by Ed Shanaphy, USPTA, PTR
It’s the age old question: What should be a tennis professional’s compensation? Is your club paying too much for that junior tennis instructor, that Pilates instructor, or is your department head at tennis or fitness leaving annually because the compensation package is just too low for your region?
There are so many ways to slice a pie, there seems to be no clear industry standard as to what a “regular” compensation package should be for an instructor or a Director of Tennis or Fitness. With on-court revenue splits, independent contractor versus employee status, and with non-profit 501(c)7 clubs competing within the same personnel talent pool against for-profit clubs and corporations, the question will forever be at the forefront of our industry when hiring that new staff member.
What Is The Role Worth To The Club And Its Membership?
Perhaps the first question we should ask when looking at this issue is the following: What does the club and its governors think the actual director’s job is worth? When considering this point of view, take into account the region, the size of the club and its membership, the revenue of the program over the past several years, and get comps. By comps we mean just that – you don’t buy a house without investigating comparable houses and their selling points in the area. We should do the same in terms of filling a Director of Tennis or Fitness position. Call the other clubs in the area, and find out how they have compensated their department head and look at their program size and membership numbers at the same time.
Two things about garnering comps. Remember that your department head should be more of an administrative position at your club than an instructor. Instructors are on a different pay scale. What do marketing managers and marketing directors at similar roles make in the area? If a talented director, he or she could take one of those roles as well. And also note that not all clubs are non-profits. The compensation package for a director of tennis for Club Corp, a Dallas, Texas company which owns over 200 clubs across the nation, will be severely different from a non-profit country club in one region. Club Corp looks at their centralized budget, costs and purchasing in Dallas which affects their compensation package while filling a position, say, in Riverwoods, IL.
How Much Control Does The Club Require Over Its Director?
How much control do you desire as a club over your Tennis or Fitness Director? This answer will dictate whether, in some respects, you have your department head as a contracted employee of the club or serving as an independent contractor to the club. In some instances, your hire will make this decision for you and will demand to be one or the other, if given a choice.
Another variable is the cost basis of the position to the club? Is the club offering benefits, such as a 401k retirment plan, health and dental coverage, and life insurance to key department heads that work year-round? For seasonal clubs, is the position requiring housing that is paid, as a benefit in kind whether as an independent contractor or employee, on behalf of the worker by the club? This is all part of the compensation package and should be considered part of the entire employee’s cost to the club.
What Percentage Of On Court Or On Floor Revenues Should The Club Retain?
Percentages retained by the club in the first instance with Directors of Tennis and Fitness have forever been under scrutiny. Again, the club must look at the costs associated with the role and the department as a whole. The philosophy of the club plays a roll here as well. Does the club’s governing body expect a department to be profitable, break even, or operate at a loss annually? Will the management slice of some of the funds paid by members as annual dues to cover the operating loss of a department or do they expect that department to run at break-even or at a small profit? If a golf club as well, which sport is the dominant revenue stream? And if a tennis only club, well then the tennis department can’t outspend the dues and new member initiation fees.
If you don’t worry about the nickels, the dollars will follow.”Former Director of Tennis at a New England Country Club
In retaining percentages of on-court revenues, clubs also need to look at the cost difference between an independent contractor and an employee, which are significant, not only in terms of employer taxes, but also in terms of liability. Independent contractors must provide their own liability insurance, workers’ compensation, housing, and tools for the trade (i.e. balls, hoppers, equipment,) and must complete their own schedules, bookings, and billings – deducting these costs from the club’s operating costs. Therefore, in most cases, percentages retained by the club tend to be significantly lower in terms of appointing an independent contractor than when hiring an employee, due to lower costs associated with a contractor.
Leave Room To Incentivize Your Assistant Instructors
Whether on the gym floor or on the tennis court, one item that we find occurs too often – clubs leave little room for staff after the Director’s cut. For example, say a lesson is for argument’s sake $100 gross revenue. If the Director is an employee, say the club keeps 25 percent. That leaves $75 for the assistant and the director to split. To keep good instructors, those instructors should feel valued. Leaving an instructor with perhaps just 50 percent of the revenue while on court or on the gym floor might be disheartening. However, if the director takes 25 percent, that leaves just 50 percent or $50 to the instructor. We believe that 60 percent is a good starting point for the assistant professional on private lessons.
As that assistant gains popularity with the membership, the percentage basis can be transferred over perhaps in the second year to clinic revenue on that assistant’s court. Rather than pay a straight $50 for an hour teaching a clinic, if the revenue of the court is $150 (6 members paying $25 each) then the assistant can realize $75 if paid 50 percent per hour teaching clinics. The club’s compensation package has created an incentivized assistant teaching clinics and has incentivized that assistant to fill the clinic courts.
Let’s look at this in the bigger picture. If that clinic revenue is across three courts of 6 members each, that is $450 total revenue. With club retention of 25 percent, that’s $112.50 to the club. If the Director is teaching one court and has two professionals at $75 each on the two other courts, that is a total cost of $262.50, leaving just $187.50 to the Director, or 41 percent. That’s not bad for just one hour.
But here’s where retaining great instructors through compensation and cutting retained percentages on private lessons can pay dividends to the club and the director. Let’s say that three great instructors go out and teach that clinic, leaving the Director to teach an hour’s lesson at the same time. Well, the same $112.50 goes to the club for the three clinic courts, the cost of the clinic instruction is $225 across the three instructors, leaving the Director just $112.50. But if the club, which has given, say, a better percentage of 90% to the director on private instruction, then the director is making $112.50 plus $90 on the private for a total of $202.50 for the hour. Over $200 per hour is a good rate no matter what business you might be in. Ah, you might say the Director is down $25 on the original example. Yes. But, and here’s the club’s real saving, the Director has saved an hour of time on court for that private lesson. Rather than spending two hours in the cage of the tennis court teaching the clinic and the private, the director is spending only one hour on court, leaving more time for administrative tasks and membership services. The instructors are all making more, the director is making more per hour and the club is retaining more. It’s a win, win, win.
A wise director once said to me: “If you don’t worry about the nickels, the dollars will follow.” He’s right. Each club has its own identity and ethos, and each club has different costs and motivations for profit in comparison to member services. But, either way, if you work on programming and incentivizing staff, the dollars will follow.
Far too often we hear “Our director is overpaid.” This is a broad brush stroke. What’s the market place? Has the club checked comparable positions at surrounding clubs? Is the director mostly on the court or is he or she mainly administrative? If mainly on the court or gym floor, could it be that the salary is too low and the club is forcing the director to teach? If mainly off the court or gym floor and there is little programming, could it be that the stipend or salary is too high and has de-incentivized the director to push the boundaries and create more programming?
The adage “You get what you pay for” holds true in tennis and fitness. Compensation can make or break any role in tennis or fitness. Ensuring that it is comparable with the experience of the candidate or employee, compares favorable with other similar roles in the region, and is offered in an honest and trustworthy nature, compensation should be highly researched and logically produced. Compensation should add to the productivity of your professional or instructor by motivating their role through pinpointing areas that the club or facility feel are worthy of growth and attention.
Ed Shanaphy, former CEO of Haysbridge (UK) Ltd, a global marketing conglomerate with head offices in London, is President of SBW Associates, Inc and BeyondTheBaselines.com. He earned his B.A. from Duke University and his M.A. in International Economic History from The London School of Economics.