briefs a health check up for your club By Bonnie J. Knutson, PhD.
A wonderful professor in my undergraduate days used to say that communication is shared meaning. Language is supposed to clarify meaning so that we are all on the same page, but it doesn’t always work that way. Take, for example, how brand has changed over time. The question is, then, what does brand mean today and what does that mean for your club. If we are to understand the relationship between clubs and today’s branding, we need to remember the admonishment of my college professor and make sure we are all on the same page when it comes to defining the term. To really grasp what your club brand means today, we have to first understand what it is not. It isn’t your logo, name, marketing, advertising, or strategy. It is, however, “the sum of all perceptions about [your club]… built through experiences and communications…creating a set of expectations [for your members].” i Said another way, a brand is simply how people feel about it. When working with clubs to enhance their branding efforts, there are two tools I always use to help me gauge members’ feelings – i.e. that emotional bond between member and club. The first is a two-part question: “If you could describe this club by an animal (or car or cereal), what would that animal be?” This is followed by “Why?” You are not really interested in the actual animal itself, although some of their choices can give you more pause or more chuckles than others, but rather
you are interested in the “why.” Because it is the “why” that yields insights into the members’ feelings about the club brand. The second involves listening to how members refer to their club. Do they say I’m going to “my” club or I’m going to “the” club? There is a big difference. And their choice of adjective gives insights into the strength of their attachment because the “my” becomes a surrogate nickname for your club. I read somewhere that brands need to be carefully nurtured and managed, and like people, they get old and tired and need reinvigorating. I agree. Every Board has to perform a regular health check on the club’s brand. I don't mean looking at just rounds played, dues levels, or even food and beverage revenues. I mean fully understanding the health of your brand internally and externally. This means doing regular refresher sessions for all key leaders to ensure that they are passionately connected and understand who they are and where you are going as a club. Your bottom line will thank you!
i Definition by Eloy Trevino, Prophet, Inc. Chicago.
table of contents club culture A Health Check Up for Your Club - p1 design 10 Must-Haves in Facilities Planning - p5 Facility Design & Renovation - p11 governance/board Strategic Board Management - p3 Olympic-Type Board Members - p7 Board Policy Manual - p15 MeMbership Refresh to Relevance - p3 Who Are You? - p7 4 Traits of an Exception (Club) Brand - p9 Millennials For Millennials Golf Alone Is Not Enough - p11 technology Improving Board Room Efficiency - p9 racquets/wellness Updating Your Racquets Facility - p13 Choosing the Right Fitness Equipment - p13
BRB
briefs
MARCH/APRIL 2018 VOLUME 3 | I SSU E 2
boardroom briefs is complimentary to boardroom magazine subscribers. This newsletter offers content that goes beyond the buzz, by surfacing and summarizing important industry information. Each issue will offer practical insights from industry experts with a focus on fit for boards, board presidents and paid management.
John g. Fornaro / Publisher dee Kaplan / Advertising
heather arias de cordoba / Editor dave white / Consulting
If you have a story idea, please contact heather@boardroommag.com or call (949) 365-6966. For more information please visit www.BoardRoomMagazine.com.
