Wednesday, February 01, 2006

Steve Filson's Fundraising Hits a Wall

A couple of weeks ago I posted a piece looking at a quote from a small district newspaper about Steve Filson’s fundraising last quarter. It raised the possibility that Filson’s fourth quarter fundraising had not been as strong as we might have assumed given his performance in the third quarter. There is now evidence that Steve Filson did even worse than the quote led me to believe. Here is the quote I was responding to (emphasis mine):



Filson’s web site said that he had about $100,000 cash on hand at the end of the September campaign reporting period. He said that there has not been much change in the fourth quarter of 2005.

Here was the meat of my response:



If Filson has not appreciably increased his cash on hand he’s in trouble. It either means that Steve Filson raised a lot of money but spent too much of it or it means that Steve Filson did not raise much money. Neither prospects put Filson in a very positive light. Now the fourth quarter reports are finally coming out and we can see preliminary evidence that Steve Filson underperformed tremendously. The FEC website that makes these types of reports available does not have Filson’s report up yet, but the FEC has published the aggregate numbers.

From the site, we see that Steve Filson ended the year having raised $155,823, of which only $54,906 was raised this past quarter. This essentially puts him on pace with Jerry McNerney in terms of the money raised this past quarter. However, what makes this more problematic for Filson is the fact that he reported spending $53,324 last quarter, which means that he only increased his cash on hand (COH) by $1,582. Also, a lot of political observers look at something called the “burn rate” which is the percentage of incoming money spent rather than saved. I have seen people on other blogs say that a burn rate of over 30% in the fourth quarter is a problem, or at least a red flag. Regardless, nobody would say that a burn rate of over 97% at this stage in the campaign is warranted. Filson, put simply, is spending way too much money given what he is raising.

But the deeper issue is that Filson has touted his superior fundraising ability. It was, when he first started running, one of the primary reasons he gave for Democrats to vote for him. And even McNerney’s strongest supporters never suspected that Filson could not live up to his third quarter fundraising. The debate was always whether Filson’s fundraising skills would allow him to overcome McNerney’s grassroots base. Nobody ever really considered the possibility that Filson would be unable to significantly out-fundraise Jerry McNerney. Even after I published my piece a couple of weeks ago, I got a couple of people “in the know” pooh-poohing the quote, assuring me that it must have been a misunderstanding on the part of the reporter. Well, it looks like the quote was very much accurate. And it looks like Steve Filson is in trouble.

I’m still waiting for McNerney’s numbers to show up on the FEC website. We know he has raised over $100,000 based on the statements of his campaign manager, but we don’t know much else. I assume that McNerney’s COH is going to be less than Filson’s, so Filson will still probably retain the absolute advantage in terms of fundraising. But I still expect Filson’s star to be seriously diminished once people realize that he did so poorly in the fourth quarter. And I still cannot get over the fact that he spent so much money given his receipts. I mean, what has he been doing to warrant those expenditures? Is it just the expense of retaining all of his consultants? If so, it’s unsustainable and something big will have to change.

UPDATE: Hank Shaw at the Stockton Record had an article
today that touches on this issue. Shaw writes (emphasis mine):


Filson, who enjoys support of the Washington D.C. party establishment, leads the intramural money chase with $102,000. But McNerney - who ran against Pombo in 2004 - has nearly $80,000, according to his campaign manager. [Ed Note: The last figure appears to be inaccurate. Or at least, McNerney only had around $69,000 COH at the end of the quarter. It's possible the $80,000 figure represents McNerney's current COH. It's also possible that the campaign manager just messed up.]

Neither Thomas' nor McNerney's campaign finance report were available Tuesday night.

Part of Filson's viability has hinged on his ability to raise the money needed to beat Pombo, who as House Resources Committee chairman can tap energy, Indian and agricultural interests better than most.

So McNerney's closing the gap comes as something of a surprise. Filson dismissed it as a blip and said he's "planning to raise some eyebrows" in his next report, due in April.

"We knew it'd be a really tough quarter with the special election and the holidays," Filson said.
Here's the thing. McNerney was almost certainly hurt more by the special election than Filson. McNerney's supporters at the grassroots have been in one campaign or another for two years, and the special election consumed the attention of most active Democrats in Alameda and Contra Costa counties.

