Curling – Business Planning
Remember the 1960’s were golden years for curling. How at $100 a year, curling was an affordable sport and McDonald’s offered a meal that came with change from your dollar. That was then and this is now. Last issue we read about the Technological Adaptation http://yorkurbanist.com/2014/10/27/death-and-life-of-a-curling-club/ . Pertinent to your application to CCA for that lifesaving $10,000, let’s look at (some of your) Financial Planning: The Expense Side
- Capital Funds: When we construct any building, the depreciation of the building on the books should be 30 years. The plant for a curling club, with annual maintenance, needs significant investment in 15 years. Technology, such as computers, is fully depreciated after three years. The reason Country Club Curling stays in business is in a large part because their smaller membership numbers are charged a capital fund fee on top of annual program fees. So, in 30 years, a typical six-sheet facility will need $3.5 replacement value. Assuming 600 members, the annual capital fund fee should be: $195 in 2014 dollars. Take this to your next annual general meeting and see what the response will be! But this is a reality. Divide that cost by the months that you play and the cost is $32, or your half of the meal you recently enjoyed with your significant other at the local pub. Recommendation: Apply any amount of Capital Fee immediately and increase it until it meets the required replacement cost of your facility. Use the accumulated funds judiciously. I will be corrected that this is the revenue side, but it should be pegged to capital expenses.
- Buying Power: Have you ever considered that you have partners in recreation? Forming alliances, particularly in urban areas can reduce the cost side of your financial statements. Who might you consider: other recreation facilities; other curling venues; suppliers of alcoholic beverages and food? Recommendation: Check out the neighbourhood for like facilities and talk about collaborating in the purchase of anything from tablets to toilet paper.
- Hiring practices: How many clubs hired a retiree to sail the ship? Never mind that he never had training in bookkeeping…but he could sure send a rock flying! Criteria for a manager should never include game capabilities. The manager is there to ensure that the vision of the club is implemented and sustains itself. Consider the CCA’s appointment of Greg Stremlaw as a successful example of hiring a non-curler to manage the sport of curling. Recommendation: Spend 20% more on the manager’s salary as a bonus, and have the manager’s contract include a clause that requires him/her to increase net revenues by at least his salary.
The Revenue Side
- Membership Fees: While McDonald’s now charges over $7 for the meals for which you once got change from a dollar, some curling clubs offer their memberships for only $300. McDonalds is still a profitable corporation. Curling corporations are struggling with only a three-fold increase over 50 years. Users expect that commercial operations will make money. Curling ‘Clubs’ are commercial operations. Recommendation: Charge fees to offset what operations cost, and then add a capital fee.
- Bars: The centerpiece of the facility and the former financial core of the club is now a service area that contributes to the social side of the sport. Revenues are down relatively from the golden years. Bartenders need to be certified whether volunteer or paid. Sin taxes continue to rise. When I travel, I go to curling clubs when I want a night out on a budget. Not only can I get conversation and meet people in curling, the beer is the cheapest in town. It should not be so. Sure, compete with the local bars, but do not squander the asset that was the cornerstone of your organization. Recommendation: Determine what is the market price for drinks, subtract 5% and you will continue to attract the same number of patrons.
- Alternatives to membership league revenues – you mean there are alternatives? Budgets from curling facilities that I have reviewed do not recognize potential additional revenue sources. Without that in the budget, there will be no impetus for the manager to pursue that added revenue potential. Alternatives warrant a whole article. See it in later issues.
- Advertising: Ask yourself, what do the businesses benefit from by exposing their emblems in our facility? Too often the logos in the ice, and on the flyers are community service promotion. But you can sell more. With six sheets of ice, you should have minimum 500 members or the equivalent rentals. Your ice should be utilized 80% of normal waking hours. It is this volume of exposure that you are selling! In marketing, that’s called ‘Hits’. Car dealers know that your patrons will buy a car on average once each of 5 years. With 500 players, there are 100 of them purchasing a car in a given year. Car dealers want to be top of mind. If they can sell 10 autos to your membership at $20k per vehicle, and if their marketing budget is 3%, then they can afford $6,000 annually to attract your market. Recommendation: Amass statistics to validate your benefits to the advertisers. How many people will see advertising? What is their demographic cross-section? How much space have you got for the advertisers’ names? How many times will the media see, or photograph their logos? Then Sell, Sell, Sell.
The CCA’s CAP deadline is pending in December. The CCA is trying to encourage you to write a business plan to convince them that the funds they provide are being guided properly. The business plan, with the requisite financial creativity is the first step toward a flourishing business and growth in curling. And 10k is not going to save your club…. Your logical financial planning will.
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