contributing writers and industry resources Rick Coyne / CEO, Professional Club Marketing / rick@askpcma.org Manon “Max” Passino Deboer / The Club at Mediterra / maxp@clubmediterra.com Bennett DeLozier / manager, Global Golf Advisors / bdelozier@globalgolfadvisors.com Henry DeLozier / golf management consultant / hdelozier@globalgolfadvisors.com Bonnie J. Knutson Ph.D. / professor, The School of Hospitality Business, MSU / drbonnie@msu.edu Frank Lucas, CPA / Tax Senior Manager, RSM US / Frank.Lucas@rsmus.com Tim Mervosh / COO/GM Thornblade Club / tmervosh@thornbladeclub.com Mike Phelps / principal/co-founder, Pipeline Marketing / mike@pipeline.agency Len Simard / search & consulting executive, Kopplin Kuebler & Wallace / len@kopplinandkuebler.com Rick Snellinger / president/CEO, Chambers / rsnellinger@chambersusa.com Frank Vain / president, McMahon Group / fvain@mcmahongroup.com William “Bill” Wagner / club industry advisor, Northstar / bill.wagner@globalnorthstar.com Thomas B. Wallace, III CCM, CCE / partner, Kopplin Kuebler & Wallace / tom@kopplinandkuebler.com Gordon Welch / president, APCD / gordon@apcd.com Dave White / editor, BoardRoom magazine / whitepks@mac.com
refresh into relevance By Rick Coyne
One of the more interesting observations of the private club industry over the past several years is the continued reluctance of many clubs to expand lifestyle brand experiences to attract and retain a broader range of members. Strategically, clubs engaging in brand expansion are using facility design and event planning to enhance usage and subsequently, satisfaction and commitment to the club. It’s not so much monumental change as it is a path to refresh. From the facility perspective, areas that promote communal experiences including sports bars, casual dining, outdoor dining, adult pool enhancements and fitness programming are but a few of the most popular and even monetizable areas to invest, that drive member and guest usage. However, until the club’s governance team embraces the need to go beyond current offerings, either facility or programming, nothing much will change in terms of membership growth, retention or facility usage. The key word is relevance. If the club is not relevant to its existing members or those it wishes to attract, regardless of pricing, it will simply flounder. Looking at the internal make-up of today’s member, clubs face enormous challenges in providing for tenured members while creating attractiveness for younger members, vital to the sustainability of all clubs. Women today are seeking more lifestyle experiences and control most of the discretionary decisions in the household. Empty nesters see the world
differently than young families with children and time continues to be a commodity to every generation. In a recent white paper for BoardRoom, I discussed several very easy ways in which to address time and usage. Larry Marx, most recently the GM at Bellerive Country Club in St. Louis, was formerly at two northern California clubs where he promoted Bocce ball leagues, growing them to over 400 participants at each club. He did the same when he went to Bellerive. The significance is the creation of another very social, relatively easy and communal opportunity for members to engage. Similar opportunities exist on the driving range to offer short game leagues competing similarly to the success of Topgolf Entertainment. In nearly all member surveys we conduct, social dining and lifestyle experiences are increasingly dominate as reasons for joining and retaining membership. This is a significant reality for clubs to understand and strategically position themselves in the path of a broader marketplace of potential member, while simultaneously creating communal engagements that have members using their club more often, enjoying it more and encouraged to share their experience through guest participation and referrals. The future is now. Welcome! BRB
strategic board Management cleve christophe: president, the thornblade club greer, sc By Dave White
“Mr. Christophe’s leadership is unparalleled. He commands respect and attention as he articulates his points, explains financial models and rationale. Mr. Christophe has worked around the globe and is highly respected by everyone who knows him and others that simply know of him,” offered the club GM/COO Tim Mervosh. He was instrumental in two major capital projects. “We invested in a state-of-the-art golf course irrigation system and completely renovated our kitchen in the clubhouse with a completely new offering of new equipment and design. “Neither of these two areas are visible to the membership but both of these elements build a solid skeleton to allow our club to build on the infrastructure that is so necessary and many times neglected,” Mervosh added. “As a result of President Christophe’s work, we’ve built a stronger management team, state of the art irrigation system and back of the house kitchen that serve the members on a much higher and consistent level.” His directive to GM Mervosh has remained crystal clear and consistent. “Do not allow any hurdles to slow your progress or plans to ensure that every member experience is exceptional.” page 3
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Thornblade’s board led by president Christophe is the epitome of a strategic board. Its laser focused on capital growth… the expenditures. He monitored the club’s net worth and long-range plans to ensure the board maintained its sight set on the horizon. The partnership between the GM and the board is built on trust and a clear message of responsibility for operations. “He is much more than our club president. He is beloved and highly respected by our staff. His generosity is many times overwhelming. His range of knowledge seems endless regardless of the subject matter,” commented GM Mervosh. BRB
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designing ahead: 10 Must-haves in Facilities planning By Rick Snellinger