I can tell you that McNerney has the support of the folks who did the special election precinct work for the Democratic clubs in Berkeley and Oakland and the people who coordinated the same thing for all of Contra Costa County. McNerney's current scheduler (Vicki) was a volunteer in the main Alameda County Alliance for a Better California office. She was in the ABC office over thirty hours a week for over six weeks before the special election. None of the Filson supporters I have met had any leadership role in the special election. And I know that, for example, Filson's Field Director spent election day of the special election going to a concert instead of helping get out the vote. I don't think she had been hired by Filson yet, but the point is that Filson gets his support from people who were a lot less active in the special election than McNerney's supporters. So to claim that the special election got in his way is a cop out.

And I think that McNerney's supporters will see this as an opportunity to rally around McNerney and flex their grassroots muscle. At the very least, McNerney's supporter will be energized, and I don't see how Filson's supporters will be anything other than dispirited.

I can tell you that unless Steve Filson does in the coming quarter what he should have done this past quarter, his campaign will be dead in the water. And even if he does raise a lot of money, there is absolutely no way that he can spend as much money this coming quarter as he did this quarter. After all, raising money does not matter if you're spending it almost as quickly as your taking it in.

29 Comments:

Anonymous Anonymous said...

For the record, McNerney's filings show he has around $69,000 cash on hand -- not "almost $80,000." His FEC filing is available here:

http://query.nictusa.com/cgi-bin/dcdev/forms/C00398644/200649/

Presumably, his campaign manager was (a bit disingenuously) including January's receipts.

2:25 PM, February 01, 2006  
Blogger Matt said...

Note, for the record, I was already in the process of correcting the post before the previous comment was posted.

Also, I'm not sure I would presume the campaign manager was being disingenuous. He may have been a bit disingenuous, but it seems silly to dissemble about something like that when the truth is going to be very apparent so soon after the statement. But in any event, you're right that it doesn't look good.

2:49 PM, February 01, 2006  
Anonymous Anonymous said...

Matt –
Here is McNerney’s year-end report from the FEC.
http://query.nictusa.com/cgi-bin/dcdev/forms/C00398644/200649/
Here is Filson’s:
http://query.nictusa.com/cgi-bin/dcdev/forms/C00413963/199634/
As with any statistics, they can be twisted and turned as one may choose.

4Q contributions:
Filson $50964
McNerney $41165
Filson collected 20% more in contributions.

4Q expenditures:
Filson $49574
McNerney $16817

4Q “Burn rate”:
Filson 97%
McNerney 41%

So looking at that, one may (as you are) cry out that Filson’s campaign is doomed, the sky is falling, etc. etc.

Here are some more numbers:

3+4Q contributions
Filson $155587
McNerney $74443
Filson has nearly a 2 to 1 advantage here.

3+4Q expenditures:
Filson $53325
McNerney $20942

3+4Q “Burn rate”
Filson 34%
McNerney 28%

McNerney still has a slight edge on this “burn rate,” but I think when you factor in the fact that Filson is just starting his campaign it is not as drastic as you claim. Can you give some links to these blog mentions of this “burn rate” and any campaign managers that have talked about it? It would be appreciated.
You mentioned the cash on hand as being “Advantage:Filson.” This is the case.

Cash on hand:
Filson $102498
McNerney $69204
Filson has ~30% more cash on hand.

You brought up the issue of spending money too fast. Just curious, what do you make of the debt situation with the two candidates?

Debt:
Filson $9122
McNerney $35891

Combining those two:
“Net” cash on hand:
Filson $93376
McNerney $33413
This gives Filson a 64% advantage.

I will concede that Filson should not be jumping for joy with the results. In comparison with the fantastic results of quarter 3, maybe he did inch up his own personal expectations too quickly. However, this talk about Filson’s campaign “fizzling out” and “hitting the wall” is too early. Filson has the credentials, firepower, and increasing support to win this thing.

3:11 PM, February 01, 2006  
Blogger VPO said...

We are talking "intramural" here -- Filson vs McNerney. But look at Pombo's numbers $370,000 this quarter alone for a total of $841,000 cash on hand -- I don't see a contest here.

Even if Filson is a superior fundraiser than McNerney, Pombo beats them by almost an order of magnitude.

Let's be realistic -- how much would Filson have to raise to be competitive with Pombo? That is an important question. With Pombo's contributors being very generous and having deep pockets, Filson would have to raise 10 to 20 times what he did in this quarter in the current quarter.

And here it is one month into it (the first quarter). Do you think he brought in $200,000 in January? I seriously doubt it.

