Club House Investment - Raising The Debate

BACKGROUND

The current clubhouse buildings have been erected piecemeal over a period of 50 years at an actual cost of c£100K (adjusted for inflation c£400K). Taking into consideration the investment in playing facilities over that same period total capital spend has been over £600K (adjusted for inflation in excess of £1m).

RETURN ON INVESTMENT

A summary of all the constituent clubs accounts for 2005 including The CGC and The Social Club shows that annual turnover is in the region of £230K and cash surplus of c£30K. The cash surplus takes no account of provision for depreciation. If it did the clubs would at best break even.

In summary our return on investment is at best 5% (£30K on a £600K investment). No business would be satisfied with that level of return.

WHY IS THE RETURN ON INVESTMENT SO POOR?

• The assets of the Club are not fully utilised. The car park is and to a degree so is the hall but the bar utilisation is only say 20% and the playing facilities the same.
• Based on what is on offer club subscriptions are too low when compared to other leisure activities but the level of subscription is dictated by the market rate.
• Club management relies mainly on volunteers many of which either do not have the time or the expertise, or both.

IS THERE POTENTIAL TO IMPROVE RETURNS ON INVESTMENT?

The short answer is yes if management has the time, energy, expertise and financial inducement to exploit the available opportunities. Some examples of these opportunities are:

• Opening the bar more often and better marketing of it to existing members and to potential social members, eg local businesses.
• Hiring out our playing facilities to local businesses. We know already that this can make handsome returns for very little investment of either time or money.
• Hiring out of our playing facilities for junior coaching. Once again we have an example of how this can generate additional income.
• More regular letting of our hall to the likes of BOS.

I estimate that if management had the time, expertise and financial inducement to exploit these opportunities annual income could quite quickly be raised by £80K/£100K per annum and surplus by £20K/£25K per annum.

THE CLUB HOUSE

The options are:

1. Refurbish what we already have.
2. Refurbish what we already have and extend.
3. Re-build all or most of what we already have.

FINANCIAL IMPLICATIONS OF EACH OPTION

It is difficult at this stage to put a cost on each of these options but is likely that option 1 could cost up to £100K, option 2 up to £250K and option 3 £500K or more.

• Option 1 could be quite easily accommodated from within existing financial and management resources without the clubs having to forgo continued investment in their own playing facilities. However would it give all that members expect from their clubhouse? Required bank borrowing would be no more than £50K
• Option 2 would require bank borrowing of up to £200K. To service this level of debt would require each of the clubs to supplement the CGC's existing income by say £3K per annum. Unless the clubs find other ways of raising their income this commitment will inhibit their ability to invest in their own playing facilities. I doubt if this will be acceptable to the clubs, therefore option 2 will require some additional management resource for it to work.
• I believe that we can only safely borrow up to £250K therefore for option 3 to be viable we would require an outside injection of non repayable cash, at least £250K. This may be available by way of grant - this is something that someone needs to explore and quickly. Alternatively we outsource the club house project to a leisure or food/drinks company that fund the investment and collect the returns on its investment. Once again it will need someone to explore this opportunity.

MY PERSONAL PREFERENCE

From my own knowledge of sports clubs gleaned over a period of 40 years I believe that what members really want is:

• Good playing and practice facilities.
• Playing in a team that is at least reasonably successful and enjoying the company of their team mates.
• Enjoying a drink with their club colleagues in a comfortable bar after the game.
• Attending an occasional and well run social event.
• Members like to feel that it 'their club.' If it becomes too big and impersonal it might lose that feeling.

In my view a large clubhouse is a 'nice to have' but nowhere near as important as good playing facilities and the clubs being successful on the field. My preference is for option 2 but then only if we can find someone with the drive and determination to double bar takings and hall lettings (these two go hand in hand). If not we should go for a watered down version of option 2 whereby we look to provide at least on additional changing room for the ladies.

What we cannot afford to do is to ignore the state of our existing buildings for much longer. I am concerned that the roof to the CC/HC changing rooms will collapse unless it is replaced.

Jon Coote

Hon. Treasurer BCGC (21 October 2006)