Today’s members use private club facilities much differently than in decades past. Here, we’ve summarized some of the biggest trends we have incorporated into our last 25 facility master plans—and we don’t see these trends going anywhere anytime soon! Be sure to consider these top ten “must-haves” when planning for the future and longevity of your club. [the top 10 list has been edited for space. click here to read the article in its entirety.] pool… Instead, members look for “resort-style” pool designs, inviting pool deck spaces, ample shaded areas and additional spaces for socialization, such as an Adult Cabana Bar. 7. cyber library Studies have shown that 30-40 percent of today’s members do not work out of a typical corporate office. Instead, a significant portion of their workweek is spent working from home, or at café-style areas like Starbucks that provide a welcoming experience and free WiFi. Members are now looking for this type of 1. rebalancing dining spaces Many clubs are rebalancing the existing square footage of their dining spaces to connectivity at their club. create appropriate separation of spaces with tasteful, updated décor – similar 8. expanded wellness, Fitness and group to what members experience in local upscale restaurants. By renovating and exercise rebalancing spaces within the existing building footprint, clubs are able to Today, the number one capital improvement in reimagine and revitalize their existing spaces to be more relevant to today’s private clubs is centered on expanded fitness member needs. And by making these updates, clubs can expect to see a and wellness facilities. All generations desire positive impact on their food and beverage sales as well. to uphold an active and healthy lifestyle, and private clubs must respond to this desire by 2. bars becoMing the epicenter oF clubs Today, members are much less likely to make a reservation. Instead, they prefer providing exclusivity for members to engage in strength training, cardio and group exercise spontaneity and wish to ‘drop by’ the club casually to meet friends and fellow classes. members. New bar/lounge designs encourage such interaction and have become the center of club socialization in many cases. 3. outdoor living areas Typically, members come to the clubhouse and immediately want to go outside to relax, socialize and dine with their family and friends. These spaces must capture views of the golf course and provide appropriate furniture grouping and fire pits. 4. bringing the outdoors, in If members cannot be outside on outdoor terraces or patios, they look for spaces that enable them to have as much connectivity with the outside as possible. This is often accomplished through the use of French doors or NanaWallsTM, from interior dining spaces to outside patios and terraces. 5. youth activities Progressive clubs recognize that being family-friendly is important now more than ever, which means certain spaces must be designed appropriately for today’s youth. This gives the club’s youngest members a place to call their own, providing spaces where they feel comfortable while fostering a deeper connection with club life and making memories they will carry with them into adulthood. 6. swiMMing pools and adult cabanas Despite being a 3- to 4-month activity, a club’s swimming pool area is now the number two amenity desired by prospective members in the industry (second to golf ). Generally, no one complains about the amount of water at the page 5
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9. year-round usage In most areas of the country, there are periods of slowed activity on the golf course. Clubs are looking for ways to engage members yearround so they continue to use the club during the ‘off-season.’ 10. aesthetic upgrades The typical life span for interior décor is 10 to 12 years. After this period, spaces begin to look either tired or outdated. Clubs should maintain a system of periodic updates—an interior enhancement plan, if you will—to keep their facilities looking fresh and current in design aesthetics. Generally, it is important that private clubs evolve to meet the needs of current and prospective members. Taking a further look into how your facilities are being utilized today is a great first step in determining what can be done to increase engagement and overall member satisfaction within your club. BRB
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olympic-type board Members By Gordon Welch
One of the more interesting observations of the private club industry over the past several years is the continued reluctance of many clubs to expand lifestyle brand experiences to attract and retain a broader range of members. The Olympics are long over but as I watched our athletes winning medals I wondered what kind of Olympic champions do you have on your board? So, I broke it down by category. Our first Gold Medal winner this year was Redmond Gerard. Redmond gave it his all and was as surprised by the outcome as many others. In fact, when he saw the results a few fourletter words came out in his excitement. He was not known as a top ranked snowboarder. In fact, he woke up late and raced over to make the run. Board members that are late, cus in meetings and don’t make you feel like your time is as important as theirs, are comical but not inspirational on the board. They take a time commitment and extra work to oversee; but sometimes they come up golden! Chris Mazdzer was our Silver Medalist in the Luge! He is dedicated to his profession and hits speeds of up to 90 miles per hour. I’m sure you have this person on your board. They mean well, they serve on many boards and they are constantly racing from one
meeting to the next, but do they serve your board or are they serving their ego or epitaph? And finally, our Bronze Medal winner was Lindsey Vonn. Lindsey is dedicated to her sport and has fought through tragic accidents but has never given up. This was her final run at the Olympics. She was very emotional, and she stated that she gave her all - her account was empty. America’s Ski sweetheart gave everything. We all have Olympic-type board members but whom would you want on your team? It’s a very important question. We must be more cognizant of who we are inviting to be a part of our boards. You need individuals that will give it their all. They need to have the time, desire and business sense that meets your club’s needs. BRB To learn more about your board go to www.apcd.com
