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EHFJR

Are Residents Being Fleeced?...Good Question.

Updated: Jun 18

Lets all think back to late Spring 2023, the Golf Club President, at a scheduled meeting, stood up in front of the crowd and announced he was selling memberships forward. Meaning, a member could lock in membership dues for years to come by paying a lump sum today. Interestingly enough, the lump sum was based on membership rates in affect at that time, which were only $199 a month. Even more interesting, is that the Golf Club Board was under a lot of pressure to increase the monthly rate, which had not been changed in years.


Management soon after raised membership fees and so the individuals that "Prepaid" their memberships got a very sweet deal. I inquired at the meeting, how long were memberships sold for? The reply was "30 to 36 months". So an individual was able to lock in $199 a month for three years when less than six months later, monthly resident memberships were increased to $289 a month. These fortunate individuals saved $90 a month or $1,080 over the course of a year. If their Prepaids were of 36 month duration, then these people saved $3,240 on their Membership Dues over the life of their contracts.


So yes, that is quite a deal. I asked how many were provided this opportunity and the reply I received was "about 10, maybe 13".


When the LLC Financial Statements for July were finally released, a liability was recognized for $167,993.40 and was labeled "Prepaid Member Dues". That's good, it was recognized, except for two issues:


  1. If memberships were sold for a maximum of three years, then that would produce approximately ( 3 x 12 x 199 ) = $7,164 in Prepaid Revenue per member. If only 10 - 13 residents received this deal, how did the LLC get to $167,993.40? To solve for members we can calculate (167,993.40/7,164) = 23.45 members, at least, have taken advantage of this opportunity, approximately twice as many as reported.

  2. But here is why I believe this could be dishonest. The July Financial Statements recognized a liability, but did not recognize receipt of any cash. Instead, Shareholders Equity was reduced by the required amount to keep the Balance Sheet in balance. To be "Prepaid Member Dues", payment would have to have been made. To recognize a Prepaid, without accepting payment, is giving your product away for free.


This means, the LLC recognized an obligation to provide membership benefits to a select group of individuals over a period of time, but the bill, the charge, the cost of providing those benefits, has been put to, or charged to shareholders. Who are the shareholders? The residents. The bottom-line, there was no cash received and residents paid the bill.


Viola, free golf.


Now that's part I of the scheme. Here is the second part.


Let's jump ahead to December 2023. This was supposed to have been a very good December with Membership Dues increasing. But did they?


Membership Dues for December 2023 were reported as $41,895.35 but included recognition of $11,632.07 of Prepaid Dues, the same dues the LLC never received any cash for. This revenue is not real and in my opinion, is a scheme to inflate revenue. What do unsavory business types refer to this as, oh yes, "putting lipstick on the pig".


The real revenue from Member Dues in December of 2023 was $30,263.28. December 2023 revenue from Member Dues was inflated by 38.4%. It was not a good December.


Comparing December 2022 Membership Dues to December 2023, and we have $34,059.74 versus $30,263.28. December 2023 Member Dues was 11.2% lower than December 2022.


This, in my opinion, is completely dishonest. In my opinion, the $167,993.40 of Prepaid Member Dues was a scheme to provide free golf to a select group of individuals numbering in excess of twenty, while at the same time provide an opportunity to inflate financial results.


This conclusion is the results of my analysis. I have verified my results with a retired professional accountant. I encourage everyone who is interested to verify my conclusion.


This is not speculation. The numbers all originate from financial statements provided to me by management. Questions to management regarding the $167,993.40 Prepaid and why residents were charged, have gone unanswered.


Readers are encouraged to do their own analysis and draw their own conclusions.


It is my opinion, the residents of our community, were fleeced, and continue to be fleeced.


Thank you. Keep the faith, keep your head down, and keep your eye on the ball.



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