At the May 11 RSFA Board meeting, the RSFA Board had a robust discussion and made some decisions regarding our Association restaurant.
The clubhouse restaurant (we really need a name for the restaurant!) has been operated as a private Association Members only amenity since 1987 or so (it used to be open to the public before then). Almost all such private restaurants (they are usually associated with golf courses) run at a deficit, and our restaurant is no exception.
In 1987, wanting both more autonomy and exclusivity, the Golf Club entered into an agreement with the Association where it would run the restaurant by itself and pay for all deficits, while allowing all Association members to dine there. Left up in the air was who would pay for the restaurant facility capital updates. Indeed in 2007, when the Golf Club paid for a major golf building renovation and new construction, the restaurant was only given a minor facelift, and it has remained essentially unchanged since.
In 2019, it became apparent that the restaurant was in dire need of a remodel, but the Golf Club had no ability to finance such an undertaking since it was busy with a major golf course remodel that was going to sap all its accumulated reserves. So the Association and Golf Club’s Boards struck a modified agreement, called the 3×3 agreement, which would have the Golf Club and the Association split both the yearly operating deficits as well as facility upgrade costs. The 3×3 agreement called for the creation of a joint working committee that would oversee both operational and facility upgrades.
From a fairness point of view, this made a lot more sense as the restaurant was always available to all Association Members to enjoy. Indeed, you could have made a case for the Association to take on all restaurant expenses since even in a 50/50 split arrangement, Golf Club members end up paying twice for the restaurant.
In the end, the 3×3 agreement was a failed experiment. A committee composed of rotating Golf Club and non Golf Club members wasn’t a great idea to help manage a dynamic business like a restaurant, and the Association never got a proper seat at the table to discuss any kind of policy that might affect finances or what the restaurant offered.
This all came to a head at the May 11 Board meeting where the Board was asked to make a decision on the 3×3 agreement and cost share going forward. After a robust discussion, the Board decided to repeal the 3×3 agreement, and asked staff to come up with a better long term arrangement for the finances, capital improvements and restaurant policy making. I am confident that letting competent experienced staff tackle this problem and recommending solution(s) to the Boards (Golf and Association) will result in a better process moving forwards.
Since the budget needed to be ratified (we have a statutory deadline), the Board opted to put in a placeholder cost share of $500K for the Association to burden for any restaurant deficits (it was approximately $800K in this fiscal year), but we expect staff to recommend a new number in the new fiscal year.
To address the Association’s lack of a seat at the table with regard to policy oversight on the restaurant, I proposed at the Board meeting that we revisit the “1987 agreement” with the Golf Club in the upcoming June Board meeting. Currently, the Golf General Manager reports to the Golf Board. From an organizational perspective, this is nuts. The RSFA is a singular corporation. All employees should be reporting (through managers) up to the Association Manager (who then reports to the Board), anything else will result in organizational chaos, which is what we encountered this past year. Just to be very clear here, this is my personal opinion, no doubt we will hear other opinions in the June meeting.
Having the Golf GM report to the Association Manager gives the Association a seat of the policy making table for the restaurant.
The Tennis Club also had a similar arrangement where the Tennis General Manager reported to the Tennis Club Board, and it caused serious issues there too. When our current Tennis GM was hired, the Association made clear he reported to the Association Manager. This protects the GM from possibly capricious club Board members who change every year. And it allows the organization to implement long term professionally developed plans.
This doesn’t change each club’s autonomy. The Association Manager will continue to delegate operational details to each club’s GM. The Tennis and Golf Boards will both continue to help set club policy with regard to dues, offerings, and plans.
There are other tweaks that should be done in the 1987 agreement, such as raising the Board approval expenditure dollar limit that the clubs are currently operating under. The clubs each have their own budget, and expenses in line with the budget should not need extra layers of scrutiny.
Finally, the 1987 agreement is actually at odds with and conflicts with our corporate Association Bylaws which makes clear that the Association Manager manages all Association employees.
Wither the Campus Remodel?
So while the yearly operating costs of the restaurant are one cost, the much bigger cost is that of a remodel. Current Treasurer Rick Sapp made an interesting observation at the May 11 Board meeting. The Association built a $16M optical fiber network a few years ago with zero increase in Association assessments on the back of some accumulated reserves and bank loans. That loan will be paid off in a couple of years, giving us more borrowing breathing room to help finance a campus remodel.
In addition, I will also be pushing for a capital donation campaign to help finance the campus remodel. Possible ideas are selling restaurant bar naming rights, and selling donation plaques, bricks and benches. I know our Members would love the opportunity to positively impact our community for generations to follow.
Finally, with a seat the restaurant policy making table, we can look at changes we can make to better align restaurant costs and revenues with policy objectives.
The author, Phil Trubey, is a current RSFA Board Director.