The thread, "It's not even about golf anymore" has been one of the highest followed pieces ever posted on this site. I have been doing this for a long time and have a comfortable understanding of how many views are involved as regulars and how many are new and unique. I don't have administrative privileges, so i don't see the analytics, but after starting hundreds of threads i know when something posted is a front burner topic. As you may have noted, i bold things when i want to make a point. This is one of those times. Yesterday i went to the RCSC offices and met with Bill Cook and Kevin McCurdy (director of finance). It was well worth my time and helped me get my head around golf and the expenses related to it. I will tell you straight up, i am always willing to admit when i am wrong and in this case, simply looking at the 990's wasn't a clear picture. Their explanations were very good, and frankly something every board member should know. As i told Mr. Cook, this lack of knowledge by board members has been lingering since i had served on the board (2012-2014). I would argue, it still exists to this day. One doesn't have to be a financial wizard to have a basic knowledge, they do need to know the facts associated with the cost of maintaining and running the 8 golf courses. Every board member has a fiduciary obligation to make decisions based on sound information. It's part and parcel of the process and it goes with the territory of serving on the board and being accountable. While i know it is time consuming to educate board members regarding this, the hour plus i spent with them yesterday was easily doable for the entire board and would make them better equipped to make decisions. I know it helped me and when i get back i will do a deeper dive into what i was told and why it matters going forward.
A couple of things that stand out from the meeting yesterday. First and foremost; golf isn't being subsidized as much as i thought from viewing the 990's. It appeared at first blush the revenue compared to expenses was costing the RCSC roughly 2 million dollars a year. That's not the case because on the expense side, as Dave Weiland has been saying, there is depreciation added to those totals. I found out there was approximately 30 million dollars of PIF improvements factored into those figures. I was also told they were on a 30 year schedule which accounts for about a million dollars of expense per year To be very clear, the good news is the RCSC was not subsidizing golf to the tune of two million dollars per year. The bad news is, i cannot tell you how much, based on what i saw, was subsidized. When i asked, i was told golf has not broken even in a very long time. That the losses on the yearly budget varied anywhere from 450k and up to and over a million dollars. The other item i found interesting from yesterday's meeting was golf out buildings were included in the financials and billed back as depreciated expenses. The was odd because one of my arguments with the former GM was when breaking out PIF expenditures, there were 2 categories. One was facilities, the other was golf. We used to banter back and forth why golf out buildings didn't appear on the golf side. She showed them under facilities? I knew the answer, because was always trying to make golf appear to be getting less money from the PIF account. Yesterday i found out the accountants always put it under golf, where it belonged. Let me be clear, there's nothing wrong with spending the PIF on our courses. They are an important amenity and they must be kept up. What sucks is not showing members, and more importantly, the board the actual figures in the column they belong in. The GM used to hide behind those posted figures and i would argue with the board that they weren't even close to being right. The better news from the the GM and director of finance is in 2022 golf is on track to being close to break even; i think. I say that because there are still questions regarding the roughly 2 million dollars per year depreciation deducted from the expense side of the 990's. I don't want to dwell on it, but not all depreciation is created equal. The long term (30 year PIF) clearly should not be factored in to the expenses. Where i see a concern is the yearly equipment purchases (roughly 500k) that has a 5 year depreciation schedule and clearly is a yearly cost. All of which is beyond the point. It was really good of the two members from management to take their time and help me understand. My understanding pales in importance to the members of the board knowing exactly how golf is doing on a year to year basis. I asked the question; if i gave each board member a piece of paper and pencil, and asked them to write how much golf made or lost last year, would anyone know? Would any two answers be the same? Bill asked me why that mattered? I told him during my three years on the board, if i had been asked that question, i could not have begun to answer it. Further, i said i doubted any board member since my time knew the answer. The point was pretty clear, board members are asked to make important decisions. Those decisions are supposed to be made based on having sound knowledge of the facts. It's part and parcel of fulfilling their fiduciary obligations. The laws governing them does not dictate they always make the right decision, it does mandate they have all of the facts as in defense of the decisions they are making. Tomorrow, we'll take a deeper dive into this whole question of outside play. I would argue, it is not the board's job to be involved in running the day to day operations, that is managements job. The board's is to hold them accountable for those decisions. Unfortunately, the question of outside play goes far beyond the day to day running of the golf course, and in my next post we'll look at why.
Great post, Bill. Depreciation always has been a "thing" with me. Not a very technical term, I know. But it's hard to grasp. It's why board members glaze over when finance directors get too detailed.
