Questions and Answers Management Services Agreement between The Powder Horn and Troon Privé. November 15, 2015
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1 Questions and Answers Management Services Agreement between The Powder Horn and Troon Privé November 15, 2015 Ownership, Control, and Management Q: Does the agreement with Troon Privé change the ownership of the club? A: No. The ownership structure of the club remains the same. The Homer Scott, Jr. Family owns the club. Troon Privé has been hired to execute on behalf of ownership. Q: Will members have a voice in setting the future direction of the club? A: Yes. Both The Powder Horn and Troon believe in building the club with membership feedback. To this end, members will be asked for input on a survey that will be sent out in next few weeks. If you have immediate feedback, you can direct your comments and questions to the new General Manager, Robert Kearney. Q: How will our agreement with Troon Privé affect our identity as The Powder Horn? A: Our name and identity will remain unchanged. We will still be The Powder Horn. Although we are not required to publicize our agreement with Troon Privé or use their name in our facility or in our promotional materials, we believe that there is a benefit to identifying Troon Privé as the provider of management services to our club, so we plan to use the right to promote their name and logo in our membership marketing efforts. Q: How will we know if Troon Privé is meeting the expectations that have been set? A: One of the strengths of Troon s management services are the systems they have that will allow us to actively manage and measure their performance. In addition to tracking financial performance relative to the goals set in our annual plan, Troon will also be measured for their impact on member and employee satisfaction.
2 Q: Will Troon be able to make changes to our club or personnel without prior approval? A: No immediate staff changes are planned. To minimize the disruption to the member experience, The Powder Horn has retained the right to review and approve changes to personnel at the department head level and above. Changes in other staff members remain at the discretion of the respective department head, as they always have been. Q: How can we prevent Troon from selling the club or converting it to a public facility? A: Since the ownership of the club remains the same, Troon has no right or authority to sell the club, change its ownership model, or convert the club into a public or semi-private facility. Because our new relationship with Troon allows us to do so, the club may choose during select times to market to Troon s subscription-only database in order to drive membership sales. However, Troon will always be required to execute within the membership plan approved by The Powder Horn and its current owner. Q: How can members provide feedback on what we experience with Troon? A: For general feedback, we encourage members to contact Robert Kearney, General Manager, at rkearney@troon.com. To provide constructive feedback on a specific experience at the club, we encourage members to contact the appropriate supervisor or department head. Member Experience Q: Will the transition to management by Troon Privé affect the services, events, activities, or facility upgrades that are in process or have been budgeted? A: Our agreement with Troon Privé will not result in any reductions in services, events, activities or plans for facility upgrades. In fact, we expect to leverage Troon s knowledge and experience to expand our calendar of events and activities. And, through an increased commitment to training and employee development, we expect the quality and consistency of services to improve.
3 Q: Will we receive discounts when we visit other Troon facilities? A: Yes. Under the terms of our agreement, all Premium Level members of our club will be eligible to participate in the Troon Advantage Program. This program provides up to 50% off rack rates at over 85 Troon managed clubs and resorts around the world. The list of available facilities includes: Silverado, Indian Wells, The Phoenician, Kapalua, Bahia Beach, and many more. A complete list of facilities can be found at Q: Will we have access to other private clubs where Troon provides management services? A: Yes. In addition to the Troon Advantage Program, our agreement also makes us eligible to participate in the Troon Privé Privilege Program. This program establishes reciprocal playing privileges with other private clubs that are managed by Troon Privé. Under the program, Premium Level members are able to request tee times at these other clubs for no more than a cart fee. Members can also bring up to three guests that can play at discounted rates. For more information on this optional benefit, visit Financial Impact and Decision Process Q: Will our dues change as a result of using Troon to manage the club? A: No. There will be no change in dues resulting from our agreement with Troon. Dues will be set each year based on market. Q: What will the impact be to our financial performance? A: By leveraging the management services model offered by Troon, the potential increase in our gross operating profit can reach hundreds of thousands of dollars annually. The actual impact will depend on how, when, or if the club decides to apply the various strategies for revenue enhancement and savings to our club.
4 Troon and the Management Services Q: Who is Troon? How long have they been around and how much do we know about them? A: Troon is the largest independent management services company in the world for country club, golf club, and resort management. They manage more than 150 facilities in 30 states and 28 countries. Troon managed clubs generate almost $460 million in annual revenues. Nearly half of that revenue is from membership clubs. The company was founded in 1990, and employs nearly 10,000 workers. Its headquarters is located in Scottsdale, Arizona, with additional offices in Switzerland, Dubai, Australia, and Hong Kong. Q: Why did we decide to use a management services company instead of staying with the direct management model that we had been using? A: The fundamental challenge for premium private clubs is delivering a consistent, highquality, premium club experience to members while constraining costs. Under a traditional operating model, these two goals appear to conflict with one another. But by employing a management services model, that conflict fades. By leveraging the collective size and number of many private clubs, a management services company can reduce costs through increased buying power and can improve service levels by sharing best practices, training programs, and specialized knowledge. Q: I ve heard that management companies are better suited for public golf courses. Why would we choose that approach for our club? A: Like many industry segments, the companies that make up the country club management services segment differentiate themselves from one another by focusing on different parts of the market and/or through different business models. In researching the spectrum of companies and their offerings, we found that there are, indeed, companies that focus on the public golf course market, and there are a few that focus on the private club segment. Our investigation determined that Troon Privé, the private club operating division of Troon, is the ideal fit for premium private clubs, such as The Powder Horn. Q: Our club is much more than a golf course. Does Troon understand what members expect in private tennis, fitness, aquatics, child care, and dining facilities? A: Yes. Troon Privé has extensive experience in managing premium private clubs that offer the same facilities and amenities offered at The Powder Horn. As part of the changing landscape of the private club industry, this experience and leadership is valuable as private club members continue to look for a set of offerings that appeal to all members of the family.
5 Q: Will Troon be able to help us with membership sales? A: One opportunity for increased activity at our club is in the marketing and promotion of our memberships. With the shared knowledge model that Troon brings to the club, we will have access to experts in membership marketing that can help our existing expertise. This will allow us to leverage proven membership marketing programs to more actively drive sales. Club Employees Q: What will happen to the employees? A: All current employees and contractors will remain with our club. Q: Will any employees be terminated as a result of our agreement with Troon? A: There are no plans to terminate any member of the current workforce. Q: Will Troon have the ability to hire and fire employees without the consent of The Powder Horn or the owner? A: To minimize the disruption to the member experience and the character of our club, The Powder Horn has retained the right to review and approve changes to personnel from the department head level on up. Changes in other staff members remain at the discretion of the respective department head, as they always have. Q: How will the agreement with Troon affect employees? A: The agreement with Troon will enable our club to elevate our commitment to a proud and satisfied workforce. While independent clubs find it difficult to justify formal training and personal development programs for their employees, Troon is able to leverage their size and number of clubs under management to invest in the employees through these programs. Additionally, with detailed job descriptions for individuals and teams, employees will be offered a high level of clarity in expectations and, accordingly, can take pride in their achievements. Q: How will the agreement with Troon affect our department heads? A: Through Troon s commitment to serve premium private clubs, our department heads will have access to Troon s industry experts, along with proven systems, processes, and best practices. This represents a wealth of knowledge that they can tap into that an independent club could not afford. Troon also provides expanded career opportunities - not only for department heads, but for all employees.
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