The Chef's Table

Over the past few weeks Chef Greig has been posting some great recipes for us to try. One of his most recent was a bread recipe that sounded very tasty. Well it didn't take one of our members, Geoff Wood long to put his skills to work and create this piece of art.  If it tastes half as good as it looks I'll be doing some baking of my own over the weekend. Stay safe everyone!

WGC and Covid-19 Update - April 15

Member feedback from our last article has been positive, so this week we’d like to discuss our second scenario—open the golf course in July but not the Clubhouse.  Before examining the numbers, it’s important to restate that this scenario requires the provincial health authorities to amend their current rules and allow golf to be played in Ontario. We are assuming that when this happens there will still be restrictions on a number of things.

Here are the underlying financial assumptions we’re using. They are not a comprehensive list of actions and are listed here so you understand how we did the arithmetic. 

• No access to or food & beverage in the Clubhouse
• Beverage carts available with limited, pre-packaged food
• No Back Shop club storage
• No outside golf events
• Guest rounds at 50% of normal
• Power carts at 50% due to single riders

Based on these and other assumptions, the following are the forecasted numbers by category. They are all stated as increases over the same amounts from last week’s “no golf” scenario.

Revenue up $355,000 – This is largely from power cart and guest revenue, as well as food and beverage sales from the beverage carts, plus some Pro Shop sales.

Greens Expense up $293,000 – This reflects the increased wages to prepare and maintain the golf course in proper playing conditions.

Food & Beverage Expense up $132,000 – This is the wages and supplies expense necessary to generate the food and beverage sales noted in the revenue numbers above.

General Administration Expense up $37,000 – This is a summation of a number of subaccounts which would all increase by a small amount.

Pro Shop Expense up $47,000 – This is the cost of goods sold plus some added staff costs.
Clubhouse Expense up $5,000.

As you can see, the added expense to start playing golf in July is about $514,000—more than the $355,000 in added revenue. Total revenue and expense are even closer together in this scenario.

In addition to getting the golf course ready, we are having discussions on how we will be able to play golf safely while observing guidelines that will be mandated by the provincial health authorities.
Most golf associations have suggested approaches to follow, so we have an abundance of ideas already! It remains for us to find out when and how we can do this, after which we will let you know what we have concluded.

Mark Crerar

President

WGC and Covid-19 Update - April 8

Last week we discussed our three scenarios and we described our assumptions and the revenue that we anticipated from each. This week we’ll talk about expense. Rather than try to show multiple expense scenarios, we’ve decided to drill deeper into the one case that most of our members are concerned about—not opening the golf course. Several members expressed surprise that we said that member dues would allow us to operate close to break even, so here are some numbers to help you put that in perspective.

The Club’s fiscal year begins on November 1, so that means that all annual figures you see cover the period from November 1 to October 31. As it is now April, we’re over 5 months into the year and the expenses and revenue from those 5 months have been factored in. To date, our expenses have been approximately $739,000 and that includes finishing up the Fall golf season (greens maintenance, pro shop, food & beverage, etc.) closing down the golf course for the winter, operating the building through the winter and lots of other things. On the revenue side, we received about $65,000 in the same time frame, but if you remember, November was very poor golf weather last year, so revenues were down.

So, what expenses will we have if the golf course doesn’t open? We certainly hope it doesn’t come to that, but we’ve already made a number of tough decisions, and below are the estimates for what we think we would still need to spend in the final 7 months.

Greens – $516,000 (down from $938,000). To a large extent this reduction comes from wages. Ordinarily we have a lot of seasonal staff, but very few of those would be brought on this year. (Just enough to continue to get the course ready for an opening when/if we get the approval.) There are also maintenance activities that would be deferred to 2021 such as tree removal, drainage improvements, etc. Even without anyone playing golf, we still have a lot of equipment lease expense, fertilizers, pest control products, etc. The grass doesn’t care about Covid-19. 

Food & Beverage – $50,000 (down from $1,066,000). In the absence of an operating food & beverage function, all we have left is a very small portion of wages and wage burdens.

General Administration - $340,000 (down from $495,000). This category includes staff costs, insurance, taxes and a lot of things that are difficult to reduce. The reductions we’ve found come from supplies, outside fees, support, and some staff time.

Pro Shop - $275,000 (down from $606,000). This represents a significant reduction in wages as well as other items like merchandise and supplies. 

Clubhouse - $107,000 (down from $261,000). Many of the Clubhouse costs are fixed, but some savings will result from reduced usage of the building and reduced staff costs.

Summing these 5 categories and adding the $739,000 already spent, we estimate a total annual expense of just over $2M, compared to that figure we stated last week of an expected $2.2M in revenue. Pretty close.

Should we end up not being able to open and should our actual costs come in below the revenue, you can be assured that we will carefully assess what to do with the overage. A refund is one option, but other possibilities are lower fees for 2021, paying down debt, and a variety of other things. 

Clearly this is not a budget, rather it’s our best forecast of the financials if we were unable to open the golf course and Clubhouse. As you start to consider the effect of partial openings, the numbers change quite quickly. Next week we’ll share some of those numbers with you too. 

WGC and Covid-19 Update - April 1

Last week we told you that we are modelling three scenarios: normal opening, just opening the golf course, and not opening anything. Today we’d like to share some of the assumptions that have gone into each model and the financial calculations so far. Each scenario also has a variety of smaller decisions to make, and there is still much that we don’t know yet, such as to what extent the government subsidies will help us. But this is the high level.

In all three cases, we have reduced salaries and wages as a result of delayed starts, wage subsidies and supplemental unemployment benefits; we’ve reduced costs across the board and placed a hold on all non-essential operating and capital spending. We still have the option of deferring mortgage and lease payments (we are assessing the long-term financial impacts of delaying these at this time). In the first two scenarios, the amount of revenue received dictates which services can be provided, and the level of facility maintenance.

Normal Opening – This is the ideal case, but it seems less and less likely. Key assumptions are:
• Loss of most tournament revenue, reduced member and guest rounds
• Reduced Pro Shop and food & beverage sales
• Reduced cart revenue

Our current estimate is that revenue would be approximately $3.3M, versus the original budget of $4.1M.

Partial Opening – In this case, the golf course would be available for play, but there would be limited to no food & beverage service throughout the year. Key assumptions are:
• No tournament revenue, reduced member and guest rounds
• Limited Back Shop service
• Power carts for single riders only, if the Back Shop is open

Our current estimate is that revenue would be approximately $2.8M.

All Closed – This case assumes that we are unable to open the golf course or Clubhouse for the 2020 season. Our current estimate is that revenue would be approximately $2.2M, which comes strictly from member dues and sales to date. We believe that with this scenario, and taking base expense costs into account, we can operate very close to break even. If we fail to receive all member dues, we will be forced to take more drastic measures with deeper cuts.

The Ontario Government will dictate what we can and cannot do. As of the moment their direction is that businesses such as ours must be closed until at least April 13th. Therefore the Clubhouse and golf course are closed until further notice.

On a positive note, some authorities believe that golf may be the first sporting activity to be reinstated, because it is easier to implement social distancing restrictions. Should this be possible, we’ll be there. The National Golf Course Owners Association has received written notice from the Ontario Government that golf course maintenance can continue for the time being. They have designated the maintenance of golf courses to be an essential service, so there is a realization in government that golf matters.

Our task remains to plan for what may happen and to protect the general welfare of Whitevale Golf Club. We are all co-owners and golfers, and we look forward to our club returning to operation as soon as it is safe to do so.

Mark Crerar, President