it drives us away from AKC. Do you then plan to replace us with the people who bought pet puppies with no papers? You will undermine the only thing that makes an AKC registration worthwhile, the purity if your studbooks, and that is the unmitigated surrender of your integrity, and ours.
As to requiring adherence to your “compliance and inspection programs”, again, you speak of elevating the quality of AKC puppies. You do realize if you truly held to a strict quality assurance program, you would lessen the number of registrations? Again, it’s either quantity or quality. You can not escape this principle. Your largest producers will deem AKC too restrictive and be unwilling
to submit to your inspections. You are an astute businessman. So let me ask you. Will they loose money by lessening output or spend money to raise the level of
care?
I doubt you will be able to suddenly turn the commercial market into a front from which happy and healthy show quality puppies spring forth. The commercial market that you seek doesn’t care about puppy socialization, genetic health screening, exercise requirements, grooming, and least of all, adherence to breed standards. It cares only about hard, cold cash, which is alarmingly close to the
core value that seems to fuel your most recent efforts.
Then you assert, “The American Kennel Club provides what no other registry provides" I’m not sure what the AKC is able to give us that the UKC can’t provide. You speak as if the AKC is the only venue exhibitors have. Granted, an
AKC championship still outshines nearly all other titles. But in most breeds it is also less difficult to obtain than a UKC Grand Championship, and the UKC shows are more fun to attend. They are far less stressful, wonderfully informal,
have no professional handlers, and use many of the same judges as does the AKC. UKC also offers something your registry does not, the Total Dog title, which requires qualification in both performance and conformation on the same day. UKC dogs are required to do much more than just look the part; they must also be able to perform. So as exhibitors, we are already experiencing, “the same
joys and passions we have so fortunately enjoyed for more than a century,” and are doing so at considerably less cost.
(blogger's note - I added the bold italics in this paragraph)
When you talk about a “staggering 53% decline” in registrations, this has little to do with other registries. Are you oblivious to the fact that those of us in the show fancy often have multiple registrations on our dogs? My own are AKC and UKC registered, with conformation and performance titles from both. When the UKC invited the nation’s most respected single-breed and all-breed registries to a summit, it was the AKC who declined to attend. By acting as a separatist, AKC cut off potential allies and breeders who would have benefited through dual registration. And let’s not forget the firestorm that arose over your decision, now reversed, regarding judges holding dual approvals.
All of this leads me to wonder if you are seeing this situation correctly. Maybe the reason AKC registrations are falling is because of brand value. The AKC must become something more than just an advertizing tool in the local classifieds. You will never be able to hold sway over the likes of the American Pet Registry, the National Kennel Club, the Universal Kennel Club Inc., or any of the paper
mills. They will always be the darling of the commercial market, and in the eyes of many – if not most of us within the sport – they are spouses within a marriage made in Hades.
The unscrupulous will always take the track of less effort. So compromising your standards for the sake of increasing revenues should work. For example, AKC’s deal with Petland would have clearly padded your bottom line. But as we made abundantly clear, it would have sold out we who hold our reputations in the highest regard. You surely would have increased your commercial share, but the AKC brand would have been trashed.
So maybe this isn’t about the sport. You say that, “as we lose registrations, we also lose our core revenues, our ability to generate alternative revenues and our legislative influence.” Is it really all about “core revenues”? You say
you want to, “get back on track growing our influence as the premier registry in the world.” I grant you, the AKC was the premiere pride of our sport. But the reason you have lost standing is because you sold out chasing those “core
revenues”. You should be striving to ensure that the buyer of an AKC puppy owns something above those bought in pet stores, flea markets, and back alley parking lots. By your present policy, the next door neighbor’s sex education project for their children is suddenly placed on the same level with our highest show champions. To have an AKC registered dog means little, if anything, these days. And this is all because of your focus on fiscal returns over the quality of our Best In Show specials.
You say, “AKC puppies and our breeders are the best”; that, “they are the ‘Gold Standard’ in the marketplace.” Reading this makes me wonder if you have been out in the trenches as of late. The average person sees no difference
between AKC and the Continental Kennel Club. In the near twenty years I’ve been a breeder, an AKC registration only meant the dog was purebred, not that it had any inherent quality. And the reason the other “registries” are weakening your position is because you are seeking to emulate their practices. You are not bringing the sport up to a higher standard, but rather, you are sinking the AKC’s reputation to a much lower one.