What do you think his numbers should be for Q1 2006?

Yes, Filson probably can out fundraise McNerney and "win this thing" (that is, the primary, I presume) -- but both of he and McNerney are not even close to Pombo.

What are people thinking? -- Filson wins primary, then a sudden surge of several million dollars for him? Does anyone realistically think that will happen? I just want to know, I never count anything out, not matter how outlandish it sounds.

3:33 PM, February 01, 2006  
Blogger Matt said...

A couple of points. First, let me just say that I'm going to delve deeper into this issue probably tomorrow. I have seen McNerney's numbers and I've been discussing with VPO who should put up the first salvo of comparisons.

Also, I don't think the sky is falling for Filson. But I think he has significantly underperformed this quarter. And unless he changes things, I think he's in big trouble. Certainly, I think he has fallen on his face in 4Q. If he can pick himself off then so be it. But he's just made a whole lot ride on what he can do this quarter we're now in.

Now a note about some of your figures:

1) It's specious to look at 3rd+4th quarter fundraising because McNerney came in with money from before. This cycle McNerney has raised over $100,000 and Filson has raised over $150,000. So Filson has the advantage, but his fundraising advantage is only something like 3 to 2, not 2 to 1.

2) Most of Filson's money has gone to consultants. Unless he has paid them in full for all of their services, I still find his burn rate troubling.

3) A lot of McNerney's debt is owed to himself. So it's not as drastic as you claim, although he does have more legitimate debt than Filson.

4) Lastly, I think you're missing something important. Filson is running on the premise that he'll be able to buy more media than McNerney. McNerney has always understood Filson will raise more money than him. The point is that McNerney's strategy does not rely on expensive media buys. Filson's almost certainly does (or else it relies on something else that is expensive, not a massive ground game).

5) Something that I'll discuss later is that Filson raised almost none of his money from inside the district. That's a big problem for him.

3:35 PM, February 01, 2006  
Anonymous nicholas said...

anon said:
Debt:
McNerney $35891

----

Where is this coming from? Details please....(while i am a volunteer for the campaign i dont get involved in debt figures)..enlighten me please.

3:36 PM, February 01, 2006  
Anonymous Nicholas said...

Per McNerney, who is with Ken Christensen in DC for three days of meetings with PAC and Labor leaders, the McNerney for Congress 06 campaign has no debt.

I was given permission to share this information with everyone.

Have a great evening folks!!!

3:46 PM, February 01, 2006  
Blogger Matt said...

Nicholas,

That doesn't make any sense. McNerney clearly had some debts going into last quarter although I believe most of them were owed to McNerney himself. But the 4Q FEC reports clearly indicates new debts. So either the reports were wrong or someone from the campaign is confused.

3:51 PM, February 01, 2006  
Anonymous Anonymous said...

Have you seen how much money Pombo raises inside the district? Not much. Why would it be a problem for Filson?

4:00 PM, February 01, 2006  
Anonymous Nicholas said...

i dont think raising money from outside the district is the issue...expecially in a primary race.

the issue is having a lack of support from within the district..

money from within the district means votes (and support) from within the district.

am i right blogger folks? by all means correct me if im wrong...

4:30 PM, February 01, 2006  
Anonymous Anonymous said...

Matt, Nick Juliano is reporting on his Tracy Press Blog that he interviewed Steve Filson today and that Filson said he was happy with his fourth-quarter fundraising numbers. Juliano also says that Filson predicted that he'd have more than $200,000 cash on hand by April 1. Maybe you can provide the link so people can read it for themselves. I assume Juliano quoted Filson correctly, and I think Filson has a good grasp of his numbers and wouldn't say it unless he had a high degree of confidence he could meet that number.

6:01 PM, February 01, 2006  
Anonymous Anonymous said...

Nicholas, it is called an FEC Disclosure Form 3. Anon was probably referring to line 10 of the Summary Page (as itemized on Schedule C or Schedule D). The number came from the same FEC form which was the source for all the other McNerney numbers that you see here. Matt can give you a link to the FEC website.

6:49 PM, February 01, 2006  
Blogger VPO said...

Anon says: "Filson predicted that he'd have more than $200,000 cash on hand by April 1".

If Pombo continues as he did this past quarter (and there is no reason to think he won't), he will have $1.2 million, meaning $1 million more (or 6 times) what Filson has.

