RubinBrown Country Club Stats 2010

Country Club Stats

2010

A Publication of RubinBrown LLP

Executive Summary

Contents 1 Executive Summary 5 General Club &

Membership Information

6 Income Per Member 7 Operational Information 8 Golf Operations

10 Food & Beverage Operations 11 Personnel & Other Information 13 RubinBrown’s Hospitality & Gaming Services Group

RubinBrown is pleased to present our 2010 Country Club Statistical Analysis. Our survey results represent responses from 16 St. Louis metropolitan area clubs with fiscal year ends that ranged between September 30, 2009 and March 31, 2010. General Industry Economic Update In our previous edition of the survey covering St. Louis area clubs’ we noted that generally, clubs experienced an average decline in total membership from September 2008 through June 2009 of approximately 5 percent (this was an average net loss of 14 regular members during that period). Membership losses appear to have stabilized by the end of 2009. For years ending from September 2009 to March 2010, the clubs participating in our survey indicated a net gain of one regular member, but with substantial work and effort to fill an average of 25 regular member resignations during the year. Although the attrition has subsided, the membership base for most clubs is below the levels necessary to maintain a “balanced budget” without continued cost reductions and reduction of headcount. Clubs continue to aggressively battle to increase membership at all levels and increase utilization in all areas by the members and guests. Dues rates increased by an average of 2.5 percent and were often accompanied by an operating assessment to fund deficits incurred during the past year (8 clubs levied operating assessments to the membership).

1 | Raise Your Expectations

Golf Operations Total rounds of golf declined by approximately 5 percent for the second year in a row due to declining membership levels and less special event activity, with the annual average number of rounds per 18 hole equivalents decreasing from 17,300 as reported last year to approximately 16,400 for the most recent period. Average golf course maintenance expenses declined very modestly as compared to the previous year. The average golf course maintenance costs on a per hole basis declined from $51,500 to approximately $49,300. Pro Shop Operations Gross profit margins on merchandise continued to slide nearly another percentage point from the previous year to an average of 16.3 percent. Food and Beverage Operations Clubs experienced declining food and beverage revenues as compared to previous year. Ala carte revenues were down approximately 5 percent and banquet/event activities were down an average of 10 percent. Average food profit margins remained steady at roughly 57 percent. Profit margins for beverages dropped approximately 3/4ths of a percentage point to 65.7 percent. Declining food and beverage revenues drove the total food and beverage labor and fringe benefits as a percentage of total food and beverage revenues upward to an average of 74 percent from the prior year of approximately 70 percent. Clubs reported an average net loss (after all direct costs and labor) from food and beverage operations of approximately $165,000 for years ending between September 2009 and March 2010. This average loss increased approximately 35 percent over the prior reporting periods.

Moving Forward In order for the club marketplace to rebound, substantial help is needed from the economy along with a continued focus by club management and boards in: • Actively and continuously rebuilding membership at all levels • Building a family atmosphere for the next generation • Increasing membership utilization of services in all areas • Aggressively controlling costs and expenses • Managing cash flow for debt service, capital improvements and operations • Retaining quality employees and providing excellent service • Complying with increasingly complex government and tax regulations Thanks to the many area club controllers and general managers who participated in our annual survey. We encourage club managers, controllers, board members and others to use these statistics as one of many tools in evaluating their club’s operations. Please keep in mind the wide range in size and diversity in club operations throughout the St. Louis metropolitan area when comparing your financial and operating results to averages contained herein.

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General Club and Membership Information

1. Number of clubs participating in survey

16 clubs

Average

2. Maximum number of regular club members allowed

432

3. A. Current number of regular club members

310

B. Current number of junior/intermediate members

31 40 77 46

C. Current number of senior members D. Current number of social members

E. Current number of other classifications (excluding nonresidents)

F. Current number of total members (excluding nonresidents)

504

4. Number of clubs with a waiting list of prospective members

3 clubs

Average

Median

5. A. Number of new members added during the year: Regular

26

25

Social

8

6

B. Number of members lost during the year: Regular

25

25

Social

13

13

C. Net gain in regular members over the prior year

1

–

6. Number of clubs planning or currently implementing significant capital improvements: Clubhouse

6 clubs 2 clubs

Golf course

3 | Raise Your Expectations

Income Per Member

Annual Dues and Assessment Revenue Per Member (A)

$6000

$5000

5,080

4,800

$4000

$3000

$2000

$1000

0

Average

Median

Annual Food and Beverage Revenue (including service charges) Per Member (A)

$6000

$5000

$4000

4,200

4,060

$3000

$2000

$1000

0

Average

Median

(A) Total members include all categories of membership (except for nonresidents)

Annual Sports Activities Revenue Per Regular Member

$2000

$1600

1,740

1,710

$1300

$1000

$700

$300

0

Average

Median

Sports activities include greens fees, cart rental, locker fees, tennis and swimming (excludes pro shop merchandise sales). This total is divided by total regular members.