who are you? By Thomas B. Wallace, III CCM, CCE and Manon “Max” Passino Deboer, CAM
Who are you? Do you have a brand? An identity? “To know thyself is the beginning of wisdom,” Socrates tells us. If you haven’t done the work of introspection to answer that question, I recommend it. It is truly the first day of the rest of your life when you can answer the question, “Who am I?” What about your club? Do you know your club? I’m sure you have a mission statement. I’m sure you have a cursory idea, at least, of your demographics. You probably have the full details of your amenities. You should be aware of your leadership style. Most of us know those things. But how many of us really know our club’s story. The uniqueness, the traditions, the intangibles that make up who we are as a club. What about your operations? Is there a common and consistent thread? Are you proactive with policies in place that enhance your culture or are you reactive, moving in whatever direction the wind or our members take us. Over and over I see operations that aren’t uniform or tight. There is no manual of Standard Operating Procedures, there’s not an Operational Mission Statement. Time and time again, I run into club mission statements for positioning in the marketplace, but they say nothing authentic. Time and time again, I see websites that provide a whole list of features and sometimes even benefits (you do remember to paint pictures with benefits and not just features, right?), but rarely do I see the story of a club. Who is this club and why do I page 7
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belong there? Because the club has two golf courses, friendly members, good food and is beautiful? That tells me nothing. Today consider a different perspective. Brainstorm your story with your team. Create a list of adjectives and nouns first, being as specific as possible. Choose the top ten and insert verbs. You might just have yourself a brand description when you’re done. BRB
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board books – improving board room efficiency and saving trees By William “Bill” Wagner
Technology has infiltrated practically every aspect of our day-to-day lives, and for most part, when used correctly and appropriately, technology has improved our overall standard of living. Around a year ago, I was asked the question by my colleagues at Northstar about what frustrated me the most during my tenure as the GM of several prestigious private clubs. I did not have to spend much time thinking to come up with my answer. I often had 12-15 committees to oversee every month which meant a different committee meeting almost every other day. On top of it, the monthly board meetings in particular were stressful events as all the information from the board minutes, financial reports, budgets, president’s report, GM’s report, committee reports, etc. all had to be collated in 3-ring binders for each of the board members. It’s a very paper bound monthly exercise that used to frustrate me to no end - seeing the time and effort the administrative assistant had to put in to ensure the documents were up-to-date. However, it was not something we could do away with, as having and reviewing all this information is key to the smooth and efficient functioning of the club. Long story short, I asked my colleagues what we could do to ensure the correct and appropriate use of technology to alleviate this issue and we came up with a beautiful and elegant solution of adding the option of Board Books to Northstar’s staff app ClubView. ClubView allows secure mobile
access to the club’s critical operating information and enables the staff to have timely information to improve member service and operational efficiency. Board Books is an option on the staff app where all the necessary documents could be stored and retrieved at the applicable meeting. This way, we could securely render all the information needed for a club meeting on a tablet that replaces the traditional 3-ring binder but does not lose any data in the process. Board Books can also be used for committee meetings and then forwarded to the administrative assistant for inclusion into the Board Meeting documents. The Board Book tablets can have predefined security controls based on club policy so there is no issue of the tablets falling into the “wrong hands”. I predict as the usage of Board Books spreads, clubs that have mountains of paper records of board meetings in storage will have a whole lot of space freed up and best of all board meetings will probably be shorter due to the efficiency of this system! BRB
the 4 traits of an exceptional (club) brand By Mike Phelps 1. Know your sweet spot Your sweet spot is defined by something simple, but vitally important – it’s what your audience aspires to and desires. The more you are able to answer that, the more you become relevant - And the more relevant, the more valuable. The more commonplace and average your offering, the less valuable. High performing brands communicate their value in a way that is clear and concise, without watering down their messaging to try to appeal to everyone. 2. siMpliFy coMplexities Clubs tend to think the more features, benefits, amenities, awards, distinctions, etc. they can pack into their brand messaging, the better. The best brands know differently: they know that simplicity is how attention is gained, and held, and that most of those brags are not important to your audience. Just like in human relationships, your audience won’t care about all those awards you’ve won until they get to know you first. Keep it simple upfront, and concentrate your complexities down to what matters most to your audience.