As I stated above, I think Filson has to do much better than $200,000 cash on hand by April 1. Yes, if he has more $$ than McNerney, he probably could win the primary. But going into the general election, with so little money compared to Pombo?

I guess the Dems are figuring that after the primary, the money will cascade into the nominee's coffers, since everyone will know who to donate to after that. But Filson would be at a greater than $1 million deficit compared to Pombo. No matter what your political leanings, I think you would have to see that as a serious problem.

8:19 PM, February 01, 2006  
Anonymous nicholas said...

Thanks anon..if im reading the report correctly those debts are part of the ledger and are subtracted from the final figures.

if i recall correctly those debts were from the previous 04 campaign. the final figure of $69204.87 is the amount of COH for the end quarter. no additional debts from the previous campaign exist.

anything else?

vop, i hear what your saying about fundraising. but is money the end all here? the central valley has never experienced a real deal retail campaign effort like the one mcnerney is running. money will be raised and is needed but the key here is energizing the democratic base (and persuading independant and republican voters) that we have a vision for improving their lives.

everyone that i have encountered gets excited about the economic posibilities that McNerney's Energy Plan can bring to the Valley. its the kind of excitement that money cant buy.

8:28 PM, February 01, 2006  
Blogger VPO said...

Nicholas -- there is an on-going debate as to whether money is the be all and end all of this race. It certainly is a huge factor. Some argue that all that matters is that the candidate have enough $$ to put out a bunch of 30-second ads to the public (who pay very little attention to these races anyway). See that thread in the Filson vs SJ Supervisors posting earlier on this blog.

The other side, and this is where I am at, is that, yes, the 30-seconds are important, but also grassroots and local organizing are critical also. I think a House race is still small enough that the efforts of the local clubs and grassroot activists can have an effect.

Some disagree with me on that, and so we have this tension between McNerney (less money, more grassroots) and Filson (more money, less grassroots).

It is very interesting to have such a clear cut contest going on. I guess the first test will be the primary -- if McNerney can pull an upset there, that bodes well for the general race, as to the importance of grassroots and local action vs a purely money strategy.

8:37 PM, February 01, 2006  
Anonymous Anonymous said...

Nicholas, check Schedule C and Schedule D for dates and itemization. IMHO I think you'll need to correct your statement in part.

8:42 PM, February 01, 2006  
Anonymous Anonymous said...

anon says:

Presumably, his campaign manager was (a bit disingenuously) including January's receipts.

And everyone bites.

I guess it never occurs to anyone that the "journalist" took something out of context or was lazy or anything like that. We just assume that the campaign manager wanted to lie about something everyone was going to find out about in the next few hours.

Bloggers.....what a bunch.

10:34 PM, February 01, 2006  
Anonymous Anonymous said...

Anon, keep in mind that there is more than one Anon here. Also, in a story posted today at the Tracy Press website, Juliano uses the word "satisfied" to describe Filson's feelings about his 4th Quarter fundraising. Last night, Juliano used the word "happy." I think there is a difference. So your point is well-taken.

Okay, Anon, what is the story with their not being any entry for a campaign manager's salary in McNerney's FEC 3 form? How would this whole issue effect McNerney's campaign numbers? How would it effect McNerney's campaign credibility if it turns out that Carrillo is a volunteer since they had announced McNerney was "hiring" Carrillo?

7:53 AM, February 02, 2006  
Anonymous nicholas said...

The last Anon person,


thats funny!!! AJ joined the campaign the first week of December. it was the holiday season and AJ was not going to be at the office the last week of the month and offered to donate two weeks of his services.

now, I noticed that Lisa wasn't paid in Dec either but I didnt raise any issue of it because its minor and not that important in the larger scope of things. I guesss I could have posted , "hey, so umm..does this mean Lisa quit. Was she fired?"....

but I didnt because in the end, what good does it do?


Please pick a name if your going to post folks..its soo darn confusticating..just call yourself "blogger 222" or something....you can post as "other" and are not required to create a user account.

8:41 AM, February 02, 2006  
Anonymous Anonymous said...

Nicholas, Thanks for the explanation. Tell us how much is Carrillo being paid?

As to Filson's campaign consultant, I don't have the kind of inside info. that you seem to have. But I've stated above what has been reported by Juliano regarding Filson's prediction for this quarter.

