RubinBrown Private Club Stats 2015

’15 PRIVATE CLUB STATS A Publication of RubinBrown LLP

Welcome

RubinBrown is pleased to present the 2015 Private Club Statistical Analysis , our annual survey of area private clubs’ operational and financial information.

Our survey results represent responses from St. Louis Metropolitan area clubs with fiscal year ends between September 30, 2014 and March 31, 2015.

If you have questions or comments about this publication, please contact us (see page 9 for contact information).

Contents 1 Executive Summary 2 General Club and Membership Information 3 Operational Information 4 Golf Operations 6 Food and Beverage Operations 7 Personnel and Other Information 9 RubinBrown Private Club Services Group

Executive Summary

General Industry Economic Update In continuing with the tradition of the past couple of years, our 2015 statistics indicate a gradual economic recovery with clubs experiencing an average net gain of 12 regular members and 8 total members (excluding nonresidents). Although clubs have experienced a net gain in membership, the membership base for many clubs remains below the levels necessary to maintain a “balanced budget” without dues increases, operating assessments and/or cost reductions. Membership dues rates increased by an average of 3.2%, and, in 40% of clubs surveyed, this was accompanied by an operating assessment to fund deficits incurred during the current or previous years. Golf Operations Substantial rainfall grabbed the headlines during the previous golf season, while this year (summer of 2014) was an ideal year for golf. Average total rounds of golf increased nearly 8% to 17,500 rounds (18-hole equivalents) played annually. The average golf course maintenance costs on a per hole basis increased from $53,700 to approximately $55,400, with the primary increases related to additional cost for water and labor.

Even though membership levels have improved over the past several years, clubs are continuing to focus on building a family atmosphere for the next generation to enhance and retain membership levels. Club management and boards must continue to focus on: • Actively and continuously rebuilding membership at all levels • 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 • Adequate planning for significant capital projects We sincerely appreciate the many area club controllers and general managers who took time to participate 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.

Pro Shop Operations Gross profit margins on merchandise increased approximately two percentage points over the previous year at an average of 22.8%.

Food and Beverage Operations Competition from various dining venues continues to put pressure on club menu pricing. Food and beverage revenues remained comparable to the previous year, as did food profit margins averaging 56.1%, while beverage profit margins increased approximately two percentage points to 66.3%. Clubs reported an average net loss (after all direct costs and labor) from food and beverage operations of approximately $92,000.

RubinBrown Private Club Stats 2015 | 1

General Club and Membership Information

Average

1. Maximum number of regular club members allowed

450

2. A. Current number of regular club members

304

B. Current number of junior/intermediate members

46 34 62 53

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)

499

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

24 10

Social

B. Number of members lost during the year: Regular

12

Social

9

C. Net gain in regular members from the prior year

12

Annual Revenue Per Member

$5,000 $4,500 $4,000 $3,500 $5,500 $6,000 $6,500 $7,000 $7,500 $2,000 $1,500 $3,000 $2,500 $1,000 $500 $0

$6,370

$6,270

Percentage of Total Revenue Generated from Outside Events for Not-for-Profit Clubs

$4,600

$4,400

12% 10% 14%

8.1%

8% 6% 4% 2% 0%

$1,730 $1,580

6%

average median

average median

average median

average median

annual food & beverage revenue (including service charges)* annual dues & assesment revenue*

* Total members include all categories of membership (excludes nonresidents). † Sports activities include greens fees, cart rental, locker fees, tennis and swimming (excludes pro shop merchandise sales). Sports activity revenue is divided by total regular members.

annual sports activities revenue†

2 | RubinBrown Private Club Stats 2015

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 $5,350

$4,940

Initiation fees

$560 $630 $740 $460 $520 $100

$360 $610 $520 $410 $540

Capital assessments Operating assessments

Greens fees Cart rental Locker fees

$90 $40

Tennis and swimming fees Pro shop merchandise sales

$30

$690

$660

Food revenues

$2,600

$2,710

Beverage revenues Service charges All other income

$920 $890 $610

$980 $850 $640

$14,100

$13,350

2. Operating expenses per member (all members, excluding nonresidents) during the past fiscal year: Food and beverage $4,550

