Financing Club Improvements How Capital Creates Change. HFTP Club Summit New Orleans, Louisiana March 19, 2018

Transcription

1 Financing Club Improvements How Capital Creates Change HFTP Club Summit New Orleans, Louisiana March 19, 2018

2 Capital Creates Change Clubs are investing a record amount of capital Driven by both needs and wants Segmentation by those that can raise capital and those that can t

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4 SIZE MATTERS In Memberships Higher Satisfaction Multiple Recreation Matters No Longer Sets Size Bigger Can Support More

5 Why Is This Happening? Members want updated facilities Fun, family and fitness are in Membership a personal choice Generational shift Money is available at low rates

6 We are in an industry that has seen monumental shifts over the past decade as country club members are looking for a casual, family friendly, fun and wellness driven experience, in addition to golf. William Bone Co CEO and Founder of Sunrise Company

7 Your Club Community REASON CLUBS EXIST IS TO BRING MEMBERS TOGETHER

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9 Where Is the Money Going? Dining & Socializing Pool/Aquatics Fitness & Wellness

10 The Membership Model Return on investment from invested capital in membership entities is more members Increased activity is measure of engagement and perceived value, not a source of capital

11 Capital Improvements Work From 350 Major Improvement Projects Source: McMahon Group Pulse Survey Database One Year After Project: Equal or Greater Number of Members 93% Average F&B Increase 25% More Members with Average 10% Increase 55% Same Number of Members 38% Fewer Overall Members 7%

12 Understand Your Market

13 Know Your Potential 75% live within 7 miles (15 minutes) miles minutes end of primary market 15% will travel 30 minutes

14 Facilities Master Plan Long term roadmap for facilities development. Highest priority improvements that fit within your financial framework are implemented first. Advantages: Continuity of direction Brainstorm a variety of ideas before acting Assures projects fit within overall scheme

15 If you want advice, ask for money. If you want money, ask for advice Fundraising is a process: Need club strategy Survey for needs and wants Segment by age groups Test ideas with members Collect member feedback on potential plan Adjust to feedback Vote when you know you have the votes

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17 Member Led Process Member Survey Strategy and Concepts Member Review/ Opinion Survey Final Plan & Member Vote Member Approval

18 Funding and Finance

19 Capital Spending: 2016 vs Country Clubs (157) Total Spending $192 M $205 M Average $1.2 M $1.3 M City Clubs (30) Total Spending $69 M $49 M Average $2.2 M $1.6 M Tennis, Beach & Yacht Clubs (37) Total Spending $33 M $38 M Average $917 K $1.04 M

20 Country Clubs: Six Year Trend in Membership

21 Tennis, Beach & Yacht Clubs: Six Year Trend in Membership

22 City Clubs: Six Year Trend in Membership 2.5% 2.0% 2.1% 2.0% 1.5% 1.3% 1.0% 0.5% 0.5% 0.7% 0.0% 0.5% 0.2%

23 Country Clubs: Ten Year Summary of Dues $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $7,966 $8,491 $8,721 $8,956 $9,225 $9,483 $9,807 $10,091 $10,333 $10,653 $ (5.7%) 2009 (5.2%) 2010 (6.6%) 2011 (2.7%) 2012 (2.7%) 2013 (3.0%) 2014 (2.8%) 2015 (3.4%) 2016 (2.9%) 2017 (2.4%)

24 Tennis, Beach & Yacht Clubs: Ten Year Summary of Dues $7,000 $6,000 $5,000 $4,655 $4,956 $5,105 $5,304 $5,442 $5,578 $5,768 $6,022 $6,250 $6,481 $4,000 $3,000 $2,000 $1,000 $ (5.3%) 2009 (6.5%) 2010 (3.0%) 2011 (3.9%) 2012 (2.6%) 2013 (2.5%) 2014 (3.4%) 2015 (4.4%) 2016 (3.8%) 2017 (3.7%)

