Letter #15

Happy Monday everyone,

This week we take a look inside March’s Board of Governor’s meeting held last Tuesday night but before we do a few important announcements and quick responses to some great questions from last week’s letter.

The Board, singularly, and the Club, more broadly, got just a little bit weaker last week. One of the Boards most esteemed members and one of the Club’s most endearing families is taking their show on the road. Dayle Smith shared the exciting news for their family last week announcing that she and her husband, Art, are headed east at the end of the current school year. Dayle has been appointed the Dean of the Business School at Clarkson University in NY. For a few years now, Dayle has made invaluable contributions to the Club as an active member of its Board and before that, spent many years as a member of the Tennis Committee often leading what is America’s true blood sport – Ladies Tennis. We are so appreciative of what you’ve done Dayle, we wish only the best for you and your family as you set off on your new adventure. We’ll miss you.

As your Club responds to its membership’s desire to be just a little more private and resemble more of the private club they thought they were joining over the past five years, several questions have come up regarding guest procedures. The rule is for all guests to be signed in all the time – that doesn’t necessarily mean there will be a guest fee incurred. But, if there is no guest fee, it doesn’t mean that guests don’t have to be signed in – an important distinction. Guest fees are incurred when guests use any of the three main activity areas (fitness, swim, tennis). There is no guest fee for guests joining a member in the Bar & Grill. The first two guest fees incurred each month by a member are waived. The guest policy isn’t considered a revenue source as much as means to gain control over unregulated non-member usage. Please consult with your member services staff each time you invite a guest to the Club. You won’t be gouged and non-members won’t be all over the place – happiness. [Please see the Guidelines, Policies & Procedures page on our website.]

Two other great questions that came up in member responses to last week’s letter: “Where does the non-member surcharge on activity program fees go?” And, “How many non-members make up tennis, I don’t want to build onto the tennis facility for non-members.” Both are excellent questions. Non-members pay approximately a 23% premium for activity programming (i.e. swim/tennis lesson/teams). That surcharge does not stay in the activity budget but rather flows over to the administration budget where it is treated exactly like member dues. There is no incentive for a program to favor non-member over member usage – quite the opposite. Non-members participate in a program only if it enhances the program for members and does not capacity constrain the member’s usage. To the second question: non-members for tennis instruction – less than 10% / non-members for tennis teams – less than 2%. For tennis, non-member usage is really a non-issue.

At Tuesday evening’s Board of Governor’s meeting, we finally got a few non-Board members to attend and participate after a few weeks of my pleading in the letters. Both ladies are former Board members and were very unhappy with me over some of the things I’ve written in the letters recently regarding the Lower Court Project (file this under careful what I wish for). Specifically, they took great issue with my choice of words in letter #13 here: “In truth, there has been progress. The most significant progress has been on the finance side, putting aside funds for the project for the past four years until the member financed side of the project could be presented to the membership without a dues increase or assessment associated with the project”. The offense was my choice of the two words “putting aside”. Those are the wrong words and are indeed, incorrect. No money was sequestered for the lower court project nor was a vote ever put to the membership for that purpose. What I should have written is “The most significant progress has been on the finance side, the Club coffers have been filling until the membership financed …”. It was sloppy phraseology and you all have my apologies, I will be careful to be more accurate in the future. Their second claim was that the project was originally presented to the Board, years ago, as a donor-only financed project. Never. Not once, not in the Finance Committee meeting back in ’09 where the idea was born, not in the many Tennis Committee Meetings that ensued, not in the countless planning meetings with Miles and members of the TC, not in the outreach meetings with local neighborhood groups, not in any Board meetings was this project ever described as anything but a capital expansion project for the lower court area where costs would be underwritten by possible donors and the membership. If anyone missed that – ever – they just weren’t paying attention – xBoard member or not.

Perhaps this is a good time to run through a very quick chain of events highlighting the financial milestones the Club has been through over the past 7 yrs since the Grand Remodel. Why the Grand Remodel? Because that’s when your Club’s character irreversibly changed for better or worse depending on your perspective. (And perspective is mostly a euphemism for date of initiation). It is also the last time you needed to vote on a capital expansion project if you consider the 2008 vote for the parking lot part of the GR (it was the last part).

It begins, innocently enough, in 2006 when the Club Treasurer at the time (it was not me) lent the club $50,000 in order for the Club to make payroll. Financially speaking, things were not good at the Club (and God Bless that Treasurer). In 2007/08 a new financial model was adopted to try to get the club under a firm financial footing over time. The Town lifted its membership cap for the Club to 700 from 650. Initiation was raised to $18,500 – a number calculated as a Club enterprise value equivalent per member plus a 10% premium. In the new model, initiation funds can only be used for capital expenses and debt reduction. The debt back then was gigantic relative to the Club’s revenues and structured as interest only with a $5 million balloon payment at the end of 10 yrs. A debt management strategy was adopted – set the payment of the debt so that the debt is retired over a defined period of time and not left out there indefinitely nor paid for all up front so as not to overburden one populous over another (future member vs current member). The Club prepaid a large chunk of its total debt in 2010 (>$1 million) and restructured the whole debt load down to a 15yr fixed, normally amortizing, loan at a very low interest rate such that the current assessment members were/are paying would wipe out the Club’s debt in 15yrs (12yrs now). From there we began saving for any future capital expenditures. Currently our coffers hold >$1.5million and take in about $500k per year in initiation money (the Club has demonstrated approximately 5% membership turnover each year for as far back as any x-President can remember). The tennis proposal that’s coming will recommend that we, as members, spend approximately $750k over the next couple of years on the new courts, lights, bathrooms entranceway/egress and some storage – but no building (besides the bathrooms & storage). From there it will be proposed that we shake the trees for a donor to donate the costs of a building – another $750k. Maybe that happens, maybe it doesn’t, but we’ll be several years down the road from here at that point and as a membership, we can decide what to do at that time. In the meantime, the Club will have a much improved lower court area, more lighted courts to handle demand and reduce capacity constraints and will have attained a look and feel consistent with the rest of the property. No dues increase, no assessment for the lower court project. If a donor doesn’t materialize, and there’s every chance they won’t, it will probably be 2017. By then a pool rejuvenation project will be underway or completed and the membership can decide then if it wants to underwrite a tennis building itself. But that’s not a decision for today.

There are no committee meetings for you to attend this week – what will you do?

The Bar & Grill did over $3k in business yesterday – a March Sunday. The Club has never done that level of business in March, not even with a menu that was 25-30% more expensive. There were three points of sale yesterday, quite acceptable wait time (<2min), terrific food and service with a smile every darn time. Congratulation Mark – your/our Bar & Grill is off to a very good start indeed. That’s all for now – I hope you all have a great week. I’ll tell you the same thing I told Dayle – don’t forget to write. All the best, Mike

Speak Your Mind