Budgeting and Funding the R&M Project
The budgeting process and meeting expenditure demands for the 2026/2027 year has been a particularly difficult task for the Board. General inflationary pressures, including wage demands, material costs, insurances and power are making it tough to control the cost of maintaining our golf course as well as funding essential operations.
Completion of Project R&M relies on free cash generation as measured by EBITDA (earnings before Interest, taxes, depreciation and amortization). It is a financial metric used to evaluate our core operational cash profit and as previously explained, it is where we get the greater proportion of money to meet expenditure on Project R&M. Whilst we are fortunate to be in this position, it has both upside and downside outcomes. Pledging EBITDA to the project avoids over reliance on long term expensive debt, charges to future cash flows and restricting growth options for future Boards, but in the short term it hampers our ability to absorb general cost increases within the annual profit cycle.
Subscription Increase
The 2026/27 subscription increase for a Full Playing Member will be $450 resulting in an annual fee of $6,500 and a similar proportional increment will apply to most other membership categories. It is worth noting that Members in the Full Playing category (ex-juniors) contribute around 55% of total subscription revenue. We are sure that some Members will be disappointed with the increase, but equally it will not surprise everyone as the growth in real terms is more like 3%. It was a difficult decision for the Board but in the end, we are convinced, it is the right one.
Looking ahead it is critical that we develop alternate revenue capability and cost reduction initiatives that allow us to undertake an almost endless list of projects that are vital to the growth and maintenance of our Club.
Capex & Proposed Projects
Having built the course, it will be necessary to complete the cart path to protect it, many of the unsightly bare patches are the result of cart wear. And without any priority, the bridge from the tee to the fairway on the 10th hole begs renovation in the near term and may cost $200k, the NorthConnex water is an outlay of $600k but will reduce expenses (power and water) significantly and secure our long-term water needs. Replacement of the membrane in the WRP this week incurred a cost of $70k. The installation cost of solar panels has all but been recovered in reduced power charges notwithstanding further tariff increases of 30% are expected. The perimeter fencing, main gate and works gate are on the project list as is the upgrading of the Pennant Hills and Copeland Road corner. We also need to commit to a sensible machinery replacement program, car park improvements, building repairs and training nets. The list goes on.
Heritage Fee
The Heritage fee payable on entrance remains at $8,000 for member-based introductions and has been increased to $10,000 for walk in enquiries. With the opening of holes 4, 7 and 8 in mid-year this fee will be reviewed again in June. Increased revenue from this source will take the pressure off rising subscription levels.
Future fund
Recently Members will have received a letter from Steve Walker outlining the launch of the Future Fund. The Club is committed to an annual allocation of $25k to the fund. Growth in the fund is not expected to be immediate, the aspiration is that over time it will be a source of income that will supplant the growth of subscription revenue. It is hoped that this welcome initiative might be a source of bequests as well as direct donations.
Foundation
Similarly, our Foundation has worked hard to meet the expenses of preparing to call tenders for the construction of the Golf Academy (GA). They have met the architectural and consulting fees of preparing and lodging the project to Council for Development Approval. Costs of this were borne by a very small number of Members. The Foundation is currently working through the conditions of approval required to fund the issue of the construction certificate and activate Development Approval. The work has stalled due to lack of funds. At the request of the Trustees, the Board has agreed to provide an option to donate $100 as part of the annual subscription invoice. This donation will be tax deductible and it is hoped that as many Members as are able, will support the initiative.
The GA was effectively put on hold when Project R&M became the immediate priority of the Club. This was necessary but unfortunate as the GA is expected to be a source of revenue with extra carts, virtual golf options, state of the art training sessions recorded on film and indoor practice facilities. The sooner we can put it before Members, commission and build it, the sooner we have a source of revenue to further supplant subscription increments above CPI.
Restoring the Pride in Pennant Hills
Our Club has forever been known as an A Grade Sydney club, often spoken of as a destination club and listed in the Top 100 courses in NSW. Australian golfing great, Kel Nagle, once held the course record at Pennant Hills. He described Pennant Hills as one of the finest park land golf courses in Australia.
We enjoy a glorious undulating acreage of a heritage listed Golf course conserving significant Blackbutt and Bluegums of a remnant forest above Devlins Creek in a naturalistic landscape. Project R&M is about the transformation of the course to modern standards and is fashioned on Phil Jacobs remarkable blueprint of a Player Design Course
Subscriptions are based on the total amount of money that is required to make necessary improvements to the course and to protect the investment we have made in our Club rooms. The strategy is to remain not only one of Sydney’s leading private member golf clubs but to restore our position in the Top 100 courses in NSW. The pitfalls of doing just the bare minimum are obvious and the benefits of development and improvement are equally apparent.
Invoices
Subs become payable from 1 April and have a 30-day time-frame for payment. Membership invoices will follow this letter which I hope puts the fees and the fee setting process in perspective.
Good luck with your golf,
Michael Rowan
President
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