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Operational Information

Average Revenue

Median Revenue

Per Member

Per Member

1. Operating revenues per member (all members excluding nonresidents) during the past fiscal year: Dues

$5,078

$4,798

Initiation fees (15 clubs)

525 707 816 432 478 104

390 696 795 422 470

Capital assessments (11 clubs) Operating assessments (7 clubs)

Greens fees Cart rental Locker fees

89 15

Tennis and swimming fees (11 clubs) Pro shop merchandise sales (13 clubs)

28

609

681

Restaurant sales Bar sales (15 clubs)

2,329

2,350

967 803 411

979 779 435

Service charges

All other income (15 clubs)

$13,347

$12,899

2. Operating expenses per member (all members, excluding nonresidents): Food and beverage

$3,785

$4,292

Golf course and grounds

2,079 1,073 1,527 1,403

2,028 1,013 1,338 1,364

Pro shop

General and administrative

Depreciation

Real estate taxes

302 228 340 427

295 212 292 393 777 568

Insurance

Interest (15 clubs)

Utilities

Clubhouse

1,014

Other (13 clubs)

532

$12,710

$12,564

3. A. Monthly dues, assessments and charges (regular members): Average monthly membership dues Average monthly assessments (including capital) (11 clubs)

$540

62 76 56

Average monthly food & beverage minimum (10 clubs)

Average monthly service charge (11 clubs)

B. Average total monthly charges (all clubs)

$667

C. Average increase in dues for regular members over prior year

2.6%

Average

Median

4. Initiation fees: A. Initiation fee for regular membership

$23,100

$13,750

B. Refundable portion of regular member initiation fee (9 clubs)

650

–

C. Initiation fee for social membership (10 clubs)

1,000

500

5 | Raise Your Expectations

5. Average percentage of total revenue derived from outside events (not-for-profit clubs only) (13 clubs)

9.5%

6. Club borrowings and leverage A. Average bank debt per member (excluding nonresidents) (14 clubs)

$6,000

B. Average total bank debt (total dollars) (14 clubs) C. Average bank debt to membership equity

$2,910,000 0.6 to 1.0

D. Average effective borrowing rate

4.6%

(fixed rate: 9 clubs) (floating rate: 6 clubs)

Percentage of Outside Event Revenue Generated for Not-for-Profit Clubs

20%

15%

13.9

10%

10.0

9.5

5%

5.4

0

Average

Median

High

Low

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Golf Operations

Peak Season

1. A. Average guest greens fees for 18 holes (15 clubs): Weekdays

$63 $70

Weekends

B. Average golf cart rental rates for two people playing 18 holes (15 clubs)

$33

Average

2. A. Maintenance expenses associated with the “golf course” for the most recent fiscal year (per 18-hole equivalent): Payroll (16 clubs)

$480,000

Payroll taxes and employee benefits (15 clubs)

90,000 90,000 22,000 39,000 21,000 15,000 72,000 20,000

Fertilizer, chemicals, etc. (16 clubs)

Fuel (16 clubs)

Repairs and maintenance (16 clubs) Sand, seed and sod, etc. (15 clubs)

Supplies (16 clubs)

Water (Those without water sources) Trees and landscaping (15 clubs) All other golf course expenses (16 clubs)

74,000 $923,000

B. Average water cost per 18 holes for those with some existing

$15,000

water source (8 clubs)

3. A. Average number of rounds of golf (18-hole equivalents) played

16,400

within the past fiscal year

B. Average number of outside tournaments held by club (13 clubs)

10

Per Hole

4. Average amount spent on capital improvements for the “golf course”

$7,100

4. during the past fiscal year (11 clubs)

5. Average amount spent for golf course equipment for the past fiscal year

$76,000

6. A. Number of clubs leasing golf carts during the year

6 clubs

B. Average annual lease cost per cart (for clubs that lease carts) C. Average purchase price per cart (for clubs that purchase carts)