$4,820 $2,420

Golf course and grounds

$2,460 $1,160 $1,230 $1,530 $1,430

Clubhouse

$830

Pro shop

$1,210 $1,460 $1,380

General and administrative

Depreciation

Real estate taxes

$320 $290 $270 $530 $580

$340 $230 $220 $480 $370

Insurance

Interest Utilities

Other

$14,350

$13,760

3. A. Average monthly dues, assessments and charges (regular members): Average monthly membership dues and operating assessments

$620

Average monthly capital assessments (if charged) Average monthly food & beverage minimum (if charged)

$70

$110

Average monthly service charge (if charged)

$50

B. Average total monthly charges

$850 3.2%

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

4. Initiation fees:

Average $24,000

Median

A. Initiation fee for regular membership

$9,000

B. Refundable portion of regular member initiation fee (if applicable)

$2,100

$750 $730

C. Initiation fee for social membership (if charged)

$740

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

8.1%

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

$6,650

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

$2,822,000 0.8 to 1.0

D. Average effective borrowing rate

3.6%

RubinBrown Private Club Stats 2015 | 3

Golf Operations

Peak Season

1. A. Average guest greens fees for 18 holes: Weekdays

$70 $75 $38

Weekends

B. Average golf cart rental rates for two people playing 18 holes

Average 2. A. Maintenance expenses associated with the “golf course” for the most recent fiscal year (per 18-hole equivalent): Payroll $537,300 Payroll taxes and employee benefits $94,500 Fertilizer, chemicals, etc. $81,300 Fuel $30,400 Repairs and maintenance $50,500 Sand, seed, sod, etc. $20,400 Supplies $22,300 Water (those without water sources) $119,900 Trees and landscaping $22,800 All other golf course expenses $64,100 $1,043,500 B. Average water cost per 18 holes for those with some existing water source $30,980

3. A. Average number of rounds of golf (18-hole equivalents) played within the past fiscal year

17,500

B. Average number of outside tournaments held by club

11

On a Per Hole Basis

4. Average amount spent on capital improvements for the “golf course” during the past fiscal year

$13,600

On a Per Hole Basis

5. Average amount spent on capital improvements for the “golf course” over the past five years

$8,500

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

$116,300

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

$910

$4,100

8. Percentage of clubs who own the pro shop

80%

Average

Median

9. A. Gross profit margin on merchandise for those clubs that own the pro shop

22.8%

23.2%

Inventory Per Regular

B. Average pro shop inventory levels:

Total

Member

Peak season Off season

$158,000 $124,000

$510 $390

C. Average pro shop inventory turnover per year

1.7 times

4 | RubinBrown Private Club Stats 2015

Golf Course Maintenance and Capital Improvements

$3,500

$3,330

$3,230

$2,500 $2,250 $2,000 $1,750 $2,750 $3,000 $3,250 $1,000 $750 $1,500 $1,250

Composition of Total Rounds of Golf

outside tournaments 7%

members 79%

guests 14%

$610

$500 $250 $0

$90

average median

average median

total golf course maintenance per regular member

total golf course capital improvements per regular member

Annual Golf Course Maintenance

$70,000

$64,900

$65,000

$60,000

$55,400

$55,000

$50,500

$50,000

$48,100

$45,000

$40,000

maintenance combined with capital improvements per hole

$35,000

$30,000

maintenance only per hole

$25,000

maintenance only per “mowable” acre

$20,000

$15,000

$10,000

$7,000 $5,900

$5,000

$0

average median

average median

average median

RubinBrown Private Club Stats 2015 | 5

Food and Beverage Operations

Average Median High

Low

1. Gross profit margin on food sales

56.1%

55.3% 64.3% 49.8%

(excluding service charge income and mandatory gratuity income)

2. Gross profit margin on beverage sales

66.3%

67.9% 71.9% 58.1%

(excluding service charge income and mandatory gratuity income)

3. A. Percentage of food & beverage payroll & fringe benefits to total food & beverage revenues (excluding service charge income and mandatory gratuity income) B. Percentage of food & beverage payroll & fringe benefits to total food revenues only (excluding service charge income and mandatory gratuity income)

