Despite all the Disruptions Avondale’s Finances are in Good Shape
Prior to the Covid-19 restrictions Avondale’s finances were broadly on track to meet the Budget for the year. The trading position was a little weaker than forecast but this was offset by a stronger inflow of new members. Overall, our operating position was forecast to be a deficit of $288,000 which included $235,000 of course development costs. An excellent outcome and in line with our strategic plan.
All the course development work that was planned for 2019/20 year was completed ahead of the pandemic with the par 3 tee box expansion, new paths and carpark lighting all now in place.
Much has changed with the onset of Covid-19 and the restrictions governments have placed on our operations. For Avondale, the main impacts are:
- Loss of external revenues for both F&B and golf operations. Function revenues, trade days and visitors’ fees have dried up. Although the Pro-Shop has remained operational through the whole period, I would note that Mark and Ben’s businesses has been negatively affected by these conditions as well.
- Member activities have been heavily impacted by the clubhouse closure and restricted playing conditions. Although restrictions are easing clubhouse activity is still substantially curtailed. We have only just started serving members inside the clubhouse in recent weeks, there has been no bridge for three months and member functions are only just starting up again with the upcoming trivia night.
The management team with the support of Kerry and Mark have done an excellent job of adjusting to the new operating environment, reducing unnecessary costs and keeping the club and golf activities operating as best as the situation would allow.
Through all the ups and downs of the last three months the golf course was only closed for a single day. The Board and management are committed to making sure members get the fullest possible service and access that the government health orders allow. I think everyone will agree that the team has done a fantastic job of navigating all these rules and regulations which at times seemed to be changing daily.
The other important offset to the drop in the Club’s income was our ability to access the government’s “JobKeeper” scheme. Jobkeeper has allowed us to maintain a full staff list through the pandemic and bring back our casuals to work when and where required. The Jobkeeper funding, which covers all staff, has been an important offset to our revenue losses.
The upshot of all this is an operating financial position that is broadly in line with where we thought we would be prior to the pandemic.
The pandemic has also impacted our corpus investments which now stand at $10.4m, just below the indexed amount of $10.5m. It is pleasing to see the financial markets regain their composure after the March wobbles. The investment committee has met regularly through the recent market volatility and will continue to assess the appropriate investment strategy for Avondale.
Financial Challenges will Remain until 2021
The JobKeeper program will come to an end in a few months and it is not clear how quickly our external sources of income will come back on-line again.
We also face an unprecedented demand for golf at Avondale. As everyone who is playing regularly understands, our course is effectively full. This reflects a combination of factors related to the pandemic, some of which may ease as domestic restrictions are lifted. Other factors, such as the closure of international borders, could be in place for some time to come.
It is hard to say when this congestion will ease and the Board is currently discussing what restrictions we may need to place on new members or indeed, if a waiting list might be necessary until these congestion issues have eased.
Restricting new membership will have financial implications but the priority is making sure existing members are able to enjoy access to the course and club.
The new membership categories will come into effect for the next financial year, commencing in August. These changes are going ahead as planned and communicated over the past year. Tim and the Board will be providing further updates on the new membership categories over the next few months. If anyone has any questions on the new arrangements please do not hesitate to contact Tim, Kerry or myself.
From a financial perspective the Board remains committed to running a sustainable business model. From an operational point of view Avondale should strive to break even each year. But we also need to mindful that this is an unprecedented event and Avondale is as important as ever to members.
Important investments are going ahead including the final interior work to complete the clubhouse renovation as well as work on water capacity and internal system upgrades. We have pencilled in a substantial program of course development for the coming year as well.
Over the next six months the finance committee and the Board will monitor the underlying financial position and decide on the appropriate expenditures.
We are striving to get the balance right; between sticking with the 3 year financial strategy and making sure the current membership is getting the best golfing and club experience possible.
Warren Hogan
Treasurer
Filed under: App News