$875

$3,475

7. Number of clubs owning the golf pro shop

12 clubs

Average

Median

8. A. Gross profit margin on merchandise for those clubs that own the pro shop (13 clubs)

16.3%

17.1%

B. Average commission paid on pro shop sales (4 clubs)

6.5%

Inventory Per Regular

Total

Member

C. Average pro shop inventory levels (10 clubs): Peak season

$160,000 $112,000

$550 $390

Off season

D. Average pro shop inventory turnover per year (10 clubs)

2 times

7 | Raise Your Expectations

Composition of Total Rounds of Golf

100%

80%

77

60%

40%

20%

15

8

0

0

From Members

From Guests

From Outside Tournaments

From Public

Total Golf Course Capital Improvements Per Regular Golf Member (11 clubs)

$500

$400

425

$300

$200

$100

120

0

Average

Median

Total Golf Course Maintenance Per Regular Golf Member

$500

$400

$300

3,595

3,450

$200

$100

0

Average

Median

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Golf Operations (continued)

Combined Golf Course Maintenance and Capital Improvements Per Hole

$30,000 $20,000 $10,000 $50,000 $60,000 $70,000 $80,000 $40,000

54,300

46,700

0

Average

Median

Golf Course Maintenance Per Hole

$60,000

$50,000

49,300

$40,000

45,900

$30,000

$20,000

$10,000

0

Average

Median

Golf Course Maintenance Per “Mowable” Acre

$10,000

$7,500

6,500

$5,000

5,000

$2,500

0

Average

Median

9 | Raise Your Expectations

Food and Beverage Operations

Average Median

High

Low

1. Gross profit margin on food sales (excluding service charge income and mandatory gratuity income) 2. Gross profit margin on beverage sales (excluding service charge income and mandatory gratuity income) 3. A. Percentage of food and beverage payroll and fringe benefits to total food and beverage revenues (excluding service charge income and gratuities) B. Percentage of food and beverage payroll and fringes to total food revenues only (excluding service charge income and gratuities)

57.1% 57.0% 73.5% 36.5%

65.7% 65.9% 73.0% 57.8%

74.8% 75.9% 99% 57.8%

103.7% 102.1% 139.6% 80.3%

4. Average service charge on food and beverage: A. Percentage (4 clubs)

19.5%

B. Flat monthly charge (10 clubs)

$55

5. Average employee meal allowances as a percentage of total food and beverage revenues

3.1%

6. Average menu pricing increase for the past fiscal year (9 clubs)

2.5%

7. A. Average percentage of a la carte food sales to total food sales

56.5%

B. Average annual a la carte food sales per member (total members, excluding nonresidents)

$1,300

8. A. Average food and beverage inventory levels: Peak Season (15 clubs)

$92,000 $75,000

Off Season (15 clubs)

B. Food and beverage inventory per member (total members, excluding nonresidents): Peak Season (15 clubs)

$185 $155

Off Season (15 clubs)

9. Average net loss from food and beverage operations (net of all food and beverage expenses including payroll)

<$165,000> <$122,000>

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Personnel and Other Information

Average

Median

1. Annual base salaries for the following positions: Course and Grounds Superintendent

$106,000

$108,000

Executive Chef

90,000 66,000 76,000 51,000 48,000 44,500

92,000 61,000 75,500 48,000 46,000 47,800

Food and Beverage Manager

Controller (14 clubs)

Office Manager (4 clubs)

Maitre D' (6 clubs)

Membership Marketing Director (13 clubs)

2. Base salary of golf pro before additional compensation (13 clubs)

$85,500

$82,500

3. Health insurance costs (15 clubs): A. Average percentage of health insurance premiums and costs to total salaries and wages B. Average increase in health premium cost over previous year C. Average percentage of premiums paid by club on behalf of employees (percentage of the total premium covered by the club) D. Average percentage of premiums paid by club on behalf of employees’ dependents (percentage of the total premium covered by the club) (7 clubs)

7% 7%

70%

65%

4. Average number of employees utilized in the following areas:

Peak Season Off Season

Golf course and grounds (15 clubs)

20 36 18

10 20 14

Restaurant and bar (non-kitchen) (15 clubs)

Kitchen (15 clubs) Clubhouse (15 clubs)

