From Kari M. Foster, Chief Financial Officer

There are many items that are discussed every month in the Finance Committee meetings and in the Board meetings. Summarized below are the key points, and it is important to note that no decisions have been made to date. We are simply sharing information.

As we begin the process of building the budget for FY 2027, it is important to discuss what is needed to make the next year successful. During the Annual Business Meeting held on May 14, we discussed the Club’s current operating and capital position. The Club has deferred maintenance, which means that fixed assets that should have been replaced based on the useful life of the asset have not been made. This creates the need to repair and replace items reactively versus proactively.

Consider your own house, there are many things that need to be repaired or replaced, such as air-conditioning/HVAC, plumbing, refrigerators, roofs, and more. As discussed in the Annual Business Meeting, consider all those things now at the scale of what the MAC needs not just in one location, but at the Downtown and West Clubhouses. Club Benchmarking, the private clubs industry standard, completed the Club’s reserve study and indicated that we have a significant shortfall in what is collected from members compared to what is needed to repair and replace current assets.

Given the Club was founded in 1903 and the flagship building rebuilt in 1914, it was shared that the Club started collecting capital dues in 2009. Since then, there have been subsequent years when no percentage increases were made. Presently, the Club has a shortfall in funding capital maintenance needs. The Finance Committee, Board of Governors, and Executive Leadership are strategically discussing many options to make progress on this front.

Operating dues have a similar pattern where there were several years with no percentage increases. Private clubs are not insulated from inflation and outside economic conditions, so when dues are not increased, this compounds the shortfall. Both operating dues and capital dues are bound to an 8% cap within the club bylaws. But what happens when goods and services in the marketplace increase by more than 8%?  The club still must purchase goods and services while attracting top talent in the marketplace.
 
There are a few areas that have been challenging in the past 10 years; namely, increases in property taxes, property insurance, and healthcare. The increases in those three categories alone range from 5% to 15% per year. With the current economic climate, all goods are more expensive, and vendors are passing along some of the increased cost of fuel and tariffs.

As a member-owned club, it is important that the dues collected cover what the MAC needs to successfully operate. The proposed FY 2027 budget will present what is needed in operating dues and capital maintenance dues to meet the needs of the Club. In addition, a potential capital reserve bucket would help to strengthen the balance sheet and make the Club more attractive to banks, as we strategically prepare for the MAC’s long-term strength.
 
If you have any questions, please let me know.