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To all Misquamicut Club Members,

As we reach mid-October during one of the most challenging of years, I would like to follow up with the membership on the Employee Bonus Fund, and to update the Capital Planning discussion which took place with the Board of Governors, in September.  Below please find the Club Benchmarking study that is helping to form our thinking.  Additionally, I wanted to update you on our estimated year-end financial standing.


Please Support the 2020 Employee Bonus Fund

By all accounts, the Club has “raised the bar” of the member experience for those of us who were fortunate enough to be in Watch Hill this summer. To those of you who have already contributed to the Employee Bonus Fund, a heartfelt thank you.

As many of you know, the Employee Bonus Fund is a key component to an employee’s total compensation and is distributed under the direction of our General Manager and the respective department heads. Approximately 2/3 of the Fund normally comes from the 15% gratuity charged on food and beverage items. The remaining 1/3 typically comes from Member donations. It is also an important retention mechanism encouraging our terrific staff to return to us year after year.

With no Club events, private parties, or non-profit events, we are facing a significant shortfall in the 2020 Employee Bonus Fund pool. We need your help. Because the Fund is distributed in early November, I encourage all members to join me in trying to reach 100% participation to support the 2020 Annual Employee Bonus. If you have not already done so, please make your generous contribution before October 31st. Thank you for your support.


Club Benchmarking – Presentation to the Board of Governors

On Friday, September 18th, Chris Barron of Club Benchmarking, a data analytics and financial analysis company that has been providing comparative information to the private club industry since 2009, made a two-hour long presentation to the Board of Governors. The presentation, “Capital Metric and Net Worth Benchmark,” compares The MC to 106 other Clubs across America who are similar to us at an initiation fee and annualized dues level price point.

Below are two links in a separate email - a 30-minute audio summary from Chris Barron encapsulating the messages about capital planning as delivered to the Board as well as a link to the entire presentation.  

a. Video presentation from Chris Baron of Club BenchmarkingCLICK HERE

b. PowerPoint presentation from Chris Baron of Club BenchmarkingCLICK HERE

I ask that you read and digest all of this information as it spells out our capital needs on a “go-forward basis.”  Bottom-line, the Club will need to position ourselves financially to appropriately fund long-term maintenance of the Club, including the significant improvements made to our physical plant over the last 15 years, and improvements we would have to make in the future...  The current membership, who enjoy the exceptional condition of our diverse facilities on a day-to-day basis, has a shared responsibility to underwrite the upkeep, repair, and maintenance of the Club and to improve things as our needs require. In a nutshell – we are evaluating a capital metric to “fund depreciation.” The first priority on a lengthy task list would be the composition of a comprehensive Capital Reserve Study. This study would catalog the “useful life” of any Club asset greater in value than $2,500 and identify a scheduled date when it would expect to be replaced. This is simply prudent, smart housekeeping to ensure the quality and enjoyment of our facilities for years to come.   


2020 Year-End Financial Realities

While I had stated in my August letter that “we hope to end the year in a stable financial position with no assessment to cover any losses at this time” with additional consideration and a goal of maintaining our economic footing, I believe it is necessary to reevaluate.

The challenging day-to-day realities of COVID-19 have affected all of us in different ways. For the Club, many of our financial drivers were not available to us this season, whether they be club events, private functions, golf outings, and guests in general. Several of these activities predicate our net year-end financial outcome. Dues do not cover our overall operational expenses and, in almost all cases, club activities are an amenity and not a profit center.

In summary, our estimated year-end revenue estimate shortfall is $(1,518,279) and expenses $(1,261,273) below budget.

The fact that our estimated expenses are $(1,261,273) below budgeted levels speaks to the excellence of Club Management to be both forward-thinking and decisive in the financial oversight of the Club. This may be best signified by being an estimated $(524,954) under budget in combined payroll - all of this while keeping us safe and well-served all season!

In summary, in the most extraordinary of years, the Club estimates to have a +/- $(220,000) budget shortfall from overall operations as well as a $203,000 overage in the collateral buildout of the stadium tennis court.  Additionally, we are projecting to have a ($75,000) deficiency in the Employee Bonus Fund.   

Because of these facts, we are now projecting to end the year in a negative position of over $(478,000). To enable the Club that we all love to stay “on plan” concerning both our short and long-term financial goals, including but not limited to debt reduction, principal pay downs and the overall maintenance of our physical plant, as well as to make our wonderful employees whole, I am recommending that the Club send each member a one-time COVID-19 bill to cover our loss from 2020.

This bill will be sent to you on November 1st and will be shared by the entire membership regardless of your status, full use, or absentee, or junior.

This one-time fee was discussed and unanimously approved by the Board of Governors at a special meeting held on Wednesday, October 14, 2020.    

The fees will be the following:

Charter - Family, Family Individual & Individual - $1,050

Subscribing - Family, Family Individual & Individual - $1,050

Absentees - Subscribing and Charter - $635

Juniors - Family and Individual - $485  

Absentee - Senior and Junior - $395

The payment to cover our 2020 shortfall is payable by December 31st, 2020. While no one, including myself, likes to receive a bill for an unanticipated or unprecedented loss by the Club, we all share in the financial stewardship of the Misquamicut Club, and funding our financial shortfall of 2020 is the prudent thing to do.


Planning Ahead

At this time the Club is in full-on planning and budgeting for 2021. As we sit here today, hoping that a vaccine is on the way, we are planning for the most enjoyable 2021 possible. The budget, once finalized, will be discussed and approved at the November Board of Governors Meeting. Before that, should you have questions and concerns, I ask that you reach out to those on our Executive Committee and myself.  

The Club will continue to send out weekly updates as to what amenities will be open and when. Please note that carts will be available every day thru October 31st and that the Club Room bar will be open on several weekend evenings. The Club will re-open on a limited basis for several days over Thanksgiving weekend. 

Lastly, the Membership Committee is evaluating and plans soon to communicate Club protocols about the Significant Other policy going forward.   

 

With best wishes,

John P. Holstein
President