25 City Clubs: Ten Year Summary of Dues $4,000 $3,500 $3,000 $2,500 $2,431 $2,552 $2,631 $2,692 $2,792 $2,909 $3,037 $3,174 $3,323 $3,439 $2,000 $1,500 $1,000 $500 $ (4.4%) 2009 (5.0%) 2010 (3.1%) 2011 (2.3%) 2012 (3.7%) 2013 (4.2%) 2014 (4.4%) 2015 (4.5%) 2016 (4.7%) 2017 (3.5%)

26 Country Clubs: Ten Year Summary of Initiation Fees % 4.9% 4.0% 2.0% 2.6% 0.0% 2.0% 4.0% 6.0% 4.3% 1.8% 1.8% 2.3% 1.5% 1.8% 0.1% 8.0% 10.0% 12.0% 10.5%

27 Tennis, Beach & Yacht Clubs: Ten Year Summary of Initiation Fees % 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 1.0% 2.0% 5.2% 4.2% 4.1% 0.8% 2.3% 0.2% 0.8% 7.1% 4.4% 3.2%

28 City Clubs: Ten Year Summary of Initiation Fees % 8.0% 7.8% 6.0% 4.0% 2.0% 4.8% 4.2% 2.5% 0.7% 4.7% 3.0% 3.1% 1.1% 0.0% 2.0% 1.5%

29 Country Clubs: Ten Year Summary of Capital Expenditures $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $1,390,680 $1,157,796 $1,413,843 $1,303,300 $1,194,141 $1,195,105 $1,172,802 $955,222 $956,078 $1,028,666 $

30 Tennis, Beach & Yacht Clubs: Ten Year Summary of Capital Expenditures $1,200,000 $1,000,000 $983,002 $945,484 $1,037,440 $800,000 $600,000 $400,000 $444,417 $721,240 $639,345 $495,418 $428,589 $631,508 $717,006 $200,000 $

31 City Clubs: Ten Year Summary of Capital Expenditures $3,000,000 $2,500,000 $2,413,002 $2,335,243 $2,000,000 $1,500,000 $1,773,231 $1,918,842 $1,434,636 $1,640,079 $1,960,842 $1,631,237 $1,000,000 $1,024,085 $961,385 $500,000 $

32 Country Clubs: Ten Year Summary of Long Term Debt $4,000,000 $3,500,000 $3,000,000 $2,500,000 $3,755,527 $3,302,691 $3,255,279 $3,450,383 $3,098,818 $2,713,909 $2,772,044 $2,845,830 $2,921,166 $2,925,396 $2,000,000 $1,500,000 $1,000,000 $500,000 $ (74.3%) 2008 (80.4%) 2009 (79.0%) 2010 (81.3%) 2011 (84.1%) 2012 (85.8%) 2013 (83.0%) 2014 (83.5%) 2015 (85.0%) 2016 (87.5%)

33 Tennis, Beach & Yacht Clubs: Ten Year Summary of Long Term Debt $1,800,000 $1,600,000 $1,577,863 $1,400,000 $1,200,000 $1,115,884 $1,192,583 $1,000,000 $800,000 $600,000 $605,312 $779,795 $901,962 $850,368 $777,922 $820,964 $899,134 $400,000 $200,000 $ (45.9%) 2008 (62.2%) 2009 (56.8%) 2010 (59.5%) 2011 (54.1%) 2012 (56.8%) 2013 (59.5%) 2014 (65.8%) 2015 (57.9%) 2016 (64.9%)

34 City Clubs: Ten Year Summary of Long Term Debt $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 $2,975, (40.7%) $4,406,022 $4,363,475 $4,065,083 $3,670,861 $3,557,090 $3,571,495 $3,540,023 $3,694,615 $3,249, (40.7%) 2009 (44.4%) 2010 (44.4%) 2011 (40.7%) 2012 (44.8%) 2013 (46.4%) 2014 (50.0%) 2015 (50.0%) 2016 (48.4%)

