THE GREEN

On behalf of the Board of Directors, I am pleased to be able to provide the membership with an overview of the 2023 financial results for the Club, our current financial position, considerations for the 2024 operating and capital budgets, and approved dues and fees increases for the 2024 fiscal year.  

Review of the 2023 Operating and Financial Performance & Current Cash Position  

2023 was a fantastic year for the Club.  I hope that each of you were able to enjoy the Shaughnessy Experience as defined at the Board-level as “The continued excellence in all areas of the Club”. The great weather, combined with a complete return to normal for golf (on our superbly-conditioned golf course), tennis and social events, allowed us to put our best foot forward to meet the desires of our over 1,600 members who want and demand the “Shaughnessy Experience.”  Stand-out club events during the year included the Canada Day Pancake Breakfast, the Family Fun Day, the Summer Party, and, of course, Championship Sunday.  An absolute highlight of the year for the Club was hosting the CPKC Women’s Open.  From the rave reviews (LPGA Tournament of the Year), the charitable contributions, the Musqueam engagement/participation, and the sense of community we created with our members showcasing our course and club, the event was a tremendous success.  The Club was able to generate a modest profit of $345k from the tournament, which was allocated to help fund our capital expenditures in 2023. 

We continue to have a busy tee sheet, finishing the year with just under 40,000 rounds played (vs 41,000 in 2022 vs 49,000 (!!) in 2021).  Maintaining the balance between access to the tee versus having sufficient dues-paying members remains a top challenge for the Club as the 2032 lease expiry approaches.  The lottery system has allowed members to be able to book tee times in advance at desired times (generally).  I think we all noticed a few more open tee times than in previous years, especially between May and August.  We had just over 2,200 guest rounds (2,100 in 2022) which helped generate approximately $0.5 million in guest fees. 

The Club’s current financial policy is to operate on a break-even basis, where our costs to operate the Club are intended to be covered by member dues and other ancillary revenues (e.g. Green Fees) and capital costs are expected to be covered by entrance dues and operating surpluses from Greenacres.  The current estimate of the year-end results is an operating budget deficit of $93k for 2023.  Our net revenues of $7.5 million were exactly on budget as the $120k negative variances from Food & Beverage were offset by $31k higher than expected dues from lower than planned net attrition of members, $33k better than planned net revenues from the Golf Shop and $46k higher Green Fees.  Our expenses including course, administration, and property (lease and taxes) costs of $7.4 million despite continuing wage pressures.  

Greenacres saw a 7% increase in rounds played (45,000 vs 42,000 in prior year) proving golf mania is alive and well in the Lower Mainland when the sun is shining.  The operation remained profitable leading to an operating surplus (revenues > expenses) of $483k (2022 – $310k, 2021 – $780k).  All excess cash flow from Greenacres was allocated to fund Shaughnessy’s capital expenditures.  

Another significant cash influx of $1.4 million from new and deferred entrance fees was also allocated to fund Shaughnessy’s capital expenditures. 

Our 2023 capital spending of $1.7 million was essentially on budget. The two key areas of focus of our capital spending in 2023 were $0.4 million related to Clubhouse infrastructure and $1.1 million related to the Golf Course.  In the continued spirit of front end loading any remaining significant capital spending to ensure we maximize the benefit during our remaining lease term, the Clubhouse spending included much needed replacements of the carpets, certain furniture, kitchen upgrades, as well as the new entrance signage.  The key areas of course-related spending included equipment (some of which had been planned to arrive in 2021 and 2022), irrigation and power carts (Greenacres).  

A continuing key operating and financial challenge facing all private clubs post-COVID is the cost to support the Food & Beverage (F&B) amenity.  Labour market shortages in hospitality, and increased food costs have certainly led to an increase in our overall cost of running the department. The Board reconfirmed its prior year decision that we should continue to maintain current standards and service levels to meet member expectations while continuing to look to improve efficiencies and reduce costs.   One example of how we have reduced costs is to continue to be closed for F&B on Monday evenings during the non-peak months. Otherwise, the F&B experience at Shaughnessy for day-to-day dining and for member events remains consistent with our stated goal of maintaining the Shaughnessy Experience.  We objectively believe we provide better quality, value and experience in comparison to other local clubs, while maintaining similar cost impact to the budget for this amenity.   

As of December 31, 2023, we ended the year with cash of $3.5 million (2022: $3.2 million) including the Club’s Operating Cash and Reserves, Special Reserves, and accessible cash from Greenacres.  The management team are working closely with the auditors to conclude the annual external audit, which will be scheduled for approval as usual in March. 