Then, when you say, “No one is suggesting we lose sight of our rich heritage and traditions,” sir, it has never been part of our rich heritage or traditions to supply fodder to the pet market! Have we not always been dedicated to producing only the highest quality and most healthy specimens our kennels can generate? “Pets” come from sorting out the exceptional, and then placing the rest into the homes of average pet buyers who should have a puppy that is, in
nearly every aspect, the equal to our champions. Again, you have contradicted the very direction you now propose.
I also beg to differ that the millions of registration dollars you collected from AKC pet owners, “overwhelmingly subsidized our sport.” Other than sanctioning events, and the AKC Canine Health Foundation (CHF), what services do you really provide? Ironically, when we send information to help identify puppy mills, we are told that you are just a registry and that it is not your function to police the breeding community.
When I was on the board of a breed club, AKC never once sent us a check to cover any of our expenses. We expended our own club’s resources for our events. The
judges pay for their required seminars and other education. The clubs pay the judges, pay for the facility, the superintendant (if one is used), the equipment, food, advertizing, printing, postage, and in the end, when all of the entries fees are collected, we send a check to you!
You say, “let me make it clear to all, that the AKC will continue to enthusiastically support the Parent Clubs' Codes of Ethics including, as it relates to their members' sale of puppies through commercial entities.” But
wait, isn’t that the very market you intend to pursue? Or are you looking to make headway with the backyard breeders, who are equally as abhorrent to your AKC member clubs? I’m not sure how you can reconcile your concept, as even local breed clubs have stipulations that members can never sell puppies to brokers or commercial outlets.
In the end, I guess the most telling aspect of your report is as follows:
“If the current trend continues and dog registrations decline to 250,000 over the next several years,AKC will face an annual revenue shortfall of $40 million. To put this in perspective, if this scenario occurred, and we relied solely on raising the event service fees to make up for this revenue shortfall, the fee would be a staggering $20 per entry. Our preference would be to grow our registrations to the point that we could lower, not increase event fees. Some would say the obvious solution is a significant reduction in expenses.However, a $40 million revenue shortfall would necessitate a reduction of our expenses by two-thirds. This is totally unrealistic.”
Either way, you lose market share. And the question begs an answer as to why you have such high expenses. Yes, you reduced the number of employees but AKC still resides in some of the country’s most expensive real estate. Shouldn’t you have moved your entire operation to North Carolina where the cost of living is so much lower? AKC may well have a revenue crisis, but you also have a serious expenditure problem.
I do believe our sport faces great risk, but I dare say it is not from lost revenue to any single registry. We are in far greater danger from Breed Specific Legislation (BSL) than from the fiscal trials facing the AKC. By fostering commercial breeders, you actually feed into the pet overpopulation hysteria. Your desire to increase funding is the very attitude that puts the sport in greater peril! Embracing the commercial market ushers in the likes of Petland, Jack’s Pets, and the whole of the Midwestern milling industry. They flood the country with countless hoards of substandard pups – complete with genetic and
health problems – lending credence to PETA, the Humane Society of the U.S., and even such fanatical groups as the Animal Liberation Front. If you succeed in this unholy alliance, these organizations will gladly push us over the edge to destruction.
My advice is to simplify your operation and cater to those who will bring you the most honors. Our future should never include legitimizing industrial puppy breeding! It should remain as the home-spun sport we, the reputable breeding community and the astute puppy buyer, have supported for ages. Our sport should not be professionalized to the point where it turns off the average
breeder-exhibitor. AKC must address the puppy mill problem, not contribute to it. And most of all, it should protect us against the ravages of BSL by uniting with other organizations dedicated to our cause. Do this, and we will gladly bring our registrations to AKC.
If you truly want to regain being the “Gold Standard” of our sport, then give us a registry whose aim is to follow your own mission statement. If you continue to chase after market share in place of strengthening your bond with us, AKC will shrink to nothing more than a top-dollar pet registry, with little support or respect from anyone. Backing the mills means abandoning us, along with your own
parent clubs. My hope is that you will listen to us, lest you find in the end that the AKC has traded its status for money without value, such as is exemplified by the collapsing banking and insurance industry. As the CEO of AKC and someone formerly in the banking business, you should know this principle better than anyone. You should
also recognize the greatest treasure of all is the ability to validate our fine and noble breeds.
I guess the Bible says it best, "No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other.” (John 2:13-16) In the end Sir, whom will you serve?
Sincerely,
David J. Arthur
Aircastle Standard Poodles