Fair enough comments Emily, if you want to disregard everything that has happened of late. I have little interest in reliving the past two years, but the decisions to fire two board members who spoke out was the catalyst to get us where we are today. And let me be very clear, where are today is exactly where they wanted us to be. Forget the board went stomping off the stage with 250 members in the room. Forget the members being denied the right to vote at the annual membership meeting, even though the Articles said he we had the right to both vote and pass them. Forget the 4 recall petition requests that were denied, even though the documents give us the right to do just that. Forget the RCSC member who was suspended for a year for something that happened off of RCSC properties. Forget the members who complained loudly about non-members taking their tee times and were told no big deal. It is yesterdays news; and that's ignoring the past 15 years where the gm took us as far away from a self-governed community as she could. To a concept, to a place of absolute and total control centered on a handful of board members and the gm. To be fair, Bill Cook inherited the mess; he didn't create it. School's still out on him for me. In fact, as i told him and as i have written several times, he's done any number of things better than his predecessor. The open planning sessions have been exceptional. We know more about what is going on than we ever did under the previous gm. That's a good thing. The problem is, there is still a lot of room for improvement. It will take time. That said, the board has been remade into the image and vision the previous gm had. Think not? Look at the newly rewritten bylaws. My good friend Ben Roloff made a motion at the membership meeting last to provide board members protections against what happened to Karen. There's a page and a half of verbiage that is anything but protections. In fact, if you take the time to read it, they have added all kinds of crap to be able to fire them, and do it under the safety net of an Executive Session. I wrote contract language for a living and if an employer had proposed what is there, it would have killed any further negotiations. It's that bad. The argument is this was a member driven ad hoc committee; it was doomed from the start. Objectivity was never at its essence, it was about maintaining control. You've followed this site for years E, you know i have written volumes about the dismantling of community safeguards. I spelled it out every time we took another step away from members rights and having a voice. Unless and until that is restored, it will still be governance by a few, not caring about the many. I guess if you think that is what in Sun City's best interest, then it doesn't matter. Let me use your words to make my point: "my head spins when i think of the problems he has inherited." I agree 100%. The reality is, most of those problems are from self-inflicted actions of the board and the gm. By carving the membership out, they made themselves the sole decision makers. If we have that many problems to fix, how did they do? I wrote this many years ago on 55places. Sun City is spectacular and the best part of it is over the next 30 years, we will have 200 plus million dollars to reinvest in ourselves. Those who came before us, built the nearly perfect community with nearly perfect documents. In 1999, the RCSC board of directors took one of the most courageous acts possible and passed the PIF. Our amenities were aging and they found a solution that kept it off the backs of those living here. Knowing that, we should have had the smarts to look at a strategic and cohesive long range plan. Money cures almost all ills. Unless of course you tell the community and the membership their opinions don't matter. That's not on Bill Cook. But, it is where we are. When i come back, i will explain why things need to change (in my humble opinion).
Sorry to get off course (pun intended), but E and i go back a long way and i felt compelled to respond. Besides, her comments fit nicely with where this discussion is going. I think i mentioned Bill Cook asked me why i hate him. I answered, i don't. Actually i don't hate many people and i certainly don't know Bill well enough to have any feelings negative or positive. The funny thing is, as we talked the other day, most of my resentment fell back on the previous general manager. I watched from the day she was hired as she took the community in a 100% different direction from how were built and why we were so successful. The historical blueprint was there, she elected to run from it. She was very good at her job and moving the board in the direction she wanted to go. My only real argument was that should have been a decision made by the membership, not by the leadership.. She wanted no part of that. To be very clear, she did some very good things. She also did some very bad things. The worst was taking the membership out of the equation and co-opting the board to believe loyalty to the organization and subsequently to the general manager was the essence of their being. Prior to 2006, that was never how the community/RCSC functioned. When i write these things, some folks think i am claiming i know better than others. I've never said that. My viewpoint was always from a historical perspective. If you have read or followed our history, you know it was based on several simple premise: Accountability. ownership, responsibility and ultimately building a sense of community. Until 2006, it worked beautifully. The changes made were subtle and a constant. Even as the gm was going out the door, board policies were shoveled into the bylaws, making them even less readable. I'm not going to blame the gm for that, i have no idea. I know the changes made along the way were written by the gm and approved by the boards. I know with each passing year, the members mattered less. I know boards didn't appear to care or worry about those changes. During those changes a couple of good things were done; meetings were recorded for playback and the long range planning committee was reinstated (though their impact was little or none, witness how many folks quit out of frustration). The other thing that everyone celebrated and members love is there has been virtually no increase in lot assessments in years. Sadly, that has become the measuring stick on whether the board is doing a good job. The problem is now apparent in Emily's comment about the problems the gm has inherited. Given what this community had to work with, both from a facilities standpoint and a financial standpoint, we shouldn't be facing the number of issues we are. Here's why all of this matters, why the past two years has been so challenging. The community has awakened from being uninterested and uninvolved. When Karen was re-elected, it changed the dynamic in the community. We've had years where less than a 1000 members voted. We've had years where they struggled to find a slate of 3 candidates. We've seen far too many time when the candidates were fixated on more of the same; preserving the status quo. We've done it all too often by keeping the board in place for 6 and more years at a time. This year, this election is different. There will be clearly defined differences in the candidates running. Some will plead to stay the course, others will be focused on restoring the concept that members matter. I'm not going to tell you which is better or worse, you need to decide that for yourself. In my next post, i will do a deeper dive on why this decision regarding outside play is such a prelude to who you vote for. Stay tuned.