72.0%

73.1%

98.9%

94.5%

4. Average service charge on food & beverage: A. Percentage

20.0%

B. Flat monthly charge

$62

5. Average employee meal allowances as a percentage of total

2.5%

food & beverage revenues

6. Average menu pricing increase for the past fiscal year

4.2%

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

53.4% $1,300

B. Average annual a la carte food sales per member

(total members, excluding nonresidents)

8. A. Average food & beverage inventory levels: Peak Season

$95,000 $82,000

Off Season

B. Average food & beverage inventory per member (total members, excluding nonresidents): Peak Season

$200 $170

Off Season

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

<$92,000> <$117,000>

Food Sales Gross Profit Margin

Beverage Sales Gross Profit Margin

80% 90% 100%

80% 90% 100%

high 71.9%

67.9%

40% 30% 60% 50% 70% 20% 10% 0%

40% 30% 60% 50% 70% 20% 10% 0%

66.3%

high 64.3%

56.1% 55.3%

low 58.1%

low 49.8%

average median

average median

6 | RubinBrown Private Club Stats 2015

Personnel and Other Information

Average

Median

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

$123,000 $92,000 $68,000 $85,000 $52,000 $52,000 $49,000

$110,000 $93,000 $59,000 $85,000 $51,000 $45,000 $53,000

Executive Chef

Food and Beverage Manager

Controller

Office Manager

Maitre D'

Membership Marketing Director

2. Base salary of golf pro before additional compensation

$102,000

$103,000

3. Health insurance costs: A. Average percentage of health insurance premiums and costs to total salaries and wages B. Average increase in health premium cost over previous fiscal 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

7.1% 7.1% 75%

61%

(percentage of the total premium covered by the club)

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

Peak Season

Off Season

Golf course and grounds

23 36 20

13 19 16

Restaurant and bar (non-kitchen)

Kitchen

Clubhouse

8 6

7 5 7 3

Office and administration

Pro shop

17 19

Other

Total employees

129

70

RubinBrown Private Club Stats 2015 | 7

RubinBrown Private Club Services Group

Experience and Expertise Our Private Club Services Group is staffed by team members who have obtained in-depth knowledge of the private club industry and have the tools that are essential to serve private clubs, consisting of both tax-exempt and tax paying clubs. We have particular expertise in the food and beverage and golf operations of private clubs. We perform profitability and statistical comparisons for all of our clubs’ food and beverage and golf operations. We have significant knowledge of the various internal control procedures and practices that are critical to a club’s operations. Services Beyond the traditional assurance and tax services, we have significant experience in assisting our private club clients with the following: • Preparation of forms 990 and 990 – T • Audit, review and compilations of financial statements • Comprehensive ViewPoints reports including insights and historical comparisons • State sales and use tax compliance • Financial forecasts, projections and budgeting assistance • Profit improvement and statistical comparison analysis • Operational reviews • Inventory controls and procedures analysis • Property tax appeals • Lease vs. purchase analysis • Capital asset cost segregation analysis • Member and employee surveys • Board election and club by-law voting tabulation and reporting Thought Leadership Our firm is a member of: • Club Tax Network • National Club Association (NCA) • Hospitality Financial and Technology Professionals (HFTP) In addition, our Private Club Services Group periodically sponsors and provides education for the Club Managers Association of America (CMAA), HFTP and local controller groups dealing with current topics affecting the club industry. We also publish a variety of newsletters for your benefit and contribute articles to leading industry publications such as Club Management Magazine, Bottomline Magazine and Golf Business.

Jim Mather, CPA, CGMA Partner Private Club Services 314.290.3470 jim.mather@rubinbrown.com

Jeff Sackman, CPA, CGMA Partner Private Club Services 314.290.3406 jeff.sackman@rubinbrown.com

Dan Pimmel, CPA Manager Private Club Services 314.290.3307 dan.pimmel@rubinbrown.com

Aaron Pollard, CPA Manager Private Club Services 314.290.3457 aaron.pollard@rubinbrown.com

RubinBrown Private Club Stats 2015 | 9

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