Well, have you figured out that you are wrong when you say that McNerney's campaign has no outstanding debt and obligations. Unless McNerney's FEC 3 form is erroneous, I know that statement is wrong. I'm waiting to see if you'll stand up and say when you are wrong. If you are basing your statement on current info., then give us the facts to support your statement.

8:59 AM, February 02, 2006  
Anonymous nicholas said...

if you looked at the detailed report then you are fully aware that those debts are payable to "Jerry McNerney".

Legally McNerney can not pay himself until 21 days prior to the election. And paying himself that money is totally up to his discression.

Now do ya really think McNerney is going to pay himself 21 days prior to an election?

If you think about the report from an accounting perspective it makes sense, doesnt it? McNerney is simply tracking his expenditures.

Now, im more then happy to answer any questions you might but all I ask is that you ask before making assumptions.

have a great day!! i gotta go get ready for a killer jazz concert down in LA tonight. Sheila E, Rhonda Scott, Katt Dyson with special guest Wendy & Lisa.

out!!!

9:22 AM, February 02, 2006  
Anonymous Anonymous said...

Nicholas, when you get back, take a look at Schedule C and see if you don't see that there are $9,100 in loans by someone other than McNerney. Then, I suggest you look at Schedule D and see what you find there. I wasn't making assumptions. I was looking at the FEC filing.

9:57 AM, February 02, 2006  
Anonymous nicholas said...

Those loans are contributions from supporters. If and when those loans are paid back are totally up to those supporters and McNerney.

And you make assumptions when you indicated that our Campaign Manager was being disingenuous and you were making assumptions when you questioned whether our Campaign Manager was a paid staffer or a volunteer. Rather then jumping to conclusions next time out, ask me...I'll be more then happy to answer your questions. And in the end, if you feel the situation benefits the candidate that you support...Superfantastic!!

now i really must get back to finding a hotel for my one day trip here..im a major late.

;)

10:32 AM, February 02, 2006  
Blogger VPO said...

I agree with Anon 2 posts up -- journalists often get something slightly wrong. I would not accuse AJ or the McNerney campaign of any "disingenuous-ness". You would have to deal with the press to see how often their "facts" are not quite on the mark. Many times, the quotes and figures are messed up or taken out of context. Just how it works, nobody's perfect.

11:41 AM, February 02, 2006  
Anonymous Anonymous said...

Nicholas, don't you know the difference between a contribution and a loan? Don't you understand the difference between a question and an assertion of fact? Are you going to admit you were wrong?

This Anon never said anything about anyone being disingenuous. Who's making an assumption?

12:03 PM, February 02, 2006  
Blogger VPO said...

All these anonymous posters, it gets confusing as to who is posting a response and which is new. Even if you don't want to identify yourself, at least use a handle of some sort. That would help understand who is talking to who.

Anyways, as far as this: "This Anon never said anything about anyone being disingenuous. Who's making an assumption? "

I was talking about the first post in this thread (by one of the anonymous posters) where he/she said: "Presumably, his campaign manager was (a bit disingenuously) including January's receipts. "

That did not seem right to me, to make this implication, when the press often gets details mixed up.

1:07 PM, February 02, 2006  
Anonymous Anonymous said...

VPO, sorry for the confusion. I was asking Nicholas if he was making an assumption that I was the one making the statement about McNerney's manager.

Maybe you can get Nicholas to realize he is wrong about McNerney's debts and obligations as set forth in McNerney's FEC 3 form filed 1/31/06.

1:59 PM, February 02, 2006  
Blogger Matt said...

Can we please stop this thread about McNerney's debts? I'll address them in a main post, but this thread is getting too long. The upshot is that Nicholas is wrong that McNerney does not have any debts. He is right that the overwhelming majority of McNerney's debts are either owed to McNerney personally (which he can wipe out if he wants) or to people who are McNerney supporters who do not need the cash back before election day. So adjusting McNerney's CoH to reflect his debt is misleading. He has almost $70,000 to spend. Nobody's going to send creditors after him if he spends it and remains in debt after election day.

2:07 PM, February 02, 2006  
Anonymous Anonymous said...

"...the point is that Filson gets his support from people who were a lot less active in the special election than McNerney's supporters. So to claim that the special election got in his way is a cop out."

I don't believe Filson was referring to volunteers or staff when he implied that the special election got in his way. He was referring to his fundraising efforts. In other words, potential contributors were focused on the special election, not the upcoming primary, and their money was going there.

10:35 PM, February 05, 2006  

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