Board of Ed: The Board Itself Might Be In Need of Education

The politics surrounding governing boards at clubs and homeowner associations are infamous. The tasks facing governing bodies at Clubs or Home Owner Associations are far too numerous to list here, but one of them often is to oversee a tennis or fitness department. In investigating the inherent politics of Boards, we will separate the country club board from the HOA board as there are extreme differences between the two Within the county club sphere, we shall separate even further between an equity or member-owned country club and a non-equity club. That said, all three Boards in question must understand the intricacies involved in the hiring of staff and the supervising of tennis and fitness facilities.

Home Owner and Condominium Associations and their Boards

Home owner or condo association boards are a hotbed of politics and biases. We’ve seen this at every community with which we have worked. From parking to paving, from decor to dandelions, condo boards can find issues to discuss for days. In all honesty, it’s almost imperative that a consultancy such as ours is brought in to work through the inherent biases and misguided owner motivations to find a result that most owners can stomach financially, but that will also allow a tennis or fitness facility to thrive and maintain “best-in-class” service levels within the community.

poster of a home owner getting caught in a trap by the HOA
Don’t get caught up in the politics of a home owners’ association board.

In most instances, HOA or POA membership is a requirement of living within the community, which is the essential difference from a country club or membership facility in which membership is voluntary. This difference must be taken into consideration when making any decision by the Board and its agents. Condo fees or HOA fees are set by the board or, in some instances the managing agent, and reflect the costs of living within the community. Again, there are differences in regard to types of communities as well. A gated community, such as Ibis or Mirasol in Palm Beach County, Florida or communities created by developer Toll Brothers are geared from the outset as a gated community offering a “country club” lifestyle. Those initial home buyers are fully aware of the lifestyle in to which they are buying. Older condominium associations or gated communities may not have had this club environment in their initial offerings to owners and any additional costs for leisure facilities can be met with indifference or even hostility.

The relationship with property management is essential and often there are long-term issues between property management and owners and members of the board. This is where an advisory consultancy can come in extremely handy to mediate and cut through the politics to the necessary needs of tennis and fitness management!

What we have noted though, for many years, is that any tennis or fitness programming at an HOA adds to property prices. Owners have to be consistently reminded of this fact as any tennis or fitness programming grows. Buyers are much more aware of offerings and have mentioned to us in surveys that they are inclined to purchase upon seeing an “active” community with events and leisure facilities. The small funds required in advance per household to run a “best-in-class” tennis or fitness program are clearly worth the profitability gained in property value after the sale. In the long run, an HOA is far better off having a tennis and/or fitness ingredient than not having one at all.

Equity Country Club Boards of Directors and Governors

The layers of country club boards, we believe from our experience, is almost always excessive. Board of Governors, Tennis and Fitness committees and their chairpersons, Trustees, and the rest of the club officers (or flag officers at Yacht Clubs) all have various sentiments and biases toward club operations. With country clubs, where there is golf offered, the number of committees grows even more numerous: Greens and Golf committees often have the ear of the General Manager far before the tennis or fitness committees.

Country Club Management Flow Chart
Country Club Management Flow Chart

Due to a cost and revenue basis, golf clubs, and even at times yacht clubs and beach and swim clubs, often overlook tennis as a revenue generator. These clubs more often than not focus more widely on golf (or yachting) and its offerings at the club level. Tennis as the “second fiddle” usually requires more persuasion for budgetary items such as maintenance, upgrades, housing and salaries or stipends for staff professionals. Pushing these items through at committee level, then board level and finally through at management level, takes commitment not usually found within a tennis committee.

It is imperative that a tennis or fitness department fund itself at the appropriate level in order to maintain a service level equal to that of the rest of the club’s offerings. Frequently, this does not happen.  We’ve seen this across the nation from country clubs to beach and swim clubs and yacht clubs.

Most boards will break down the tennis or fitness department within a budgetary constraint that does not allow these departments to show a profit. Time and time again we have heard from Directors of Tennis and Fitness that the club has earmarked an annual loss for their department, and therefore, are loathe to spend more on these departments which are “losing” money.

There are many ways to allocate membership dues and initiation fees across various departments and once this is done appropriately, we often have shown the club officers that tennis and fitness are indeed profitable. Usually, initiation fees are budgeted for capital expenses, and a prudent Board would look at percentages across club departments when allocating new membership fees. It’s imperative that a matrix which considers club usage by hour and member is used to create this percentage basis. Also, experience shows us that tennis or fitness can “drive” members to high profit areas of the club, such as food and beverage. A tennis event ending with a luncheon must be taken into account when looking at the tennis department’s profitability. We literally can affix a number to such events: ” The salon day special brought 42 ladies to the restaurant for lunch” Some of that food and beverage profit should be allocated to the fitness department at month end.

Non Equity Clubs

Firstly, it’s imperative that we note there are major differences between equity (member-owned and usually a 501C non-profit organization)and non-equity clubs which are usually corporations. It’s interesting to note that non-equity clubs tend to be more receptive to staffing professionals and creating the right work environment and benefit packages for their employees and staff. Overall, non equity clubs understand better the need for quality instruction and management in their tennis and fitness departments as they see the profit related from these departments. Again, there are fewer committees and, in some cases, just a Managing Director rather than a Board of Governors who is clearly focused on making a profit and keeping a healthy club and bank account.

A recent general manager once said to me: “It’s much easier for a member to leave a non-equity club, in that they are leaving a company in which they do not own stock.” It’s also easier for a member to leave a non-equity club and turn to their own gated community club (usually member-owned) as well if the member is looking to make cuts in their payables. So, non-equity clubs are forced to focus even more on member retention. Because of this, many non-equity clubs treat their members better than equity clubs. However, members still have an innate stigma about leaving a club in which they own a stake in and maintain a membership at an equity club longer on average than a non-equity club. With an equity-owned club, members are in fact shareholders in their club, whereas, they feel less connected to a non-equity club which is a corportation for profit.

Summary

In conclusion, each and every club has inherent biases and outward motivations. With various departments competing for budgetary requirements along with membership usage, all Board of Directors are inherently flawed, and in many ways, clearly ill-educated in regard to tennis and fitness management. Club Managers are often too removed to deal with the daily managment and budget items. Tennis and Fitness Committees have different objectives than the Directors of Tennis and Fitness who are running the program. Educating all of the above groups is part of the Director’s task and often times, the Director does not have enough time off the gym floor or off the teaching courts and excellent programming and best business practices are never achieved nor measured.

Ed Shanaphy has served as Managing Director to three global advertising and marketing firms and was a finalist in the Ernst and Young (UK) Entrepreneur Of The Year Award. He is now President of BeyondTheBaselines.com, a consultancy aimed at advising country clubs and homeowner associations in marketing and profitability.

 

 

 

 

 


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