Club Times Digital - August 2021

Preparing for the Future A Letter from the Treasurer and Finance Committee Chairman

for the earth movement/shaping, irrigation and drainage work. We are still on track to hit the budget approved by the Finance Committee and board and have avoided some of the inflationary pressures by pre-buying the majority of drainage and irrigation pipe. The very detailed plans that Lukus Harvey and his team put together have helped us drive sharp pricing from our contractors.

More broadly, our Club financial operations continue to be strong. Our facilities, operations, and resulting reputation have created great demand for the club from both current and potential members. The current internal wait list for golf is 24 months. The external waitlist to join the Club is 18 months and then an additional 24 months for golf privileges. Our revenues are within the budget that was set earlier this year. From a cost perspective there are two areas that are creating expense pressure on the financials of the club. The first is the labor market. The hospitality

“Our facilities, operations, and resulting reputation have created great demand for the club from both current and potential members.”

What a great few weeks it has been for the Club. Starting with the outstanding KPMG Women’s PGA Championship, followed by a stellar 4th of July, and then the Invitational completing an impeccable trifecta! Thank you to David Sheppard and the entire team for delivering to our members some experiences we will not soon forget. The guests that

ABOUT THE COVER This month’s cover celebrates the outstanding athletic accomplishments of several Atlanta Athletic Club members in the summer of 2021. Read all about them in the Athletics Section

industry is seeing one of the most significant labor shortages in many years. As Tim Bentsen and David Sheppard have previously communicated, these labor shortages have caused some curtailment of our operations – the continued closing of the Merion Room being the most visible example. In addition, salary adjustments, retention payments, and hiring bonuses have been required. Through sound financial management, thus far the club has been able to manage this within our existing operational budget. Like many of us, the Club has also seen a much higher rate of inflation than we have experienced in years. As an example, our parking lot renovation budget increased by 33% from the beginning of the year. Because of this, the project was delayed until next June. We have also seen cost increases in other capital items. As you may recall a couple of years ago, the club completed a 20-year capital reserve study. The purpose of the analysis was to document the estimated replacement costs for existing capital facilities to ensure capital funds would be available when required. The Club is currently updating this study and the Finance committee will review it this year. One of the primary vehicles for funding capital is our monthly capital charge. It is clear that the purchasing power of this charge has declined due to the inflationary pressures the Club is experiencing. This fall the Board will be presenting to membership a recommendation that an inflation factor be added to the existing monthly capital charge. This will help prevent a degradation in value of this important capital funding item. The Club has a strong finance and accounting function lead by Tony Kelley our CFO, Scott Sperry our Controller and their staff. In addition, the Finance Committee of Andy Dunn, Vice-Chairman, David Clough, Mike Englert, Laurie Ann Garrett, Hyungho Lee, Yutta McCants, Randy Moore, Steve Norton, Jason Patrick, Andy Scott, and John Straughan is comprised of individuals selected for their skills to help the Club with the issues that we face. Thank you to Tony, his team, and the Finance Committee for continuing to ensure that the club remains in a healthy financial position. Kevin Costello Treasurer and Finance Committee Chair

attended or those that watched were exposed to a level of perfection and hospitality that many of them had never seen. Talk about building the AAC brand! From a finance perspective, the club continues to be in a solid position. The audit for the fiscal year ended March 31, 2021 has been completed by our audit firm – Frazier and Deeter. They are a regional firm that has a specialization in private clubs like ours. Once again, we received a clean audit opinion. They were also very complimentary of our accounting processes and procedures. Our financial position remains secure with a solid cash balance and debt that remains in a range of reasonableness and within acceptable benchmarks for a club our size. There are no plans to take on additional debt and the Riverside renovation will be completed with existing funds. The Riverside Renovation project is progressing well. The

permitting process is moving forward with no major issues and we are finalizing our selection of the contractors

Members enjoying one of the many rides at this year’s July 4th Spectacular