9 5

7 5 6 1

Office and administration (15 clubs)

Pro shop (15 clubs) Other (13 clubs)

15 17

Total employees

121

64

Average

5. Employee productivity and utilization A. Average employee total hours worked (11 clubs) Kitchen/restaurant and bar

73,693 29,739 14,924

Golf course grounds

Pro shop

B. Average annual hours worked per employee (11 clubs) Kitchen/restaurant and bar

1,495 1,546 1,314

Golf course grounds

Pro shop

C. Average payroll and benefits cost per hour worked (11 clubs) Kitchen/restaurant and bar

$18 $21

Golf course grounds

11 | Raise Your Expectations

Notes

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RubinBrown Hospitality & Gaming Services Group

Employment Taxes • Consultation and compliance • Policies and procedures development and implementation • Tax credits • Examination representation Consulting Services Enterprise Risk Management and Internal Audit • Risk assessments and internal audits • Sarbanes-Oxley compliance • Internal control and operational reviews • Policy and procedure development and documentation • Corporate compliance audits • Forensic accounting Information Technology Audit • Payment card industry (PCI) data security standards review • Information privacy review (Gramm-Leach-Bliley) • System implementation controls design • Pre and post implementation review • IT security assessment • Network and operating system platform specific services • IT policy and procedure development and integration Financial Reporting • SEC financial reporting • IPO assistance • Merger and acquisition assistance • Business valuation • Financial forecasts, projections, and budgeting assistance • Cash flow analysis • IT risk assessment/planning • IT audit project management • General computer control review • ERP and application audit

RubinBrown’s Hospitality and Gaming Services Group offers a full range of assurance, tax, business planning and consulting services to hotels, restaurants, golf courses, country clubs and retail industries. Beyond these traditional services, we also offer specialized knowledge of the industry and familiarity with specific challenges and issues encountered by country clubs and the hotel industry overall. Assurance and Accounting Services • Audits, reviews and compilations of financial statements • Preparation of comprehensive management letters • Agreed-upon procedures concerning policies and procedures Tax Compliance and Consulting Services Tax Compliance • Preparation of Forms 990 and 990-T • Federal, State and Local Tax preparation • Internal Revenue Service examinations Tax Consulting • Real Estate and Personal Property Tax • Ongoing compliance • Asset classification • Cost segregation analysis • Valuation review and assessment challenge • Litigation support Sales & Use Tax Services • Audits of pension and 401(k) plans • Adjusted Gross Receipts (AGR) audits

• Compliance and consulting • Nexus (filing) requirements • Voluntary disclosure negotiation • Planning and structuring • Sales & use tax refund review • Examination representation

13 | Raise Your Expectations

Information Technology Consulting Services • MAS90 and Great Plains implementation, support and training • Significant experience with POS and retail operating experiences • Retail and Pro Shop inventory management system implementation • System procedures and controls consulting • Integration with other operating systems and general ledger packages

• Financing analysis and assistance • Lost profit calculation and litigation support • Profit improvement and statistical comparison analysis • Market feasibility and economic impact studies Miscellaneous • Franchise audits and related agreed upon procedures • Vote tabulation • Inventory controls and procedures analysis • Membership, customer and employee surveys

Contact

Chelle Adams, CPA Partner-In-Charge Hospitality & Gaming Services Group 314-290-3329 chelle.adams@rubinbrown.com

Jim Mather, CPA Partner Hospitality & Gaming Services Group 314-290-3470 jim.mather@rubinbrown.com

Meyer Saltzman, CPA Partner Hospitality & Gaming Services Group 303-698-1883 meyer.saltzman@rubinbrown.com

Jeff Sackman, CPA Manager Hospitality & Gaming Services Group 314-290-3406 jeff.sackman@rubinbrown.com

Todd Pleimann, CPA Managing Partner, Kansas City Office 913-499-4411 todd.pleimann@rubinbrown.com

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Denver Office 1660 Lincoln St. Suite 2000 Denver, Colorado 80264

Kansas City Office 10975 Grandview Dr., Building 27 Suite 600 Overland Park, Kansas 66210

Saint Louis Office One North Brentwood Blvd. Saint Louis, Missouri 63105

ph: 314.290.3300 fax: 314.290.3400

ph: 303.698.1883 fax: 303.777.4458

ph: 913.491.4144 fax: 913.491.6821

For more information, visit www.rubinbrown.com