April 18, 2017
This edition wirtten by Ron Hodges, Director of Finance
A FINANCIAL UPDATE
The end of February represents the conclusion of the first 5 months of our Club’s financial year. Your Finance Director would like to update you on our financial status so far this year, before the busy-ness of membership billings, summer mooring billings and the much- increased dining and bar activity that coincides with sailing season.
OUR 2016 OPERATING BUDGET
It is not always clear that, even though we are a non-profit organization, the Club needs to be profitable. Good financial performance is essential to generate the cash the Club needs for upgrades and additions to the Club’s assets. In this financial year, the budget approved by the Board is to break even on an accounting basis. That level of profitability will generate about $60 thousand to invest in the Club’s assets. This level of profitability and operational cash flow is historically about average for the Club. The Board has prioritized the various identified needs for spending on our assets and now our capable Yard Steward can get on with all the approved upgrades. A couple of special notes on this year’s operating budget:
1. One of the biggest features for our members since the arrival of Greg McNab has been the vastly improved and virtually year-round Dining and Beverage operation. Of course, it is vital to the Club that the provision of this great service be achieved on a financially sustainable basis. Thanks to a tremendous effort by Greg and his staff, in our last financial year this operation came within a hair’s-breadth of breaking even. This year, Dining and Beverage is budgeted to generate a significant contribution to the Club’s profit.
2. Another area of spending on which Greg and your Board keep an especially close eye is our general overhead. These are expenses that are not directly attributable to a particular activity at the Club (like Sailing, or Dining) but are just the expenses involved in operating the Club’s properties and general administration. Our goal is to steadily reduce the percentage of membership fees spent on general overhead. This year, Greg has budgeted to not only reduce overhead expenses as a percentage but also to reduce the absolute dollars spent on general overhead.
FINANCIAL PERFORMANCE THROUGH FEBRUARY
The Club’s expenses to the end of February were very well controlled and slightly below budget. Revenues were all in line with budget with the exception of Junior Sailing. This apparent shortfall was purely a timing issue, and preliminary revenue data for March indicate that JS revenue is now on budget. Dining and Beverage revenues have been slightly below budget but should easily recover with better weather. Expenses are well controlled.
DOCK EXPANSION AND UPGRADE PROJECTS
All members have undoubtedly been watching as the Club’ moorings are being upgraded and expanded. From a financial perspective, it is important to note that these projects have all been self-financing; that is, the incremental revenue from these facilities is more than enough to pay the bank loans by which these projects were financed. There is no drain on the Club’s operating funds.
It is very evident to the many who come to enjoy our Club over the past few years that our members are using their Club more and, in particular, are enjoying our vastly upgraded Dining and Beverage offerings. It’s great to see our members enjoying the place. An important effect of all that increased use of the Club by our members and the attractiveness of our Club has been substantial membership growth. In the years up to 2014, membership growth was non-existent. This lack of growth – a combination of high turnover rates among existing members and little sustained acquisition of new members – was very worrying for the long term viability of the Club. In 2015, the membership approved a significant increase in the membership fees for Full members. While that increase was badly needed for financial stability, it did lead to a foreseen increase in members re-evaluating their use of the Club and an increase in that year of non-renewal. Since then though, new members have been appreciating the value of the Club’s offering and in 2016 membership grew by 33 – a growth of almost 10%. Budgeted growth this year is 29 members, or over 7%. Membership growth is essential not only for the Club’s financial viability but also as evidence that the Club’s offerings are seen to be worth the money.
To our General Manager and his staff whose efforts are producing these fine results. To the Club’s Finance Committee who have put tremendous thought and effort into our operating budget and our capital budget. And to your Board, who have spent the time and effort to scrutinize the Club’s budgets, to argue about the best use of your Club’s funds and to regularly scrutinize the monthly results. I am proud of them all.
Director of Finance