THE PAUMA VALLEY COUNTRY CLUB est. 1961 Improving Member Experiences and Membership Growth
Annual Meeting Agenda Board of Directors Election President s Remarks Financial Report Membership Report Strategic Plan Update
Board of Directors ELECTION
President s Remarks Improving Member Experiences and Membership Growth
Accomplishments of 2015-2016 Completed sale of land - reduced Club s debt from 3.8 mil to less than 1.5 mil Loan repayment fee repays loan in its entirety early Less than 8 years Eliminates operational cash flow pressure Critical for stability of our Club operations
Accomplishments of 2015-2016 (continued) Strategic Plan Rolled Out and Began Implementation $900,000 Investment Program Greenside Bunker Restoration #1 Green Expansion Cottage Windows Kitchen AC and Exhaust System Golf Maintenance Breakroom and Bathroom Other Significant & Needed Improvements
Accomplishments of 2015-2016 (continued) Replaced 2 Key Positions Membership Food and Beverage ohead Golf Professional search in process Membership Equivalents declined 13%
Accomplishments of 2015-2016 (continued) Member Participation is high and growing! 12 Standing Committees w/ 80+ Members Special Project Committees Gifting from 25+ Members and Member Groups Over 300k in $s and Services
THANK YOU Steve Borden and the Borden Family CSD, RPMWC, and Roadway land sale, front gate 742-Art, WA, Garden Group kitchen, front gate PVCC Estates Committee led by Bill Winn Master Plans 3 being developed 1. Golf Course Cartwright and Mingay 2.Cottage Interiors Johnson 3.Cottage Landscape Herbert Donald and Darlene Shiley
Foster the sense of Community that engenders a welcoming atmosphere of unexcelled camaraderie and friendship
THANK YOU & CONGRATULATIONS Eric Stear GM at Bernardo Heights Country Club Terry Abeyta Dream home on the Oregon Coast Jerry Hixson Director of Golf at Traditions Golf Club
WELCOME Scott Shinner New AGM-Membership Brian Green Food & Beverage Director Head Professional Position Interim Head Professional Mike Mendoza Search in-process
Thank You Leadership Team Doug Rudolph, Peggy Delano, Colleen Starr, Kathryn Custer, Joe Powers, Arturo Alvarez Notable Key Players: Joyce Thatcher, Joan Borden, Gary Bley, James Bradley, Susie Delaney, Mike Mendoza
2015-2016 Financial Summary EBITDA: Net Loss of 70k (estimated) Attributable to Member Attrition and summer construction Membership 244 Equivalents Net Loss of 36 Equivalents (-13%) Cash: 170k on hand +300k for Capital Projects (from Contributions and Assessment)
2015-2016 Fiscal Year Summary (continued) Club Debt Current Loan Balance $1,458,000 down from 3.8 mil Land Sale Significant and Valuable Operating Cash no longer required Debt fully repaid before note is due
Strategic Plan Capital Projects Funding of Initial Projects 900k Raised 615k from Assessment 285k from Member Contributions $s Services
Strategic Plan Capital Projects (continued) Where did the $ go? Total Contributions Assessment $s Golf Course 63% 67% Clubhouse Facilities 13% 15% Cottages 22% 18% Reserves 2% Where we planned and communicated it would
Strategic Plan Projects & Funding Summary PROJECT LIST FUNDING SOURCES Golf Course Ops $s Assessment $s Angel Gifting $s New Maintenance Equipment $ 30,000 Greenside Bunker Restoration $ 368,000 $ 15,000 Golf Course Master Restoration Plan $ 15,000 $ 5,000 Re-Claim Greens (#1-DONE, #11 in Spring) $ 15,000 Tree Removal/Trimming $ 60,000 Greens Top Dressing Program $ 15,000 Golf Course GC Maint. Staff Breakroom & Bathrooms $ 40,000 63% Clubhouse Facilities Sub-Total $ 15,000 $ 413,000 $ 135,000 $ 563,000 Kitchen AC & Exhaust System $ 35,000 $ 20,000 Clubhouse Carpeting $ 25,000 Clubhouse Facilities Lighting for Parking, Walkways, & Cottage Exterior $ 30,000 Employee Kitchen Bathrooms $ 10,000 13% Sub-Total $ - $ 90,000 $ 30,000 $ 120,000 Cottages Cottage Windows & Sliders $ 85,000 Cottage Design Fee $ 15,500 Cottages Cottage Landscaping Design Fee $ 10,000 Replace Necessities $ 27,000 $ 58,000 22% Sub-Total $ - $ 112,000 $ 83,500 $ 195,500 Reserves Reserves $ 22,000 2% March 17, 2012 Annual Meeting TOTAL $ 15,000 $ 615,000 $ 270,500 $ 900,500
Road Maps in development Golf Course Master Restoration Plan Origins Golf Designs Cottage Refresh Plan California Ranch Style Exterior Landscape Plan Capital Reserve Study Existing Assets Facilities Plan Club Lifestyle of Future
Road Maps (continued) Environmental Sustainability Nature Water Energy Supply Chain, Pollution Control, Etc Community Integration Property Values Quality of Life Generations We are All in this Together
2016-2017 Annual Budget EBITDA of +14k Membership Growth of 13 Equivalents
2016-2017 Annual Budget (continued) Key Factors and Assumptions: Annual Dues Increase of 2%-5% Water Expense Increased water budget 32k Working with RPM, CSD, and Roadway Labor Expense all have increased Minimum Wage, Taxes, Insurance, and Workers Comp=37k
