What a difference a year makes. Last year Mill Creek Country Club members were considering selling the club because of pressing financial obligations. This year membership is up, banquet center bookings are up, and worries about debt have faded significantly.
Setting the stage for a turnaround
In the spring of 2013 the Mill Creek Country Club’s Board of Directors told members that the club was steadily losing money and there was a major cash flow issue in 2014 when paying off the 17 Charter Equity Plus members who made the member-owned club possible.
At a May 2013 special town hall meeting club members were presented with a number of options to deal with the financial situation. One of these options was to sell the club.
After the meeting Paul Clampitt, then President of the Mill Creek Country Club Board of Directors, said, “The members overwhelmingly rejected the idea of selling the club and since then we have been able to restructure our debt in such a way as to give us at least 5 more years to build membership.”
With club members’ backing the board of directors hired nationally known golf course expert Ken Arimitsu to evaluate their situation. His first recommendation was to hire a professional golf management company to run the club more efficiently and to increase membership.
After interviewing three different golf management companies, the Board of Directors hired Atlanta-based Sequoia Golf to take over operation of the Mill Creek Country Club in October 2013.
"We chose Sequoia because we believe they have a long term interest in making Mill Creek Country Club a successful member-owned club, and we are the start of Sequoia's commitment to golf in the Northwest," said Clampitt.
“We interviewed other golf management companies. Sequoia was the most professional and believable, and presented themselves as the type of people we wanted to work with,” said Tom Libby, Mill Creek Board of Directors Treasurer.
“They showed a clear understanding of our situation and presented a realistic vision for how they could help the Club deal with its issues and move forward. We talked to a number of clubs in other areas that Sequoia manages and their comments were that Sequoia delivered beyond expectations."
Changes made to increase membership and improve cash flow
Sequoia Golf immediately took steps to change operations at the Mill Creek Country Club by hiring and promoting the following key personnel:
- Hired a General Manager and Head Golf Pro, Cory Carper. He has 20 years of experience in the golf industry with contributions to the success of seven other clubs prior to joining the team at the Mill Creek County Club.
- Hired a Membership Sales Director, Scott Anderson. He has a background in world-class golf at Whistling Straits in Wisconsin.
- Promoted the Food and Beverage Director/Banquet Sales Director, Meredith Lambert to a full time Banquet Sales Director. She has already increased the business by 30% of prior year.
In order to attract new members the new management took steps early in 2014 to align their pricing with other local clubs and to offer additional benefits to club members.
According to Sequoia Golf spokesman Chris Schwartz, “We conducted market research to ensure that our value proposition was in line with the other competitive clubs in the market. We made adjustments to our pricing structure to ensure our offer is attractive enough to grow the membership by reducing the initiation fee by $4,000 from $9,000 to $5,000, and we are currently running a promotion where new members can get in for $3,000.”
“We also introduced our PlayAway program that allows MCCC members reciprocity at over 450 private clubs throughout the United States and the best thing is the program costs the members nothing additional.”
“The management team at MCCC will be supported by the Sequoia Golf team behind the scenes leveraging their years of knowledge operating high-end private equity golf clubs and sharing best practices from over 1,000 clubs their team members have been associated with.”
“As a first step we evaluated every expense line and made changes that align with other Clubs we own or manage that are similar to MCCC resulting in a good deal of savings to the Club without affecting the member experience.”
The Mill Creek Country Club Board of Directors took a number of steps to improve the club’s bottom line as follows:
- They signed a five-year cell tower lease with AT&T providing an additional $21,000 per year of revenue and are in negotiations with Verizon for a similar contract.
- They implemented a lighting retrofit program costing $36,941, but after a Snohomish County PUD rebate of $17,240 the net cost was $19,701. With an estimated utility savings of $900 per month it will pay for itself in 22 months.
As a result of these efforts the club is now making a profit, membership is up, and banquet center bookings are up 30%.
Financial obligations addressed
After getting direction from the membership not to sell the club, the Mill Creek Country Club Board of Directors has been taking firm steps to address the club’s financial situation.
Along with hiring professional management for the club, the board contacted the 17 Charter Equity Plus members to see if they would extend their payoff dates to give the club more time to build membership.
Bart Pitzer, current Board of Directors President, said, “We now have 10 signed Charter Equity Plus member extensions and two who have verbally committed to extend their membership."
The club is now offering new $100,000 Equity Plus memberships, of which they have sold four and have $5,000 deposits on three more.
Postponing the approximately $1,700,000 payment to Equity Plus members gives the club time to increase membership and upgrade the club.
In the last six months the board successfully negotiated to sell the tennis facility to Roger and Byron Mark, who have been leasing and operating the tennis operation for the past five years.
Pitzer said, “We are in the process of selling the tennis facility to Roger and Byron Mark per their long-standing lease-purchase agreement. The purchase money is in escrow and wheels are in motion for a July 31st closing date.”
Pitzer went on to say that part of the proceeds from the tennis facility sale may be used to pay off mortgage debt. He went on to say some of the funds will certainly be used to update the banquet facility including new tables and chairs as well as a new paint job.
As well the club has hired an architect to prepare conceptual drawings for an outdoor swimming pool next to the clubhouse. According to Sequoia Golf’s market research, a swimming pool would “make it more of a social hub for members' and their families providing an enhanced lifestyle and promoting family time.”
According to Pitzer, “We also decided to form a pool feasibility committee to do the research on building the pool. They will help in the design, do research of other country club pools such as Everett, Ranier, and Bellingham. Their goal is to find the size of their pool, its depth, hours of operation, monthly dues, and operating expense just to mention a few things.”
Sequoia Golf is very encouraged by the progress made so far. Schwartz said, “The Club is really headed in a good direction. We anticipate it returning to the glory years where it served as the social hub to the community. Our members are as excited as we are and have already started referring their friends to the Club.”