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Tuesday, August 17, 2010
By Remmert Wolters
Treasurer
Remmert Wolters
For the Sept. 10 membership meeting, there are a number of subjects on the table and the financial situation is just one of them. In order to save time at the meeting, I thought that I would give you the short version of the background to put the situation in perspective. In that way, we can get right to the discussion rather than getting bogged down in discussing what might have led us into this situation.
In 2008, operational expenses exceeded income by $55,000.00 and we were invoiced for the new clubhouse ramp to the tune of $65,000.00. The financial reserves of the club took a $110,000.00 cash flow hit, obviously an intolerable situation.
For 2009, the board put together a conservative budget, including projected membership losses due to the economy. Substantial cuts in expenses were made, including the loss of the Leschi clubhouse. As an attempt to partially replenish our financial reserves, a year-end surplus of $25,000.00 was budgeted for. The end result, for both income and expense categories, was a little better than budgeted for and we were able to just about double our planned contributions to reserves and started 2010 in better financial shape than anticipated.
For 2010, clearly hoping for a stronger economic recovery, we budgeted for membership to be flat. That proved to be optimistic and we are trending down by about 10%. The race packages were re-structured slightly and we were projecting a modest 3% - 5% increase in race fees. While non-member race fees are on budget, member race fees are down to the tune of 20%. Since race fees and dues are the large income categories, it looks like we will miss our budgeted income by about $45,000.00.
On the expense side, we are in a little better shape for the year overall but our payroll is over budget. In addition, the roof of the clubhouse was leaking and needed to be replaced and we did get a very good deal at roughly $30,000.00. Including that expense, I am projecting a yearly operating loss of $55,000.00 for the year. That is an unpleasant number from what we were projecting but it is not nearly as bad as it looks.
Our budget includes $20,000.00 for a Leschi clubhouse expense or reserves and $5,000.00 for junior expenses. Neither are scheduled to be spent this year. We also had a projected surplus of $25,000.00. That totals to $50,000.00 and, if we are willing to give up on those, we will only take a $5,000.00 cash flow hit this year. We need to keep in mind however that we need to have surpluses every year so we can take big hits, like the roof replacement.
The club has no debt and has a fair amount of money in a savings account. It is therefore not in the same position that many other yacht clubs find themselves in. However, the loss of income trend is not sustainable and we either need to do something about it or cut expenses to match the income losses that we are experiencing.
How does the membership expect the board to address this issue? No-one wants to touch the core value of our deliverables but, since payroll is such a large expense item, we are likely going to have to partially solve the problem with more volunteer labor. Since the membership is not used to providing that on a regular basis, we are looking for input on how we can structure that such that not the entire load falls on the very few. We have a number of members who, year after year, do all the heavy lifting and they struggle with burnout. If we lose some of them because of this factor, we are going to be in trouble.
In closing, we have financial issues but, as long as we respond in responsible manner, we can deal with it. However, it takes the participation of all of us to make that happen and I would therefore hope that you will attend the “Open House” discussion on Friday night, Sept. 10. The board does not expect miracles but we would appreciate input on how we can solve this long-term problem and will be comforted by the fact that the membership is properly informed about what is taking place.