Financial Sustainability of Crake Valley Croquet Club
For the private information of CVCC members
The objective of this paper is to plot a sustainable way forward for the club finances. The underpinning approach is that the annual membership subscriptions should aim to cover the annual operating cost of maintaining the ‘status quo’ of the current facilities, or (as a minimum) meet a very substantial fraction thereof, to the extent that other reasonably expected annual income (such as visitor fees) could cover any gap.
This approach therefore makes no provision for any improvement or upgrading of the facilities, nor does it make any provision for eventual replacement of the new clubhouse or the garage store. It is assumed that any such improvement/provision would come out of our savings/investment funds or from special fundraising activities. Indeed, such funds would also need to provide for any shortfall in a stepwise approach to achieving a sustainable membership fee level and to cover any short-term replacement of essential equipment that may be necessary before a stable funding level is achieved.
All costs are discussed in terms of 2022 money values. Appropriate inflation must be applied for future years beyond 2023.
An analysis of costs is given in the attached tables. This breaks down costs into two principal components: annual direct costs paid in cash to maintain the current provision, and replacement of equipment necessary to maintain the current standards on the assumption that such equipment has a ten-year lifetime – effectively simple amortisation over a ten year period.
From the table the annual direct cost is around £8840, and the equipment 10-year amortisation cost per year is around £2200 (given that the nominal overall replacement cost of essential equipment is around £22,000). Hence the implied total annual cost to maintain the status quo is around £11,000.
It is now proposed that the club will have three membership grades: Full Member, Country Member (living more than 15 miles from the club) and Far Country Member (living more than 50 miles from the club) [see Membership Byelaw]. The current Full Member fee is £95, with a fee of £45 for Country Members. The Committee considers that the current Country Member fee at 47% of full member is unusually low, and proposes that this should increase to three-quarters of the Full Member fee, with the new Far Country Member fee set at half of the full membership.
Current club membership is 34 Full and 17 Country (which would split to 12 Country Members and 5 Far Country Members) – the highest membership over recent times. Financially this is equivalent to around 45 full members. Hence to fully cover the above annual cost the annual full member fee should be around £245 per year, which is a very significant increase. The Committee judges that whilst it is essential to implement a substantial increase in fees, this £245 fee level could not be tolerated at the current time. Hence for the immediate future a lower interim fee level should be implemented, together with a careful ongoing review of the club finances. It is proposed that the interim approach should be to cover the direct annual cost of running the club (approximately £8840 as above), with our financial reserve fund covering any costs listed in the capital equipment (amortisation) category.
Other significant income streams include visitors (possible range £1500-£2200), together with other minor streams. It would not be prudent to assume a guaranteed ‘other income’ contribution greater than £1500 – £2000. If we allow this sum to contribute to expected annual income, then the fee income needs to be around £7000 (i.e. £8840 minus ~£1840 visitors etc). This implies an annual membership fee of around £155/160. Any fee less than this will eat significantly into reserves, which would only be sustainable for a relatively short period of time. The Committee therefore strongly proposes that we move towards an annual Full Member fee of £160, and thereafter keep a very close oversight of club finances, with serious consideration of further fee increases to provide for longer term financial stability, including the necessary replacement of key capital equipment.
Given a potentially significant increase in fee it is proposed that any change would be phased in over three years, as shown below.
| Eventual member fee | Current 2022 | 2023 | 2024 | 2025 | |
| Full Member | £160 | £95 | £120 | £140* | £160* |
| Country Member | £120 | £45 | £80 | £100* | £120* |
| Far Country Member | £80 | £45 | £60 | £70* | £80* |
*NB 2022 money values: inflation should be added to future fee levels beyond 2023.
The 3-year lead-in to the fee increase means that at least in the early years the club membership fee income will be below the desired £7000. The following table shows the financial outcome, assuming that the current number of members remains stable.
| Eventual full member fee | Total membership fee income | Deficit from £7000 target | Total 3-year deficit | ||||
| 2023 | 2024 | 2025 | 2023 | 2024 | 2025 | ||
| £160 | £5340 | £6250 | £7280 | -£1660 | -£750 | +£280 | -£2130 |
The current club financial reserves are £10,660 in the Development Account, plus a current account cycling generally in the range £2500-£5500. The above analysis assumes that these club funds must cover the three-year deficit as identified above, together with all expenditure associated with capital equipment replacement etc in the ‘amortisation’ category.
Note that the Committee have resolved to increase the Visitor Fee from the current £5 to £10, with an intermediate step of £8 for 2023. This will help to underpin the assumption of at least around £1800 per year visitor income.
To provide some additional context to this proposal, it is noted that when the Croquet Association reviewed the club status and achievements in the context of our application for the Apps Heley Award for the ‘most progressive club’ in 2021 they gave a strong recommendation that the club fees were unusually low and should be significantly increased.
Summary
In order to provide for future financial stability and preserve the current standards of the club, it is necessary to substantially increase annual membership fees. It is proposed to move towards an annual Full Member fee of £160 (in current money values) in three steps. The proposed 2023 Full Member fee is £120, with Country Members and Far Country Members also having proportionate increases.
It is emphasised that even the substantial fee increases proposed here will not cover longer term replacement costs of significant capital equipment necessary to keep the lawns and grounds at the current standard, and future further fee increases may indeed be necessary.
Agreed by the CVCC Committee
6 September 2022