One of the methods used to attract a great Director of Fitness or Tennis is to guarantee a certain amount of on-court or on-floor teaching revenue during the first year. It shows that the employer is truly behind the hire and understanding of the ebb and flow of teaching revenue streams. But, given these times and the fact that Covid-19 might rear its ugly head again and again, is it a possibility to have annual guarantees after the first year? Let’s have a look.
When a long-time department head leaves or is asked to leave the position, it is always an up-ending event for staff, membership and club management. The search for a replacement is usually rife with politics. If the director had left unwillingly, there are always those members who feel the outgoing director was treated unfairly and band together to create a group to better make their voices heard against the powers-that-be.
To push through this transition time, often, a club or facility will guarantee a certain figure for on-court or on-floor revenues for the incoming director. With members perhaps not happy how the previous director was treated, staff leaving without a leader or a department, and club administration helpless against this void, an incoming Director has to tread lightly and understand the forces within which he or she will be working.It’s a time of transition for staff, members and club administration.
Ladies team players will be asking the new Director of Tennis to look at their games and move them up to a new team. Yoga class participants will want a different instructor and ask to have the current teacher replaced for one of their own liking. Directors of Tennis and Fitness starting a new role are ambushed from the first day they set foot on property. Clubs and facilities, realizing this, will average yearly revenue streams from the previous director and guarantee those to incoming directors. Guaranteed revenues can replace lost revenues stemming from spiteful members or hanging resentment, which can quickly deflate teaching revenues.
Because of factors such as these, it can take years for a newly hired director to “build a book.” Building a book is a combination of three variables: Trust with a client base, instructional knowledge, and time. With this in mind, many facilities, knowing that the first year, or perhaps two to three years in extreme cases of member strife, guarantee teaching revenues to a new hire. We have seen figures ranging from $25,000 to over $100,000 in guaranteed instruction per season or even higher if a year-round position.
To describe how the guarantee works is simple: Whatever the director doesn’t receive in either his or her own personal instruction and garnered from percentages from assistant instructors is “made up” to a certain value by the club or facility. For example, if a guarantee of $100,000 is made to the new hire, if that new hire teaches $60,000 and garners $20,000 from retained percentages from assistants, the club would be on the hook for the final $20,000 to complete the $100,000 contractual guarantee.
We have long advised candidates, when receiving a guarantee, to negotiate a longer term guarantee. We advise to taper it down over three to five years. For example, if a new Director is offered $100,000 of guaranteed instructional revenue for a summer position by a club in the first year, we advise that over five years, a guarantee should be offered but tapered down, say, 20% each year. Therefore, the fifth and final year would have $20,000 guaranteed to the Director. By the fifth year, often, the salary or stipend which has been raised each year through negotiation, can more or less replace the guarantee once the club or facility knows the value and worth of the new director.
A guarantee can work well for both parties of a new contract. A new director realizes the club or facility understands the undulations of revenue streams and is more attracted to an offer that caters to these factors. The facility can attract better candidates while at the same time use the stipend or salary as a replacement for the guaranteed revenue as trust is built between the director, the board and administration, and the members.