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Howick Golf Club. Annual General Meeting October 27 2010. KEEP PRESSING ENTER BUTTON TO VIEW. Introduction. Key issues to consider Including funding for Wash Down Bay / Shed project Members need to be fully informed To enable correct decision Explanation of situation - PowerPoint PPT Presentation
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Howick Golf ClubAnnual General Meeting
October 27 2010
KEEP PRESSING ENTER BUTTON
TO VIEW
Introduction
Key issues to consider – Including funding for Wash Down Bay / Shed project
Members need to be fully informed To enable correct decision Explanation of situation Questions at the end
Overview
Golf Clubs under financial pressure – Howick is OK– But feeling the pinch
Declining membership– Worldwide trend
Average age of golf club member around 60 NZ Golf research:
– 25 to 40 year olds biggest decline in memberships– Family, financial and time constraints– Don’t want to be tied to one club– Still play and pay at a number of courses– So green fees are important
Howick
85% of club income comes from:–Member subscriptions (65%)–Green Fees (20%)
Membership
0
200
400
600
800
1000
1200
2003 2004 2005 2006 2007 2008 2009 2010
F ull O ther Total
1047
756735
556
312
200
179 full members 112 other members 291 members lost since 2003 28% drop
Green Fees$193,000 in 2006$154,000 in 2010$ 39,000 20% drop
$700,000
$720,000
$740,000
$760,000
$780,000
$800,000
$820,000
$840,000
$860,000
$880,000
$900,000
2006 2007 2008 2009 2010
$850,000 in 2006$750,000 in 2008- Mainly s ubs c riptions and g reen fees-$100,000 drop in inc ome
Impact On Income
The Good News
$700,000
$720,000
$740,000
$760,000
$780,000
$800,000
$820,000
$840,000
$860,000
$880,000
$900,000
2006 2007 2008 2009 2010
Income almost back to 2006 level
$700,000
$720,000
$740,000
$760,000
$780,000
$800,000
$820,000
$840,000
$860,000
2006 2007 2008 2009 2010
But Expenses Have RisenIncreased Costs:- Course improvements- Fertiliser- Administration- System- Catering
Trading ( Excluding Depreciation)
-$50,000
$-
$50,000
$100,000
$150,000
$200,000
2005 2006 2007 2008 2009 2010
$153K
$108K$90K
$9K loss
$56K
$46k loss
Excludes $130k • 10 year members• Funding grant
Trading ( Excluding Depreciation)
NOTE: Trading loss of $46k excluded:
– 90% of income received from10 year memberships• $13k taken up as income last year• Balance will be accounted for over next 9 years
– See Subscriptions In Advance of $121k in balance sheet
– Funding grant of $20k for Wash Down Bay / Shed project received late in year
• Will be accounted for next year• In line with proposed project commencement
Would have been trading surplus of over $80k if these had been included last year
Trading
-$20,000
$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
2005 2006 2007 2008 2009 2010
$153K
$108K$90K
$9K Loss
$56K
$80K
Including full income from 10 year members &
grant
Last Year In Detail31 Aug 2010 Previous
YearComment
Subscriptions $521,027 $529,365 Inc.$13k 10 year subs. Exc.$121k subs in advance.
Green Fees $154,738 $165,538
Golfing Income $58,099 $71,408
Other Income $17,915 $48,433 $25k repayment of grant received last year
Bar $80,755 $53,185 Impact of functions
Shop $21,588 ($23,829) $36k shop wages to administration this year
Catering ($29,334) ($24,235)
Income $824,788 $819,866
Course Expenditure $438,620 $420,993 Continued improvements
Administration $253,480 $174,614 $36k shop wages, system implementation, one off costs
Golfing Costs $52,950 $52,549
Occupancy $111,171 $98,092 Inc. provision for $40k rent from July. Still under negotiation.
Finance $15,248 $17,248
Expenditure $871,649 $763,496
Net Trading ($46,681) $56,370
$25,000 shed grant received in previous year
Had to be repaid last year – not ready to start project.
Without this the results would have been:
This Year Last Year
($21,681) $31,370
The good news - $50,000 next year
Catering Losses
-$30,000
-$25,000
-$20,000
-$15,000
-$10,000
-$5,000
$0
2006 2007 2008 2009 2010
• Providing member service is expensive
• Accounts for 60% of trading loss • Low sales • Major drain on club resources• How can we stop the losses?
Cash Flow
The real test is how much money we have in the bank.
Trading surplus needed to fund capital expenditure:– Course equipment replacement– Projects
Cash / Bank Position$240k spent on clubhouse in 2007/ 08
• Committed expense back in 2006Led to future shortage of working capitalBecause of drop in trading surplus from 2006
The Bottom Line Golf income has dropped
– Memberships– Green fees
Worldwide trend To fund future developments we need to either
– Increase golf income– Or generate more non golf income
Combination of both
Summary Cash flow has suffered:
– Membership and green fee income drop– Clubhouse renovation impact– ($15,000) overdraft at year end– Would have been ($135,000) without 10 year subscriptions
• Bank would not have funded this We do not have the cash flow or reserves to fund major
projects– Wash Down Bay– Shed– Sprig Bar
Need to borrow if projects are to proceed And need enough money to pay it back!