35 Capital Projects: Type of Financing Available to Clubs 1. Internal Upfront assessment Monthly assessment Capital bond/certificate Self amortizing bond Initiation fees Sale of assets 2. External Bank debt Other 3. Combination

36 Capital Projects: Other Things to Consider Communication with members: Before project starts During construction After construction is completed Communication with bank/lender Interim facilities Loss of revenue Certificate of occupancy Grand opening function Booking of events Operational budget for new facility

37 Case Study #1

38 Club #1: Facts 100 year old traditional country club Per website: Our club combines the best of both one hundred years of tradition and modern country club life 2016 Operating Budget: $10.3 million Project: $20 million 2008 Original Debt: $7.5 million 2009 Amended loan $8 million swap 6.7% due in Borrowed $9 million paid off swap and old loan due : $8.4 million

39 Club #1: Membership

40 Club #1: Revenue Trends $7,000 $6,000 $5,000 $4,800 $5,000 $5,200 Dues F&B Initiation Fee $5,400 $5,500 $5,700 $5,900 $6,000 $6,300 $4,000 $3,000 $2,000 $2,000 $2,500 $2,600 $2,800 $2,800 $2,800 $2,900 $3,100 $3,100 $1,000 $1,142 $915 $920 $1,118 $740 $754 $771 $781 $786 $

41 Case Study #2

42 Club #2: Facts Country club 36 holes Full service 2017 Operating Budget: $16.5 million Project: $23 million covering 4 years 3 phases 1. New clubhouse 2. Pool 3. Employee housing First Phase: Debt acquired: $18 million 2 loans Amortizing 16 and 13 years Outing business increased 40%

43 Club #2: Membership

44 Club #2: Revenue Trends $9,000,000 $8,000,000 $7,000,000 $6,994,000 $7,106,000 Dues F&B Initiation Fee $7,300,000 $7,800,000 $8,200,000 $6,000,000 $5,000,000 $4,000,000 $3,900,000 $3,000,000 $2,000,000 $1,000,000 $2,800,000 $2,800,000 $2,800,000 $1,286,000 $1,609,000 $1,395,000 $2,500,000 $1,646,000 $1,816,000 $

45 Case Study #3

46 Club #3: Facts New Clubhouse Project: $7.5 million Construction: : Spent $4 to $5 million on golf course projects Debt: $8.5 million $5 million from 2012 consolidated Swap debt due 2023 Other headwinds Competition stiff Property taxes

47 Club #3: Membership

48 Club #3: Revenue Trends $3,000,000 Dues F&B Initiation Fee $2,700,000 $2,700,000 $2,700,000 $2,780,000 $2,700,000 $2,500,000 $2,000,000 $1,826,000 $1,500,000 $1,442,000 $1,439,000 $1,374,000 $1,359,000 $1,000,000 $500,000 $336,000 $225,000 $377,000 $

49 The Country Club of Detroit

50 Phased Improvements ( )

51 Phase I Ladies Locker Room $1m

52 Grille Room (Casual Dining) $300k

53 Grille Room

54 Phase IIa Summer Village $4.5m

55 Summer Village Summer Village

56 Summer Village

57 Summer Village

58 Phase IIb $5.5m

59 Bowling Center

60 Casual Entrance

61 Health & Fitness Center

62 Health & Fitness Center

63 Results: Gross Revenue +20%

64 Results: F&B Close to Break Even Sales Increase from $2.2m to $3.9m

65 Results: LDP* (local dues payers) Average Age Decreased from 66 to 58*

66 Results: Attrition Decreased?

67 Results: Bank and Members Happy Debt paid by $100 per month capital fee and operational profit. CCD also transferring $100k annually to fund depreciation.

68 Summing Up

69 Summing Up All clubs need a strategy and capital plan to grow Critical to relevance and new member attraction Capital improvements have a significant impact on club success

70 Thank You Questions?