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3. stand For soMething real Vague ambiguous offerings are suspect. Having ‘The Ultimate Golf Experience’ doesn’t say anything. A cousin to simplicity is authenticity, really standing for something that you can back up. Don’t follow trends. Don’t submit to superlatives. The best brands own a defensible position in their market. It’s good to be best, but it’s usually better to be different. 4. great design uses visuals, words and experiences Design is to branding what aroma is to food, it hints at what’s about to come. It is the preamble to what will soon be in front of you. It resonates emotionally. And great design relies on experiences as much as great images and words to maximize differentiation. Top lifestyle brands use design not merely to “ inform” but instead “to engage.” Often the biggest brand design opportunities for clubs are not websites and collaterals, but the experiences designed for prospects, members (especially new ones), and their guests. BRB To learn more visit www.pipeline.agency
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Facility design and renovation By Frank Vain For club facility improvements to be truly successful, they have to be designed with one purpose in mind, to achieve each club’s mission. So it gets back to, does your club have a clear mission of what its purpose is? Only by fully understanding this can improvement programs achieve your club’s full potential. The often-seen approach of a club board in regards to addressing facility needs is, go out and hire the architect. Solve the problem at hand, but don’t worry about anything else. And while this may well solve the problem at hand, it often creates wasteful expenditures of poorly thought-out initial projects, which have to be revised or demolished in the future. The best facility projects result from clearly identifying a club’s strategic needs like attracting the next generation of members under age 50, fixing a dining problem which is facility or kitchen caused, upgrading recreation facilities, making a club a more year-round value, etc. In other words, before planning facilities, a club must know what it wants and needs to achieve in member satisfaction, membership growth, operation efficiency, dining quality, etc. So, before your club jumps ahead and hires its facility architect, do a little or even a lot of strategic planning with the board and club’s management. By doing so your club will achieve its strategic goals and get maximum benefit for every facility dollar spent. As Alice will tell you in Wonderland, “If you don’t know where you are going, any road will take you there”. Be sure you and your leadership know where you must go before drawing a single line on a facility floor plan. BRB
For Millennials golf alone is not enough: referrals, Family access, non-golf amenities Matter By Bennett DeLozier
The Millennial generation contains the golf industry’s future consumers, customers, and members. Millennials are integral to the future financial sustainability of golf operations and will want to ‘belong’ if the facility matches their values and logistical needs (time, costs, activities, loved ones, etc.). However, unlike previous generations of club members and regular golfers, Millennials have different priorities and are predictable in different ways: • agility – Millennials are mobile and will change levels of engagement more than previous generations. • loyalty/infidelity – Given their agility, Millennial golfers require more robust and meaningful engagement to sustain their business. • relationship+ – Millennials want to “connect” with the club/course to develop a sense of ‘ownership’ of that facility and cultivate a relationship that is more relational than transactional. • inclusiveness – Millennials want inclusivity and often do not consider themselves to be ‘traditional people’. They are willing to try new experiences and co-create with golf businesses. • affordability – Costs are the biggest barriers between them and golf. • relevance – Traditional membership, payment, amenity, and service options/offerings are not as appealing to Millennials as to previous generations. “For golf facility owners, operators, and managers, this means establishing relevance to Millennial lifestyles by rethinking membership programs, privileges, and amenity offerings” explains Michael Gregory, GGA Senior Manager. “Our research on Millennial golfers indicates that socialization is highly important and existing relationships can be leveraged to influence their engagement with golf facilities.” reFerrals and recoMMendations worK More than four in five (83 percent) Millennial golfers regard recommendations from friends, family, or colleagues as the top factor influencing their decision to join a private club. Nearly two-thirds (64 percent) might join as a result of a positive experience attending an activity or function at the club (such as a golf tournament or wedding – events typically attended with friends and family). Flexibility and custoMization are Key “Cost is a major concern for Millennials,” Gregory emphasized, “They would prefer to pay more annually rather than invest a large sum on joining fees or upfront costs.” Of the 1,000+ Millennial golfers asked, 51% said the most appealing membership offering is a flexible membership through which they can pay a low social fee and receive full access to the club and play golf on a pay-per-use basis. In other words, they would choose social outlets over golf access if put to the choice. golF alone is not enough When it comes to joining a private club, research indicates that golf alone will not recruit the next generation. Millennials are seeking an experience that is, or can be, more than golf. As a result, non-golf amenities matter, particularly those relating to fitness (71 percent), access for the entire family (65 percent), swimming (62 percent), and social events (57 percent). While all clubs must continue to explore methods of establishing relevance to Millennials, golf can begin to address their evolving lifestyles and changing priorities by conceptualizing the facility as a conduit for lifestyle and socialization rather than sport alone. BRB