Capital Projects
Total cost of Wash Down Bay / Shed project $275,000– Wash Down Bay necessary for compliance– Current Green keepers facilities are dilapidated
Grant funding of $70,000 (hoping for more) Balance required $225,000 National Bank have offered loan of $200,000 payable
over 5 year term.– Floating rate – current 7.99%– Security over assets of club
Loan repayment of around $50,000 a year
Wash Down Bay / ShedStage 1
Foundations, Base, Drainage,Uncovered Wash Down Bay
Cost $125,000Plan DecemberBorrow $70,000 maxRepayments $17,000 a year
Note: - Includes cost of plans & permits - Borrowing will not be needed until
later in financial year - Positive cash flow early in year
-Subscription income
Stage 2Shed, Fitout
Cost $150,000Plan 2011Borrow $130,000Repayments $31,000 a year
Note: -Stage 2 will commence on
achievement of trigger points: - Membership renewal
- Budget being on track - Otherwise will be delayed - Need to ensure Club has cash flow to
repay loan
Summary Of Bank Loan ProposalADVANTAGES Will enable us to build Wash Down Bay and Shed
– Has been on drawing board for a long time– Resolve compliance issues– Better staff conditions– Undercover storage for machinery
DISADVANTAGES Need to find repayments of $50,000 a year
– Additional income needed– Expenses may have to be cut if necessary (Course expenses)
Project will not bring in any additional income
Financial Situation
Minimum trading surplus of $100,000 needed to cover:– Bank loan repayments $50,000– Rent Increase (being appealed) $35,000– Capital expenditure $15,000
» $100,000
Hopefully The Corner Has Been Turned
Including full income from 10 year memberships and grant
But risk if $100,000 surplus not achieved• Bank loan still has
to be repaid
Board Strategy Keep subscriptions competitive Minimise expense Stronger Management focus on budget accountability:
– Need to be more proactive and make things happen– Can’t rely on members walking through the door any more
Increased marketing :• Membership drive (including 10 year and corporate)• More Golf events to increase green fees:
– Trade days• Green fee specials at quiet times• Web site marketing• Sponsorship (including Sprig Bar)• Functions (weddings etc)
– Competitive market
Club Management
Ian Higgins has confirmed he will continue as General Manager– Good news– Overall responsibility with key focus on course
Della Gray is retiring after 13 years– Thanks for everything she has done
Board has reviewed structure Carolyne Hughes commencing November:
– Administration and Development Manager– Support to Ian– Includes marketing role (in conjunction with Margaret Greer)
Increased role for Annette Smart
Trust Fund
For donations and bequeathments to the club Separate trust fund to be used only for course and
club development– As approved by Trustees
David Philippe initiative
Lease Situation Club has perpetual lease
– Value Have paid $4,000 a year since 1974 ! Should have been renewed in 1995
– Lost in bureaucracy– Crown / Manukau City Council/ Treaty issues
Board wanted lease sorted before major capital projects Negotiations over last year Crown rental value $266,000 a year !! Lease has “hardship” clause Crown has offered $40,000 a year (because of financial situation) Still under negotiation Hopefully less than $40,000
Budget For Next YearBudget Last Year Comment
Subscriptions $572,000 $521,000 Fee increase & New members.
Green Fees $175,000 $154,000 More trade days
Golfing Income $70,000 $58,000
Other Income $80,000 $18,000 $70,000 grant funding approved
Bar $80,000 $80,000
Shop $35,000 $22,000
Catering ($20,000) ($29,000)
Income $992,000 $824,000
Course Expenditure $420,000 $439,000 Part time staff member reduction
Administration $250,000 $253,000
Golfing Costs $50,000 $53,000
Occupancy $135,000 $111,000 Inc. rent at $40,000 – still under negotiation.
Finance $28,000 $15,000 Inc. bank term loan interest
Expenditure $883,000 $871,000
Surplus $109,000 ($47,000)
Budget
Budget is conservative Internal target is higher Includes $70,000 grant funding (already received) Includes $40,000 rent
– But hoping for less Sprig Bar not included in budget
– Looking for sponsors to assist with capital cost– Will proceed when funding permits
Proposed Sprig Bar Food and beverage available at all times from shop
– When bar and catering are closed– Better service for members and visitors– Additional income for club
Accommodation for members if lounge is being used for function– Weddings etc– Further income opportunity
Will incorporate deck expansion Looking for Sponsors so we can go ahead
– $70,000 – Not easy!
And Volunteers– To help with materials and building
Drop Down Sides
Finally ! Proud tradition over 75 years
– Built on volunteer support Member support needed to carry on the tradition
– Enable the club to continue– Overcome the difficult times
Renew your membership Introduce new members Get the younger people back in to the game
– They are the future of the club Support club activities Team effort to get the Sprig Bar up and running
We all need to sing from the same sheet
Working Together
For the good of the Club
Remember JF Kennedy
Ask not what your Club can do for you
Ask what you can do for your Club
It’s about our future
Next Steps
1. Questions2. Approve reports3. Approve annual accounts for year to August 20104. Approve budget5. Approve proposed bank loan for Shed / Wash Down Bay
Questions