A bit of a more sombre tone for this update, as your not so fearless leader huddles in the trenches trying to dodge financial bullets and chaff, all the while trying to maintain a modicum of humour and serenity.

As we approach the end of the club’s financial year (30 September), I thought it would be a good time to update members on the club’s current performance, and some of the broader issues we have been contemplating.

Financial Performance Year to Date

You may recall when we wrote to members about the Capital Levy for the development projects (retic and house refurb) we laid out a 3-year budget based on the following assumptions.

• Member subscriptions will increase over the next three years at a rate of 5%, 3% and 3%
• All variable costs increase by 4% per year for the next 3 years
• The club makes investments of $350k in 2023 in the retic system and $150k in 2024 in the clubhouse

The expected outcome for YE2023 was for the club to operate at broadly “break even”.

As we sit here today, the good news is the reticulation upgrade has been completed at an overall cost of around $320k. However, we did have to replace one of our Variable Speed Drive pumps, at a cost of about $33k. This is a good reminder that there are always landmines lurking and the importance of keeping appropriate contingencies in our budget projections.

The club has also faced considerably higher cost increases across many budget items. These are the same general inflationary trends running across our economy, and on top of that we had;

• Materially higher repairs and maintenance costs for our ageing fleet of machinery
• The pump replacement mentioned above
• Higher admin costs due to staff changes over the year
• Significantly higher Fuel, Fertiliser and Chemical costs (in 2022 we spent $67k on these items against $127k in the 2023 year to date). This is impacting all golf courses, and whilst our maintenance contractor has absorbed most of these costs for 2023, for the budget period ahead these will be borne by the club.
• Materially higher energy, utilities and insurance costs than budgeted for

Whilst we have been able to take some mitigating actions, the bottom line is we now expect a year end loss in the region of $50k, rather than break even.

The Year Ahead

We have just completed our budget forecasting for the year ahead, and it will not surprise you to learn the cost pressures are not abating! We are currently in discussions with our course maintenance contractor regarding a renewal of the contract for the next 12 months and anticipate cost increases in the order of 6%-7% (this is in consistent with our estimates if we bought the services back in house).

We have recently seen the Fair Work Commission grant a 6% increase in the minimum wage which is already flowing through to our roster of casual bar staff. And we expect further considerable increases in energy, insurance, and utility bills.

This is a long-winded way of saying that our original assumptions of being able to maintain cost escalation to 4% lay “where the poppies blow” and we must face the reality that the Golf Club is considerably more expensive to manage and maintain for our members than it has been in the recent past.

Our original budget projections anticipated a “break even” outcome for the 2024 year, but on our current estimates, we are now projecting a deficit of more than $100,000 (assuming a 3% across the board increase in fees in line with the original 3-year estimates)

So, we need to make some more meaningful changes to our fee structure if we are to continue to deliver a golf course, and golfing experience that lives up to members expectations. More on this in a moment.

Membership Trends and Categories

There was a discussion at the last AGM about member categories, and although it was mainly around “the right to vote”, I promised to investigate the matter and come back to members with a considered opinion on a way forward. Well, that is a failure on my part, because as we delve deeper into the issue it raises more questions in my mind than it answers. One of the key questions we have been looking at is whether there is still “equity” across the different member groups, not just in terms of “the vote” but also related to playing and access rights, and subscriptions.

Here is some food for thought…. (Without judgement, and with peace and love to all)

• 75% of our members sit in one of 4 different playing categories and make up the bulk of the revenue generated by the club.
• 40% of our members are paying 55% of the costs to maintain our course and clubhouse.
• Said another way, 60% of our members get some form of discount against full subscriptions, due to having reduced access or playing rights.
• Our fastest growing category of members are 9 Hole members (spread evenly across Men and Women)

The questions this data raises in my mind are;

• Our existing categories were created to serve a purpose and have changed over time to reflect changing demographics and trends.
  • Are they still fit for purpose?
  • What are our own membership trends telling us?
  • What if we extrapolate those trends, what does it mean for how we allocate costs to members?
  • Are there sufficient incentives for members to join as “full fee-paying members”?
• How should we allocate the costs of maintaining the course?
  • Should it reflect access rights, usage or a combination of the two?
  • Does the notion of weekends being the “premium” days still hold true?

So to give this topic the attention it deserves, we have a Membership Sub Committee led by our Vice President Gary Hing that has started to review and consider whether our membership categories are fit for purpose and meet the needs of all of our members. They have created an excellent summary of all member categories and playing rights, that we will publish shortly.

