Why you should have a fresh look at your land
If you have it, even if it is Crown Land, there’s a chance your spot on the planet could be developed, earning your club profitable income in years to come without losing ownership.
Just like the heyday of pokies in the 80s and 90s, land could be the new money. Money that will solve problems, such as subsidising the cost-intensive sports of golf and bowls, cheaper beverages, and support you in a very competitive restaurant environment.
The club industry has its winners and losers in developing club land. When an opportunity has been identified, winning can come down to three things;
Club remaining the developer and not selling-off to a third party
Working with an experienced consultant
Strength of planning in the early stages.
Planning barriers removed here
A significant planning barrier for many CEOs and boards is the confusing and time consuming process of feasibility studies, financial projections, best-use scenarios, building council relationships, and finding good people with which to work. Add to that attracting and managing start-up funding.
Together with my clients, we’re focusing on master planning as a key strategic initiative for 2017-2018.
A unique business model of which several clubs are taking advantage involve Independent Living Units. Alternatively known as Retirement Living or Over 55s, they are ideally suited to club developments with the bonus of an inbuilt connection to social and/or sporting activities. They are a good option for clubs that are cash poor and asset rich.
The aim is that the club remains the developer, retains the profit into the future and the board decide where the profits should go.
Over the next few weeks, we’ll be talking to CEOs about how to take the first step in understanding the strategic use of land assets, and how to build your board and CEO acumen to manage the new income stream. If you would like an obligation-free phone call and site visit, please call me on 0412 241 773 or email email@example.com.
Why I should look at my Crown Land options urgently
Crown land leases should not restrict your ability to negotiate on developing the land and providing an alternate income source. In fact, the NSW Government provides a framework to facilitate developments on Crown land.
With changes in the Crowns Land Act imminent, clubs on Crown Land should act now before local councils take land away, such as car parks, or sharply increase rents.
Yes, you are feeling the pinch
The 2016 Club Census confirms what we’ve been feeling; there has been a decline in average revenue reported by clubs earning between $1 million and $10 million in annual gaming revenue, while expenses continue to rise resulting in contracting profit margins.
Without land-development projects, the future of many clubs and their contribution to their community and local employment is in real jeopardy. I’ve spoken with many boards who are very reluctant to sell property assets yet find it difficult to understand that they may not be able to afford to keep hold of them in the short term.
The KPMG Club Census states that, since 2011, 65 clubs have closed – 22 of those were bowling clubs with a further 40% of bowls clubs and 64% of golf clubs in distress or serious distress. These clubs support over 11,500 jobs.
Large clubs are very good at investing more in new assets. Differences in financial viability are a result of differences in the capability and capacity of clubs to respond to a challenging operating environment. Larger clubs have greater scope to invest and expand their operations.
With unsuccessful amalgamations resulting in the total loss of community clubs, like Swansea Bowling, and Hamilton Bowling and RSL, the future remains tough for small to medium-sized clubs.
Thankfully, many small to medium-sized clubs had the foresight (or luck) of purchasing or negotiating large land holdings.
Going it alone
One issue I’ve seen with several clubs is the expense poured into redevelopment with no performance indicators or plan to earn the redevelopment investment money back.
The board get ‘sold’ on renovating the interior and exterior but there is no feasibility on how the fresh coat of paint and new chairs will attract a young family or 45-55-year-old couples still working.
Renovating is a lost opportunity if the board doesn’t improve its approach to operational efficiency. If boards don’t have a balanced approach to governing, such as their role in pricing basic products like beer or adjusting marketing and promotional expense, a renovation is in danger of never paying for itself.
The fate of Adamstown RSL is a classic example. Burdened by renovations that were over budget (costing around $5mill) and which missed the mark seeing no upturn in patronage, then hampered by an administrator, the board ran out of time to take advantage of its property assets.
Avoid the same fate. I look forward to talking with you on your land options, and to see YOU remain the developer, working with an experienced consultant, and strong planning in the early stages.
Fast growing areas of NSW
The fastest growing suburb in NSW is Riverstone-Marsden Park with thousands moving into the area. Around fast growing areas, there is often a halo effect of growth.
Many people moving into fast growing areas are from overseas as well as migrating out from Sydney Metro.
Retirees are heading north and south providing many opportunities in coastal and hinterland areas. Other regional areas that are experiencing strong growth include Wagga Wagga, Albury, Queanbeyan, and Maitland.
Contact Shayne Leslie 0412 241 773 | Shayne@IntegratedGovernance.com.au