2016-2017 Annual Budget (continued) Key Factors and Assumptions (continued): Additional Revenue Streams Some price increases Charity Golf Tournaments Vetted Small Groups Weddings Net Growth in Membership +13 Equivalents Nov/Dec forecast shows equivalent growth
Improving Membership Experience and Membership Growth
THE GOLF INDUSTRY AND ITS IMPACT ON PVCC HOW PVCC HAS FARED WHAT WE NEED TO ACCOMPLISH WHAT WE ARE DOING TO GET THERE
Golf is a consolidating industry
Golf is a consolidating industry It peaked in 2000. The U.S. population was 282 million and there were 24 million people playing golf. That represented a penetration rate of 8.5%
Golf is a consolidating industry. It peaked in 2000. The U.S. population was 282 million and there were 24 million people playing golf. That represented a penetration rate of 8.5% Today, we still have 24 million players, but our population is now 324 million. We ve added 40 million people, but the number playing golf has remained the same and the penetration rate has declined to 7.4%. That s a drop of 13% over the last 16 years.
Since 1990, we ve gone from about 5,000 private clubs to about 4,000 --- a decline of 20% in 25 years
Since 1990, we ve gone from about 5,000 private clubs to about 4,000, a decline of 20% in 25 years The industry built those courses, mostly in the form of master-planned communities where the golf course was nothing more than an amenity, just like swimming pools, meeting rooms, tennis courts, etc. As penetration dropped, demand slowed and we now have an over-supply of golf courses in the U.S.
There has been a decline in the number of golf facilities every year for the past nine years
There has been a decline in the number of golf facilities every year for the past nine years Projections are that 20% of private clubs in existence today will not be here in ten years
Of the 4,000 private clubs that exist today, only 6.5% are full with a waiting list
Of the 4,000 private clubs that exist today, only 6.5% are full with a waiting list That means 93.5% (or 3,740 clubs) find themselves in a position similar to PVCC: they are actively and aggressively looking for members and if they re not, they won t be here within a few years
There will be winners and there will be losers Our decisions and commitment will determine which camp we fall within
It used to be that all you needed was a great golf course to succeed as a private club
Today, clubs need to create an entire lifestyle surrounded by a great golf course
Clubs are becoming more family friendly
Clubs are becoming more family friendly They are focusing on health and wellness, complete with facilities and programming
Clubs are becoming more family friendly They are focusing on health and wellness, complete with facilities and programming They are creating greater opportunities for drop-in dining in casual environments and for greater social interaction through food & beverage
Clubs are becoming more family friendly They are focusing on health and wellness, complete with facilities and programming They are creating greater opportunities for drop-in dining in casual environments and for greater social interaction through food & beverage They are developing life long learning and travel opportunities for their members
THAT S WHAT MEMBERS JOINING PRIVATE CLUBS TODAY WANT AND EXPECT
They want a safe haven that delivers privacy, social interaction, solid health and wellness, all surrounded by a great golf course that is managed in an environmentally sustainable manner
Flight to Quality
Regular Non-Resident Social National/International
2005 2010 2015 2016 Regular 274 196 175 143 Social 85 56 48 53 Non-Resident 60 75 103 92 National/ International 0 0 55 53 Other 13 8 46 41 Total 432 335 427 382 Member Equivalents 356 206 285 244
We lost 23% of our membership between 2005 and 2010 We gained back 27% between 2010 and 2015. About half of those members are no longer here We lost 13% last year
The drop in total membership from 2005 to 2016, from 432 to 382, is 12.6%, almost exactly the 13% decline in overall penetration referenced earlier
Improving Membership Experience and Membership Growth Attract 150 members over the next 3-4 years
Attract 150 members over the next 3-4 years We know that we ll likely lose 50 members over that timeframe to the natural attrition that takes place at private clubs
Attract 150 members over the next 3-4 years We know that we ll likely lose 50 members over that timeframe to the natural attrition that takes place at private clubs But we ll net 100 additional members which will get us back to 350 member equivalents
A good closing rate at private golf clubs is about 10%. That means that we need to host 1500 visits over the next three years in order to have a chance at reaching 350 equivalents