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considerations: updating your racquets Facility By Len Simard
There are many new technologies and trends regarding the Racquets Industry that make the customer experience better. Here are just a few to promote thought on your next capital project. First on the list of typical Racquet facility discussions is LED Lighting. You have seen LED lighting in every area of life but now many lighting manufacturers have come out with quality tennis court lighting. Tennis facilities need to optimize two ideas; energy savings and usability. With older technologies such as metal halide or HPS bulbs, it is common for them to use excessive energy and provide a poor user experience when compared to LEDs. The LED technology has the ability to reduce energy consumption by 75 percent, hence having a very affordable pay back. Although not necessarily a new concept or technology, subirrigated soft tennis courts are certainly worth consideration if you don’t already have them. Hydro systems are a self-regulated irrigation system that waters the tennis court from below. A water control box simply allows the amount of water you require for the conditions. There are many advantages to a sub-irrigated system including 1) Perfect conditions 24/7: You can always have a playable, uniformily wet, smooth and firm court. 2) More available court time: Hydro technology eliminates midday shut downs and improves drainage. 3) Simple Maintenance: Maintenance time is cut in half as rolling is rarely needed, brushing is required only once a day and watering is completed automatically and uses 40 percent less water. 4) Player comfort: Courts are cooler by as much as 20 percent from that of a hard court. With the price of a sub-irrigated court at virtually the same price as an above ground watered court it certainly makes sense. Short Court Offering. A national craze hitting the Racquets industry is the surge of short court games like pickleball, padel, Platform and
Pop Tennis. Although tennis participation has taken a slight downturn in recent years, these other entities are solid performers and growing market share. To a club, it makes good geographical sense to get four courts in the space of one court, which is the case when it comes to pickleball and a tennis court. Pickelball’s popularity soars with their no fuss approach to instruction and tournaments and heavy emphasis on social play. Club’s that experience winter weather in the NorthEast or MidWest can entertain the idea of a hybrid court. There are a few companies (next-court and others) now producing a portable pickleball or pop tennis court that can be installed on a paddle/platform court. This would give the typical platform tennis court year-round use ability rather than the current five – six month usage. These quality courts have many applications and enhance the member experience in the spring, summer and fall. PlaySight’s SmartCourt offers the only all-in-one video and analytics solution for tennis. The SmartCourt is a system of internetconnected HD cameras that can be installed around any court. SmartCourts offer multi-angle video review instantly from a courtside kiosk or tablet, or later from any device with the PlaySight app. Everything that happens on a SmartCourt is automatically recorded and saved in the cloud. You can live stream your practice or match to a global audience. SmartCourts easily integrate with other sensors, tracking devices and tagging platforms. These ideas may make you even more successful with your next Racquets Capex Project. BRB
choosing the right Fitness equipment By Rick Ladendorf
The most commonly asked question I get from private clubs is, which vendor do you prefer when buying (fill in the blank). Most often, the question pertains to a specific type of equipment or the latest fad and rarely does the question pertain to selecting equipment based on the overall strategy or vision. The answer to the equipment selection question is; it depends. Reason being, there are so many variables to consider when selecting fitness equipment. The correct answer should take in to consideration the current configuration of equipment, importance of technology, member demographics, member interests, budgets and finance options, maintenance, warranties, service & repairs, integration of wearables and the look and feel which may include the color of the seats. Unfortunately, most decisions are made by fitness directors and are often based on a personal preference, which emanates from the persons knowledge and personal exposure to a wide variety of equipment lines. Dig deeper and you will likely find a certain amount of bias from the “experts” i.e. consultants, designers and vendors. Transparency is key. The first thing is to understand the source and their perspective. Are they a disinterested third-party consultant or are they getting paid to recommend a particular line, are they a fitness equipment distributor or manufacturer, what do they know about page 13
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competitive lines and are they personally familiar with a specific brand? Do they attend fitness trade shows to gather information, test equipment, and speak with vendors and their peers? There are two schools of thought when it comes to selecting equipment. The first of which is a “Wall-to-Wall” solution where one brand is used exclusively throughout and the other is more “functional” where the choice is made on the merits of the specific piece of equipment without regard to the bigger picture. Before selecting equipment we suggest you get feedback from the membership to know more about their needs, wants and interests, interview industry experts, get feedback from the wellness / fitness committee then narrow the search to three vendors and evaluate each based on a criteria checklist. Keep in mind, fitness equipment manufacturers want to sell you equipment, and in many cases, isolated fitness equipment may not serve the long-term interests of the membership, where other functional fitness solutions may do more for less. BRB