I've always understood your distaste for confrontation Emily. Most people dislike it. Your comments kind of opened the door to address the outside golf passes and why this election is about looking forward, not back. I know you've read a lot of my stuff over the years and I always was the consummate cheerleader. Watching them dismantle the documents and drive the members away has soured me. The full play golf pass for non-residents is a classic example of tuning out the membership. Not being a golfer anymore, i wasn't aware of the problems. I know members have been complaining about the courses and much of it was centered on the amount of play they were getting. I didn't see it first hand, but read comments on line and in the newspapers. Going from 300,000 to 350,000 rounds put stress on the courses. The rubber hit the road in April when three long time RCSC golfers complained about not getting tee times like they used to. I started digging and saw the RCSC doubled the number of passes from 2019 to 2020 and in 2021 had sold another third again. Then at the planning session on golf we heard the the average price for a round of golf for the outside full play pass was $20. Then we heard they were guaranteed a golf car for an additional $500 and at an average of 100 plus rounds were paying $5 for a car. Plus we found out they could book tee times on the members portal (one of the reasons golf pass sales exploded) and they could join small groups of 30 or more and avoid even entering the draw for $2 per round. Yesterday's news, and here's even more critical yesterday's news: "the decision to sell the passes was by a board motion in 2010. I know the origin, where the recommendation came from, but it was in fact approved by the board. The reality is the first 5 years the number of passes sold hoovered around 50 per year. To my knowledge part of the reason was booking tee times wasn't done as easily as it was for the members. The point here is this; IT WAS A BOARD DECISION. The board could easily reverse that decision now. And here's where i become truly disappointed. The board voted to reject the motions to take away golf cars and to stop them booking on an equal basis as the members. It's their job to make decisions, it's also their responsibility to make decisions on having all the facts, all of the information. They simply don't, they listened to the general manager's plea to keep it in place. This is even the bigger concern: The general manager does need to look at the RCSC as a business. The board is elected to the serve the membership, to insure we are run as a community. The previous gm in fact changed that entire structure. Swearing allegiance to the organization and the general manager was a massive paradigm shift in how we were built and why we were successful. Perhaps none of that matters any more. Perhaps the membership has bought into the marketing pitch, the Original Fun City. Perhaps it's time for me to quit caring about what happens, to let the community to become monetized and sell of all of our amenities. Imagine how much money we could take in if we just let anyone come in and buy what we all have and think of as ours.
It’s important to realize that while no a cash expenditure, it is in fact a very real expense. While it’s not included in a cash flow analysis, it definitely needs to be considered when straight line depreciation is used vs. accelerated. That’s the only true picture.
