One of my favourite ads of late is that Trumpet one “togs togs togs… undies”. How far can you go from the beach before togs turn into undies? I have been thinking of this ad (not in a pervy way) after reflecting on my last blog. You may recall that I looked at a venue where the kids were not allowed into the Council owned loos at a venue managed by a community group. I noted that the venue generated some $30k from the bar. The metaphor is around core business: when is a sports club actually a pub?
So last week I went to a function at the Belfast Rugby Clubrooms. Nice club rooms, great outlook.
I had a wee gander at their latest financials (August 2016) just before I went to the meeting, just so I could understand how it sat regarding income. They can be found on this website. They generated a total revenue of just under $440k last financial year.
Of course there are direct costs associated with each revenue line around the “core businesses”: bar and as a sports club. The accounts show the bar produces a net $59k, open grade footie lost $2k, touch provided $8k and juniors provided $3k. These direct costs include coaching and uniforms, revenue includes subs, raffles and donations, grants and sponsorship. So core business provided a trading income of $67k. Curiously enough, as I had expected some change over 16 years, these revenue items are fairly similar to the 1999 accounts: the bar made a net $30k, senior lost $2k, Juniors contributed $8k and touch $12k to produce a trading income of $49k.
However, its a different story when it comes to expenses. There were then almost $300k of expenses which seem to relate to operating a venue, and which, BTW, are largely funded by grants. In 1999, expenses were $90k. The difference? Wages in 2016 were $135k, minimal in 1999. The 1999 ones showed no grants, although sponsorship came to just under $60k. Hard to say whether this was grants or not: I assume not given the language. In the 2016 Donations, Grants and Sponsorship figure of $175k, again it’s hard to say what’s sponsorship (i.e., a commercial transaction) and what’s grants.
As an aside, the accounts also identify a related party transaction: “The Club purchased product from Robbie’s Bar and Bistro, Belfast, of which … is the owner (of Robbies) and Chairman of the club. These transactions occurred on normal commercial terms.” Now, according to DIA data as at 31 December 2016, Robbie’s Bar have 18 Air Rescue and Community Services gaming machines in the bar. I do imagine that this conflict has been checked out, as otherwise that could just contradict section 113 of the Gambling Act 2003. For the record (from my mega database), in 2015 Air Rescue seemed to give $36k, Christchurch Earthquake Recovery Trust $40k. Interestingly, the gaming trust charged with raising money for rugby in the top half of the South Island, Mainland, seemed to give nothing in 2015. Two things; would be really helpful to see why these grants were made, and secondly, I reckon grant makers should disclose any related party issues in their decisions. Shout out to CERT who are providing some good disclosure around this now.
Now I confess I have not been into a sports club bar since the seventies, when Mum and Dad would drag us down to the Southland Aeroclub on Friday nights for a bottle of Thompsons lemonade and a bag of chips. That’s how things were then. Invercargill was not a hotbed of wine bars, gastro pubs and craft beer. Nor was the rest of the country. But, times have changed. Even in Invie. Private businesses have had to adapt or die. I catch up with my friends at the bar down the road, or at home. Organisations like this: well, write a grant application, and keep the beer flowing.
But this is by no means an exception: rather it’s very common. I looked at a Bowls club the other day: same scenario. In fact just this week Burnside Bowls Club won Club of the Year in the Nexia NZ Canterbury Sports Awards. Last year they made a total revenue of $155k from the bar, at a gross profit of $75k. This compares to a subscription and tournament income of $58k. What are they? A bar or a sports club?
I could suggest that this is a great example of how demand for funds has grown to meet supply, and how its symptomatic of the grant making ecosystem. I could also look at these accounts through a social enterprise lens and say they were doing a great job at diversifying income by generating money from trading. And that would be fine were it not for the large grant component which these guys are both eligible for and receive which seem to support the costs of their venues, and yet a privately owned bar across the street would be unable to access.
And on a different matter: DIA has just done a report on Gaming Trusts. You can check it out here. Interesting stuff, a good start.
Would love to talk with you if you think this is vaguely interesting..