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Business Overview of ARC & WCB

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ARC – How do make money?

Club Members

Comp Members

Visiting Crews

Juniors Program

Private Lessons

Member Rentals Regattas

Retail Sales

ITR / Classes

Currently there are nine distinct businesses:

Together, these businesses form ARC

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ARC – How do make money?

Club Members

Comp Members

Visiting Crews

Juniors Program

Private Lessons

Member Rentals

Regattas

Retail Sales

ITR / Classes

Businesses that are stable or growing:

Businesses that are shrinking / more competitive:

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How Profitable is each ARC Business?

The table below shows ARC revenues and expenses (through Aug 2013) by program, excluding WCB & ARC overhead

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Six Entities Under One Roof

ARC WCB Congress Ave Kayaks

In Motion Fitness

Power to Perform Alta’s Cafe

$130 to $140 thousand in annual facility overhead to share

Key expenses that are included in WCB overhead are utilities, facility maintenance, Executive Director salary & front desk staffing. Not

included for purposes of this presentation are advertising & bookkeeping.

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Splitting Overhead

Below are estimated figures to illustrate how overhead would be split given the below revenues

EntityRevenues OverheadARC: $600k $82k (58%)Congress Avenue Kayaks: $215k

$29k (21%)Waller Creek Boathouse: $100k

$14k (10%)Alta’s Café:$100k $14k(10%)

Fitness in Motion: $15k$2k (1%)

Power to Perform: $0k$0k (0%)

Total:$1,030k $140k (100%)

In this example, WCB overhead is approximately 14%

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ARC’s Actual Share of WCB OverheadBelow is an estimation of ARC’s share of total WCB overhead YTD through Aug 2013. While the below estimate is not perfect, it is accurate enough to use for planning purposes.

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ARC OverheadThe below estimates ARC’s overhead YTD (through Aug 2013). This includes actual 2013 facility overhead, but also includes expenses unique to ARC that are directly attributable to any one program:

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ARC’s Share of WCB Overhead + ARC Overhead

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Allocating in the Overhead – Example 1

The table below proportionally allocates the WCB & ARC overhead by the revenue of each program. After allocating in overhead, the club is running its core programs at a deficit.

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Allocating in the Overhead – Example 2: Exclude Regattas

The table below is the same analysis as is on the previous slide, but excludes regattas (since they are held offsite & typically are not ‘overhead intensive’)

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Allocating in the Overhead – Example 3: Exclude Regattas & Juniors

Taking the analysis one step further, some might argue that the Junior’s program is a separate entity that should be excluding from having overhead allocated to it. If so, almost all of our core program become unprofitable.

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Waller Creek Boathouse

We have made approximately $38 thousand from event rentals YTD (after allocating in expenses & overhead).

Event rentals are critical to funding our equipment budget & are the only reason that we are in the black for the year.

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Key Takeaways

1) ARC is going to be the largest revenue driver for the foreseeable future, we need to plan to be responsible for 50-60% of the WCB Overhead

2) ARC’s overhead is high. It is not enough to look at a program & it’s direct expenses. Every program must also pull its weight in terms of overhead allocation.

3) Our highest margin businesses (visiting crews & classes / clinics) are the areas of our business that are shrinking. This puts additional pressure on our business model.

4) Event rental is key to funding our equipment budget.

5) Once we exclude the juniors program & regattas, very few of our core revenue drivers are profitable

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Appendix: Additional Details by Program

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Comp Team, Regular Rowers, Visiting Crews

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Juniors, Private Lessons, Member Rentals

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Retail, ITR / Clinics, Regattas, Other