board policy Manual By Henry DeLozier
Fred Laughlin, for four decades a leader at PWC Non-Profit Governance Practice and now a director at Global Golf Advisors, says it simply: “Boards deliberate as many and govern as one.” Laughlin, the author of the Club Governance Model which was adopted by the Club Management Association of America in 2003, encourages robust discussion and disagreement within the board room. He teaches that there should be differences of opinion expressed openly and respectfully within the confidential confines of the club’s board room. Those viewpoints and any disagreements should be kept in the boardroom, Laughlin counsels. This baseline of board conduct requires that board members will honor the confidentiality of the boardroom and commit to oneanother for the benefit of the club that differences of opinion – however strongly held – will not be discussed in the club bar or on the first tee…as too often occurs. Many club boards are adopting joint commitments to confidentiality that are consistent with standard corporate board conduct policies. If a club board struggles with boardroom confidentiality, it should address the issue head-on. An effective BPM does far more than addressing differences; it unites club leaders with an organizational umbrella of understanding. Most club BPMs are between 14 and 18 pages, not including certain documents – such as strategic plans, conflict of interest statements and house rules, for example, which are included in the BPM by reference. The BPM consists of five parts: (1) Introduction and administration, which sets the baseline of understanding for the reader and board
members, (2) organizational essentials, such as vision, mission, values, goals, objectives, and strategy; (3) board structure and processes, such as the job description of the board, roles, responsibilities, meetings and committees; (4) description of the board and GM / manager relationship; and (5) the description of executive’s parameters of accountability and authority. Laughlin points out five important reasons for the value and power of the BPM: (1) the efficiency of having all board policies in writing and in one place; (2) the useful ability to quickly orient new board members concerning current policies; (3) the elimination of redundant and conflicting policies; (4) the easy reference of existing policies when the board considers new matters; and (5) the benefit of clear-cut guidance for the manager and staff. The BPM is an effective and easy-to-use guide for club leaders who want to make their club’s governance more transparent, understandable, and accountable to the club’s members. Three easy questions to prove its value are shown below: 1. Where does the board currently keep its written policies and methods? 2. What is the board’s authority? 3. How does the manager have – or not have – the authority to execute certain requirements of the members? The BPM is the answer in clubs seeking greater transparency and better understanding with and from its members. BRB
options to Fund your renovation By Frank Lucas
Wouldn’t it be nice to have money to pay for your renovations without assessing the members or taking on debt? With the recent favorable economy, we have found a significant amount of clubs are starting to do major renovations. Generally speaking, we see these clubs paying for the renovations by both assessing the members and taking out debt. The percentages for how much is debt financed versus assessed varies based on the club and its financial situation. As I’m sure you are aware, assessing the members is never fun and/or obligating the club to debt can create future issues. Wouldn’t it be nice to not have to worry about how to fund a major renovation? Exempt private clubs filing under code section 501(c)(7) have an ability to sell an exempt function asset and not pay the gain on the sale provided it meets certain requirements. Under this provision if you sell an asset, which was used, in the exempt purpose of the club, you can exclude the income under code section 512(a)(3)(D). In my opinion, this provision is the second best provision in the tax code, only losing out to the principal residence exclusion on individual tax returns which allows individuals to not recognize gain on the sale of their primarily residences. In the case of qualifying to reinvest the proceeds under code section 512(a)(3)(D), you must reinvest the gross proceeds in other assets one year before or three page 15
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boardROOM briefs March/april
years after the date of sale. This is not like a like-kind exchange in that it must be similar assets. In this reinvestment, you could sell a part of one of your golf course holes and reinvest the proceeds by purchasing furniture for the newly renovated dining room. Additionally, in certain situations excess insurance proceeds will qualify for this exclusion of gain provision as well. We have seen this be used in locations, which were impacted, by hurricanes or floods. To see if this is a viable option, first analyze if there is a capital asset, which is used, in the exempt purpose of the club that might be outdated or not as frequently used. It is important to note that assets, which are not used in the exempt function of the club, such as a bunker between the road and the golf course, will not qualify for this provision. If you do find an exempt use asset, which you are willing to part with, it could help you fund your renovation without having to pay tax on the gain from the sale of the asset. Recently, we have seen several clubs take advantage of this provision to either partially or completely pay for their new renovations. As always, if you are considering something like this, consult with your tax advisor before doing so. BRB
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