Which was really the point and the one i was making to the general manager, the board needs to know the real cost. More importantly they need to know the real impact to the Sun City golfing community. In the thread, "Its' not even about golf anymore," the one with 12,00 plus reads, we pretty much tried to move past both the expense and revenue discussion and tried to focus on how those 150 full play non-resident passes were hurting the membership. Let's be really, really blunt here: 12,000-13,000 rounds to non-members who have equal access to the web portal, just like a member, is creating problems. We know when they are in the lottery, they sometimes get tee times members have applied for. We also know when they come in and join their friends in groups of 30 or more, they pay the $2 charge and bypass the lottery completely. We know the hundred non-residents who buy the pass with cars are guaranteed one will be there for them, and we know members are told, go see if you can find a course where a golf car might be available. We also know the $500 add on for a car is less than half what a member would pay (based on 100 rounds played), and we fully suspect many of those 50 non golf car passes jump in with their buddies to further reduce the cost to them. We also know if a member wants to guarantee a golf car, they are told to buy the non-member full play pass for $2,750; a $1200 increase over their current $1,550. Knowing all of these things hasn't mattered one tiny whit to several of the board members. The general manager is looking out for the business side of the equation, has overridden the board's obligation to the community side of the equation. Think about that. So we are all very clear here, the board has one employee to oversee, the general manager works for them. The tragedy is, we've spent the past 15 years conditioning board members to be loyal to the gm. That's not Bill Cook's fault. As Emily said, he inherited a slew of problems. Unfortunately he is stuck in the middle and there is no escaping it. We all know golf hasn't made money in a very long time. I would argue i am far more comfortable subsidizing it for the members than i am for some guy living in Peoria. This notion we are going to reach break even by giving it away is folly. It always has been, it always will be. I just posted a photo on the Facebook page, Sun City Chat Arizona of the Sun Bowl. I've been posting pictures along with the history there for a year and half. In today's story, i mentioned in 1981, the RCSC asked the membership to vote to take ownership of the Sun Bowl venue or not. Thank God the vote was a yes, it is truly an iconic setting. How about we do the same thing now. Let's send out a vote to the membership and ask them how many think it makes sense to let non-members come into the community and play on our courses for half price. Be sure to tell them how cheaply we guarantee them a golf car and they have equal or better access to our tee times. Anyone want to hazard a guess on the outcome of that vote? This is where this all breaks down for me. If the community were polled, i suspect that would quickly end the stupidity. The break down is on the board's end of the bargain, their job is to be there for the membership. Could i be anymore clear?
S Simple two part solution 1> Eliminate carts on all annual fee passes. Rate is far too cheap. 2> Cap the number of rounds that an outsider can play per year. 100 seems like a fair number to me, but that’s open for debate. Also, limit outsiders access to the web portal to two day advance registration. Several other ideas but this would be a great start.
When confronted by a woman who claimed i hated golf and had no right to comment (following the meeting the other day), i was pretty stunned. Larry's points above are pretty spot on and he is a golfer. We know the total of Sun City residents who play are somewhere in the neighborhood of 4200. That's a large number but a fairly small percentage. I don't know how many times i have written this but a boatload; i'm happy to let the golfing community be involved in solving the golfing problems. There's long been a golf advisory committee and each course has its own greens committee. Unfortunately, most of those golfers have no idea on either the front side costs or backside revenues. They only know/hear the RCSC is within their budgets. Which by the way is meaningless. Here's the real rub, board members don't know anymore than the members of these committees. In fact, the information i got the other day from the general manager and the director of golf was an exceptional starting point. In two hours they could cover the gamut. Those involved, the would be decision makers (board and golfing committee members), should get the full picture on the finances, how rounds are broken out by each group and how many RCSC members aren't able to get tee times when entering the lottery. How often are RCSC member unable to get golf cars because of the 100 full play non-resident passes get them first. They have all of that data at their fingertips. Yesterday, a handful of us gathered and a comment was made (and it was a good one), golf course rate comparisons should be provided so those ultimately making these decisions should know how much our competition is charging. I've posted some of that information, but a detailed comparison would be a great starting point. And, i would argue i, as a non-golfer, do not need to be involved. I trust the golfing community to make smart decisions. Here's where i pay attention: Selling our amenities to outsiders, especially on the cheap, is a far bigger issue than just the golfers in Sun City. There is not one good, defensible argument for asking/telling RCSC members to subsidize golf for anyone living outside the walls. And to be very clear, there's only a tiny percentage of Sun City golfers who think it's a good idea.
Now that we know golf is making us money (at least according to the gm and director of golf today), why is it we need to give golf away to non-members? Why should outsiders get 12,000-13,000 rounds that belong to the members? It can't be we need the money, we were just told how well we are doing. And to be really clear, the $300k brought in by full play non-member passes could easily be made up by members or outsiders willing to pay market rates. We know that play (visitor rates) are up even higher, in fact so much so they are increasing that rate by $4 a round in season and $2 during the summer. Love to hear we are doing so well, but as i said it the meeting, outsiders should never get prime time tee times before members have first crack at them. I notice they stayed away from talking about that. About how non-members were joining small groups and bypassing the lottery all together. It's easy to make numbers say what you want them to say, especially when you simply forget the part that is so devastating. We've now made it the norm to look at full play pass purchasers as "cash flow." Even though the cash they are paying is less than the rates 90% plus of the membership would pay to golf. Sorry, i can't get my head around how that makes sense.