Create Awareness and Stimulate Visitation
Digital Outreach and Fulfillment
Digital Outreach and Fulfillment Internal Restructuring Membership Growth Committee Membership Retention Committee AGM with focus on membership sales
Digital Outreach and Fulfillment Internal Restructuring Proactive Public and Media Relations
Digital Outreach and Fulfillment Internal Restructuring Proactive Public and Media Relations Promotions Discover Pauma Invitational Regular Member Benefits Pauma Preview
We have 338 dwelling units inside the gates Of those, 236 are members, or about 70%
Fact: The property of everyone who owns a home here is worth 20% more when the club is healthy
All of us need to help get people here so we can demonstrate what an outstanding lifestyle and Club this is
So. Where From Here on the Strategic Plan? The Board, many members and our consultants firmly believe that fulfilling our Plan to upgrade the Club to nationally competitive standards is the most likely way forward to preserve Pauma as a traditional private club. Where we ve been, and what we ve learned: There was a strong reception of the Plan by the membership earlier this year However, the member losses (post a very modest assessment) were significant, and sobering While our operational stability isn t immediately threatened, we believe that attempting to further fund the Strategic Plan through assessments alone may result in significant additional member losses that we cannot afford
Pauma Valley: An Analogy 1964 Aston Martin DB5
Continuing. We re not this this is Augusta, Cypress Point, etc. 1961 Ferrari 250 GT SWB But we re not this, either this is many other private clubs in SD and elsewhere 1964½ Mustang #
How we ve taken care of our terrific asset We all love our classic Aston Martin It remains highly desirable, a nice prize There have been many drivers over the years, and we ve generally taken care of it Wash/wax, gas and oil e.g., daily course maintenance New tires and brakes punching the greens Rebuilt starters, water pumps leveling tees, fixing the irrigation Repaired the interior replaced clubhouse and cottage items It still looks good, and runs well but it s not a show winner any longer
What about investing in it for the long term? At some point, all cars need restoration to keep them looking and running fresh, and to maintain/improve their value Owners need to plan for this all along and we haven t done that Engine rebuilds Replace the irrigation system Transmission overhauls New maintenance equipment Repair the interior Refurbish and modernize the cottages And... add new features/equipment A/C, sound system, phone, GPS Modern exercise facilities, new/increased member services Unlike many other classics, our DB5 (Pauma) is worth the investment
In the meantime, what has happened? There is increasing competition for members nationally, and we must have a top quality product to compete and thrive as we are. It s that simple. The top quality cars are always restored or change hands in the process Unlike many of the 93.5% of private clubs scrambling for members, we have great potential and we are confident that investment will be rewarded Pauma Valley can survive longer in break/fix form this isn t an emergency but at some point our DB5/Club will break down and no longer run as we currently know it unless we fund necessary investments
Pauma Valley will never look like this.. but if we continue to ignore the realities of owning a club in the current private club environment, it will morph to a different form
Our Go-Forward Options Our Goal: Preserve Pauma as a private club for our Members What s at stake?: According to industry consultants Everything.from our private club experience at the place we all love, to the value of local real estate We know we must pursue two things: An investment/improvement program a significant one A highly robust member recruitment program For investment capital: Likely a mix of modest assessments, and Voluntary investment of various sizes by members, to include associated benefits What this could mean? Change: A little, or a lot Changes in club governance Different classes of memberships, with various benefits More outside activities for revenue, etc.
Next Steps? We know we must be assertive and act A group of board members and others are exploring our options To raise capital Allocate it appropriately Ensure we adhere to our previous agreements We ll continue to utilize outside guidance as well as internal feedback We ll be reporting back to our membership about progress in the coming months What if we can t get the job done? We continue to drift along the club won t die but will likely eventually morph into something else. But what if we can? #
If We re Successful Pauma Valley could even morph from this... To This. Aston Martin DB10
QUESTIONS