2024 Budget, and Dues and Fees Increases 

The 2024 Budget process has been through several reviews by the Finance Committee and the Board.  I would like to thank each of the members of the Finance Committee for their time and effort in this robust annual process.  We challenged each of the key assumptions in the Budget, all while trying to balance “access to the tee” concerns with the economic challenge of the potential end of our lease on December 31, 2032. 

We are expecting our operating costs to increase by over 8% from 2023 due to continued inflationary pressures in all departments (e.g. labour, materials and supplies) as well as increased insurance and benefits costs.  In addition, we expect to continue to see attrition of dues-paying members and a net migration to lower dues-paying categories of membership (another 1%), leaving less of us to cover an increasing base level of costs. 

In order to limit the annual dues increase, the Board and Finance Committee have recommended two important revenue-generating actions: 

1. With respect to new term golf and/or tennis members, the Board is recommending a small intake  at the same initiation fee as last year. We are budgeting an intake of 25 new term golf category members and 15 term tennis members which will help offset the expected attrition of 42 golf members and the historical number of members reducing their dues-paying category as they age.  As mentioned, access to the tee remains a key concern for many members. As an additional measure to help control access to the tee, each new term golf member will once again be limited to a maximum of 25 rounds of golf for the first two years of their membership. This measure will restrict the tee sheet impact to a maximum of 625 rounds for the 25 new term golf members, for each of their first two years. 
2. To once again allow approximately 2,000 guest rounds as part of the 2024 budget at a slightly higher rate to generate an additional 18% in green fees.  While admittedly the guest fee remains high, the Board elected to keep this high guest rate to avoid an even higher dues increase. 

The Finance Committee recommended and the Board has approved a breakeven budget for 2024.  In order to balance the books, with the above revenue and cost assumptions, we will require a monthly dues and blended fees increase of ~9.75% at the beginning of our Fiscal Year beginning January 1, 2024.  We would add a couple of important data points: 

1.  This annual increase will not be the smallest across our peer clubs but please recall that for 2022 and 2023, we had the lowest increase across our peer clubs in the Lower Mainland. 
2. Our overall annual dues remain competitive with our peers despite our unique circumstances (i.e. an annual rent payment of nearly $1 million). 

Please note that in your upcoming statement, you will see what appears to be double-charges for the increase – this is due to the back-dating of the above increases to January 1. For a complete list of all ancillary fees for 2024, please click here. 

Dues and Mandatory Fees – Club Comparison 

Though we hold ourselves to our own standards and expectations, we have had a long-standing practice of confidentially sharing high-level financial information with other clubs as a sanity check on our monthly dues and fees. We have included a fee comparison for the most comparable golf and country clubs in the Lower Mainland to provide an additional data point. We would also highlight: unlike the other Clubs, we have a significant annual rent component to our operating costs. 

Please see the chart below for Monthly Full-Play Golf Member Dues and Mandatory Fees at comparable clubs. Please note that these amounts include dues and mandatory fees such as assessments, locker fees, driving range, club storage, and gratuities. 

2024 Capital Budget Overview

Management has prepared a long-term capital plan to 2032. As mentioned above, this capital plan has been front-end-loaded to ensure we receive the full benefit of the capital expenditures and is composed of mostly sustaining capital of $5.85 million to the end of 2032.  We expect to spend over $1.1 million in capital expenditures in 2024 as the final year end of our front-end loading on sustaining capital concludes. Key areas of focus remain the Golf Course ($600k), the Clubhouse including certain overdue depreciating Furniture, Fixtures & Equipment ($400k), and other miscellaneous items (<$100k).  These capital expenditures will be funded from Greenacres operating surpluses and entrance fees from the new membership intake in 2024.

Closing

A few final comments:

We continue to face an incredible challenge managing our Club given the uncertainty of the long-term future of the Club.  The Board and management team continue to explore all alternatives towards a continuation of the Club beyond 2032.  We use a long-term financial model which uses a number of key variables including member attrition and the number of rounds played to help with our long-term financial planning, especially around liquidity.  We are endeavoring to ensure that we maintain the maximum financial flexibility to pursue all alternatives for as long as we can.

The 2024 dues increase remains in line with trends we are seeing across the industry and it was interesting to see that our monthly fees remain in line with our peers.  We remain committed to maintaining the “Shaughnessy Experience” until the “last ball is hit” (which will hopefully be well beyond 2032).  We believe the 2024 budget provides a fair balance by increasing membership to address attrition and sourcing revenue from additional areas such as guest fees while aiming to maintain our long-term financial flexibility.

Here is to another great year on the course and courts.

Respectfully submitted,

Tom Whelan
Vice President and Club Treasurer