INFORMATION ON TRANSITION FROM NONPROFIT TO FOR PROFIT STATUS
NOTICE OF OPEN LICENSE HOLDERS MEETING OCTOBER 24 AT EAGLES CANYON RACEWAY
October 17, 2025
To All CMRA License Holders and Interested Parties:
Ref: Dissolution of the 501C7 Non Profit entity
To All,
Over the last 60 months of operations the Board of Directors has made changes to the structure and systems that the CMRA uses in an effort to maintain a place of racing in Texas and surrounding areas. The current structure and model are just no longer viable for operations, and require a shift of position from a non-profit to a for profit organization. To that end the Board of Directors has decided to accept business proposals from qualified entities in anticipation of this shift.
This process is clearly documented and requires a vote for dissolution, disposition of all assets, and any and all proceeds to be donated to a similar not for profit entity. In short, the CMRA will sell all assets and intellectual property to a business that will continue operations after the close of this calendar year.
The CMRA has been the home of motorcycle roadracing in Texas, Louisiana, and Oklahoma for over 50 years. Offering a family friendly atmosphere with fierce competition featuring some of the finest amateur riders in the United States has been our sole purpose. We are making this change in an effort to keep our sport sustainable and continue these traditions for many years to come.
The CMRA will hold an open meeting at our Season closer Friday evening 10/24/25 at 7:00pm, we encourage all license holders that can attend to do so, as well as any parties that may be interested in submitting a proposal to the BoD for evaluation. We will have the detailed information of what we are looking for in these proposals, as well as timelines and any other requirements. If no proposals are acceptable after evaluations the CMRA will continue on as normal for the 2026 Season while we explore options further.
__________________________________________________ __________________________________________________ ___________________
FAQ: WHY THE CMRA WILL BE BETTER OFF AS A FOR-PROFIT ORGANIZATION 10/18/25
Q1: Why are we considering changing from a 501(c)(7) nonprofit to a for-profit organization?
A: While our 501(c)(7) status has served us in creating a strong member-based community, it also limits our ability to grow, raise funds, and serve the broader racing community. Transitioning to a for-profit model would give us more flexibility to pursue sponsorships, public events, business partnerships, and reinvestment strategies that are currently restricted.
__________________________________________________ ______
Q2: What are the main limitations of staying a 501(c)(7)?
A: As a 501(c)(7) social club, we face several constraints:
• At least 65% of income must come from member (license holder) dues or assessments.
• No significant revenue can come from non-members (e.g., spectators, sponsors, merchandise).
• We can’t advertise to the general public or operate in a way that resembles a commercial business.
• Profits must be used solely for club purposes — no distributions or incentive options.
• Heavy IRS oversight and risk of losing exemption if we step outside the strict guidelines.
These rules limit our ability to:
• Grow attendance and participation.
• Attract outside sponsors.
• Sell merchandise or concessions broadly.
• Reinvest profits creatively into facilities, technology, or staff.
__________________________________________________ ______
Q3: How would becoming a for-profit help the club grow?
A: As a for-profit, we can:
• Open events to the public and promote them widely.
• Secure corporate sponsorships and advertising deals.
• Sell branded merchandise, concessions, and tickets to anyone.
• Hire and compensate staff or contractors more flexibly.
• Expand services like training programs, track days, or racing schools.
• Reinvest profits into better equipment, tracks, marketing, or safety initiatives.
• Eventually reward founders, early supporters, or investors through profit-sharing or equity.
This structure allows us to operate more like a dynamic motorsport business rather than a private social club.
__________________________________________________ ______
Q4: Will this change mean the club is “selling out” or losing its community feel?
A: Not at all. Our community is the heart of what we do — that won’t change. The goal is to retain the spirit and camaraderie of the club, but with the tools and freedom to grow and support our racing mission sustainably. We can still offer memberships, organize member-only events, and preserve the culture — but with fewer legal handcuffs.
__________________________________________________ ______
Q5: What happens to current members (license holders) if we switch?
A: Members would likely transition into customers, partners, or optional membership tiers, depending on how the for-profit is structured. We could still offer perks or loyalty programs for long-time supporters — but we’d also have the ability to expand access, attract new fans and riders, and build a broader audience.
__________________________________________________ ______
Q6: Will we have to pay more taxes as a for-profit?
A: Yes, we would be subject to standard business taxes, but this is balanced by the fact that we could:
• Earn more income through commercial activity (sponsorships, public ticket sales, etc.).
• Take advantage of deductions for legitimate business expenses.
• Grow faster, scale operations, and invest in ways not allowed under 501(c)(7) rules.
The trade-off is more financial opportunity in exchange for paying taxes — like any business.
__________________________________________________ ______
Q7: Can we ever go back to nonprofit status later?
A: Possibly, but it would require reapplying and reorganizing as a new nonprofit. The goal now is to choose the structure that gives us the best shot at growth, sustainability, and impact. For-profit status doesn’t mean we can’t do good — it simply gives us the tools to compete and expand in the modern racing landscape.
__________________________________________________ ______
Q8: How will this benefit the average rider or club participant?
A: Riders and fans benefit through:
• Better organized, better funded events
• More track time and training opportunities
• Stronger sponsorships and prize pools
• Improved facilities and safety measures
• More access for friends, family, and the public
• A brand that can grow with the sport
This move isn’t about profits over people — it’s about using a better business model to serve the riding community more effectively.
__________________________________________________ ______
Q9: What’s next?
A: The Board of Directors is exploring the transition in detail and will share clear timelines, legal guidance, and impact assessments. License holders will be informed throughout the process and have opportunities to ask questions, give feedback, and help shape the future of the organization.
__________________________________________________ _________________________________________________ ________________________________
More information will be shared as it becomes available.
Reply With Quote
Originally Posted by Joseph Caruso