Our plan is to conduct a comprehensive survey of members to better understand your playing preferences and get some perspective on what you want from your club. We will also analyse our data to get some insight into playing patterns, course usage and utilisation. The Committee will then review that and consider whether any changes to our membership categories are required to ensure EQUITY across categories, and SUSTAINABILITY for the longer term.

In all likelihood any changes that the committee recommend will require a vote of members, and changes to the constitution.  This work has commenced, and our current plan is for this to conclude in the second quarter of 2024 with a Special General Meeting (SGM) around that time if required.

Until this review has concluded we have placed a cap on membership numbers in the Mid-Week and 9 Hole playing categories. Full fee-paying membership categories remain open and new members will be warmly welcomed.

So back to the 2024 budget and the upcoming fee renewal

As I said earlier, our initial forecast projected a deficit of more than $100,000 and that was after an across the board 3% increase in subs. We have made some allowances for higher spending on repairs and maintenance and if this is not required, we will likely look to bring forward one of the Greens for renovations.

Our bar trading and catering contributes about $50k per annum to our revenues, corporate and guest fees add a few more $’s to the pot, but the reality is over 80% of our revenue comes from members subscriptions, so there is only one place to look when it comes to balancing the books.

Our previous strategy has been to keep fees as low as possible, but I wonder at what long term cost?

• Do we need to set fees with a longer time horizon?
• We continue to fail to address our greens. At what point do we need to start a proper replacement program?
• How much longer can we continue with our out of date, and out of support IT and office technology?
• Our equipment fleet is ageing – How will we pay for their replacement over time?

Our role as the Committee is to administer the club in line with the constitution, and for the benefit of all members, but we need to do this with one eye open to

• The longer-term financial viability of the club
• Ensuring we are delivering a quality golfing product that members want to pay for, and
• Being clear what the “product is” that we are trying to deliver.

The work we will do in the Membership Sub Committee, will help us with some of these questions, but as of today, we need to decide about fees for the new financial year, with invoices due out in the last week of September. This is made more complicated by our Constitution restricting overall fee increases to 8%. Anything more than that (and we need more than that) requires a resolution of members at a SGM.

The Committee has deliberated about the most equitable way of meeting our financial needs over the next 12 months and we have concluded that the increase in costs should be borne equally by the main playing cohorts. That is the 75% of members that use the course most regularly.

• 7 Day (inc Vets)
• 6 Day (Inc vets)
• Mid-Week
• 9 Hole

We are proposing a fixed increase in fees for these playing categories of $400. Given we have experienced higher cost escalation this year than our forecasts, a small margin of error is appropriate. The net outcome of this increase should turn a $100k deficit into a small operating surplus of about $40k.  All other playing categories (the 25%) will receive a scaled increase in fees between $100 and $300.

This will require approval from members at a Special General Meeting (SGM). We are working on the notice and background information to issue this (we need to give 10 days’ notice) and would like to be able to issue invoices in the last week of September, meaning an SGM around mid-September.

We appreciate this is a larger increase than some members may have been expecting, and so we have also proposed to reduce the existing house levy by 50% for all categories to help reduce the cash impact on members.

We have a significant infrastructure to maintain, outside of just the golf course. Over the past 12 months we have replaced our carpark, spent $320k in a reticulation upgrade, and spent $80k on other repairs and maintenance. Over the course of the next 12 months, we have budgeted for investing around $150k into our clubhouse and associated facilities, as well as about $85k in general upgrades and maintenance of our assets, plant, and equipment. Golf is not a cheap business!

Please note your committee is very strongly advocating for all members to vote in favour of the proposal when it comes up for a vote. Nobody likes paying more, but we have an amazing asset here at NGC, and if we do not protect and maintain it then we are at risk of going the same way as other small suburban 9-hole golf courses (that shall remain nameless, but you know who I am talking about), and that would clearly be to the detriment of all members.

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And on a final note, you’re not so fearless leader predicted at his last update that his golf had “turned the corner” and he was back on his way to a single figure HC. I am pleased to report that indeed, that has been the case, albeit fleetingly.

Unfortunately, after putting himself in a position to challenge the leaders at the half way point of the Winter Cup, a Sunday afternoon spent chopping his way around the course for a -7, has seen him drift back to an unflattering 10. But I guess, that is just in time for the Spring Cup, just around the corner. Onwards and upwards.

Whoever said “Golf is an endless series of tragedies following by the occasional miracle” wraps up my game nicely at the moment.

Good golfing to all, and as always never be afraid to tap any one of the committee members on the shoulder and have a chat about what is on your mind. Feedback is a gift!