I've been planning on detailing out the money issues with our Municipal Golf Course for some time; but today seems particularly important. Yesterday afternoon, I got word that a really good golf course employee walked out. He didn't resign. He didn't leave to go on to bigger and better things. He had enough and walked out. This is the FIFTH employee to leave the village since the incident on May 4th! FIVE.
So, in honor of another great employee lost as a direct result of our CAO, I'm bringing you the Red Tail Golf course money review. One thing you need to know about me is that I have an extensive background in retail; I've run my own travel business; and I've pulled together my fair share of budgets. I may not know how to golf, but I can run a profitable business.
Before we pick apart this mess, you need to know that I'm not unaware of the global pandemic. The budget was put together during Phase 2 of IL Restore Plan -- with NO idea if or when we'd move to phase 3 or phase 4. It is with that understanding, I've tried to give credit to attempting to budget into the unknown. That said, that's what budgeting is -- it's your BEST guess at the future.
First -- we need to level set some truth. There's a chart in the packet that is not accurate when it comes to profit. It took me a long time, but I figured out the cherry-picked line items it includes and doesn't -- but when you look at a business, you likely should look at all the revenue coming in and ALL the expenses to run it. So, let take a look at what is presented to the board and what is reality.
Board:
Reality:
What's the difference? The board numbers only show Operating Revenue (Golf Course/Pro Shop and Food & Beverage) and 'Operating Expenses' (Excludes Capital Improvements -- but our Equipment leases are in the Capital Improvements department, so those are added back in). What I pulled was ALL of the revenues and ALL of the expenses to own and operate the golf course.
This is where I need to stop and say, I'm convinced that run right, I think the Golf Course is a benefit to our Village. I see that when it was run well, we made $135,000 -- IN PROFIT. Since President Stephan and CAO Smith have been involved, the expenses for the golf course have sky rocketed while revenues have dropped.
So, what's changed:
I don't want to bury the lead here -- so before we go nearly line by line -- let's look at some key indicators of the health of a golf course business:
Can anyone explain to me how when in the midst of a GLOBAL PANDEMIC we are projecting the rounds to be about the same as they were two years ago?
Why did Food & Beverage profit drop after all the expensive rehab has been done?
Revenue (Remember 20-21 is a budgeted number from when the state was basically shutdown)
Key highlights here:
Memberships are down to less than half of what they were 3 years ago. My guess is this a result of 4 Golf Course Managers in 3 years, uncertainty in the future from prior members, and an administration that didn't focus on customer service. (Or, so I've been told.)
Food & Beverage Sales have dropped year over year over year. But costs have gone up? That's curious.
On the budget side, CAO Smith (who I understand prepared this budget with no additional help) says that Food & Beverage assumes take-out only because of COVID. But she also has a 30% cost for that food -- We've never had food costs be that low in the past four years. So, was food getting cheaper with COVID too? (not my grocery bill, yours?)
Also, CAO Smith eliminates Golf Instruction (because pandemic) but budgets Pro Shop sales to be HIGHER than last year? (and again with the lower costs). -- so we are going to be basically closed, but sell more goods with a higher margin on those goods? Really??
Expenses:
We know about the deck right? (I've got a WHOLE thing about the deck coming, promise) but here's a review of the expenses for RedTail:
I get that's a wall of numbers -- so here's what I want to call out:
In 2019-20 and budgeted for 20-21, CAO removed her salary (20% of her total salary) from the expenses in an effort to make RedTail look better even with a $196K loss)
The drop in Part-time Wages is because she budgeted for NO Food & Beverage staff (because COVID), but don't forget that $80K revenue we were going to make in Food & Beverage.
Look at the line item for Pesticides and Fertilizers, two years ago we combined these (as they are bought together) on the suggestion of a previous Course Manager. Last year we spent $71K on this line, because (as I understand) you buy it in the fall when it is cheaper and pay for it in the spring -- she paid the bill early, but did not take that amount off the budget as it is already purchased with last year's funds.
CAO Smith budgeted NO money for Cart fuel or repairs for this coming year -- I show that she's projecting a profit of about $22K this year -- which is just a bit over the average of these two expenses over the prior four years.
From 2017-2020 we have spent, $186,916.98 in Other Capital Improvements. I know $31K of that is the deck (that the board never approved), and $30K of that is the silo (that sat like that for about a decade), and $120K of that is the rehab of the trailer (it's a triple wide plus a double wide -- so that's a quintuple wide, right?) that we have for the clubhouse. Anyone else think we didn't get our money's worth?
In 2019-20, we didn't pay our $500 obligation to SSA#8 for the privilege of watering RedTail. We won't have that expense going forward because of the $20K well we are drilling that we don't need.
I've been hearing that June and July have been having record breaking months. The rumor mill says that some of the record breaking is that the CAO Smith hasn't been at the golf course and they've been able to focus on great customer service and the the staff is awesome. And then yesterday, to find out that one of those awesome staff members felt that his only option was to leave breaks my heart.
So, I have to leave you with one of my favorite Richard Branson Quotes -- he might know a thing or two about making money in business:
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