I recently did a short analysis of Golf Club (GC) membership. It was intended to answer the often-asked question “If the GC was entirely member supported, what would that look like in terms of membership and monthly dues?”
I have attached the analysis as a pdf for those who wish to refresh their memories. It is interesting to note, that at current membership levels, per member dues would have to increase to $1500 monthly to pay the $2.2 million annual overhead for the courses.
The analysis is helpful in other ways. It helps us understand what $15 monthly will contribute to the LLC coffers, and will it be enough to sustain operations?
1. Annual Operating Expenses, the amount required to keep the doors open is estimated to be $2.2 million annually. This does not include the amounts needed to repair and renovate the courses. Our Reserve Study shows Cranes will require $1.5 million of repairs in 2025 (estimated 2023 dollars) and there are also repairs to the bridges. The amounts required for the bridges seem to change with the seasons.
2. To meet the $2.2 million annual operating budget, the attached analysis shows 120 Members will contribute $416,160 annually at current rates. But we know not all members pay the posted $289 monthly rate. To err on the side of caution and make it easier to follow, let's round down to $400,000.
3. The annual subsidy, paid in monthly installments of $15, from 2820 HOA Members equates to (2820 x 15 x 12) = $507,600.
4. Between the membership and the subsidy, the funds generated equal ( $400,000 + $507,600) = $907,600. As was stated previously, $2.2 million is required to keep the doors open. After the subsidy and the membership, (2,200,000 – 907,600) = $1,292,400 shortfall remains to be paid. For ease of use, let's round this obligation up to $1.3 million.
So we have $2.2 million of costs, with approx. $900,000 coming in, leaving $1.3 million to be paid.
5. The remaining source of revenue is Green Fees. The question then is, will Green Fees be able to meet the remaining $1.3 million obligation and keep the doors open?
It's easy to calculate that Green Fees will have to average approximately $110,000 a month for the entire year. Very difficult during the off-season between April and October, where Green Fees barely reach $50,000 for some months.
6. In 2023, the GC experienced 33,500 Total Rounds of play. This includes member and non-member rounds. Member rounds have averaged approximately 32% of Total Rounds. This means (32% of 33,500) = 10,720 rounds, which means (33,500 – 10,720) = 22,780 are non-member rounds and subject to Green Fees.
7. Rounding to 23,000, can 23,000 non-member rounds generate $1,300,000 in green fees so the GC can break-even? In order to do so, the GC would have to charge (1,300,000 / 23,000) = $56.50 a round.
8. The blended rate has dropped to $31.50 a round which means at current prices only (31.50/56.50) = 56% of the shortfall is being met by green fees.
9. To put this in context, at current prices (31.50 x 23,000) = $724,500 annually, is being generated through green fees. We need $1.3 million annually. This is a shortfall of ($575,500).
10. The current planned $15 monthly will be inadequate to subsidize the courses, and it is very likely will require a total of $35 per month from each HOA Member to reach break-even on an operational basis. This would be (35 x 2820 x 12) = $1,184,400 annually.
11. In order to break-even, the courses will require operating subsidies of $1,184,400 or $35 a household. How will this happen and still fall within the 10% limitation? The CCR Addendum does not require the Board to adhere to the 10% limitation. There is no oversight. There is no enforcement. There are no penalties if they don’t. The addendum is “toothless”. Additionally, item 2.5 clearly states that the Board has the authority to maintain, repair, and improve the courses with all related costs being assessed to lot owners.
12. The question then arises, how many non-member rounds do the courses require to break-even given the $15 monthly subsidy, 120 members, and the reduced blended rate of $31.50? This is a simple calculation (1,300,000 /31.50) = 41,270 rounds.
13. With the $507,600 subsidy, and 120 members, the courses will need to experience 41,270 non-member rounds to break-even. This is a (41,270 / 23,000) = 79.4% increase over 2023 levels, a dramatic feat in this highly competitive, declining market for golf.
14. How will the funds be sourced to pay for the $1.5 million renovation of Crane’s or the funds needed for the bridges or the further repair of Otter’s flooded Back 9?
15. We don’t know what the story will be but I am sure our Board has some inventive and less than inspiring story to tell us, that of course will make, little sense. But it won’t have to, since they will have the CCR Addendum. So it is likely, residents will not be informed at all.
Please VOTE NO. Stop this insanity. Do not allow our Board to threaten residents. Do not allow our Board to give residents an ultimatum. Do not allow our Board to have a “Blank Check” on our HOA Operating Funds.
VOTE NO. Save our community.
Comments