Zinkin Obtains Oro Valley Projections, Losses Expected

Oro Valley Town Councilmember Mike Zinkin has repeatedly been denied complete and accurate information from Town staff regarding monies lost due to the purchase of the El Conquistador Country Club and golf courses. Finally last week, he was able to obtain records from Troon, the management company hired to tend to the courses.

Troon’s numbers spell out in detail the massive losses the Town has experienced, and can expect to experience in the future.

TROON
El Conquistador Pro Forma
2017-2022 Prive Pro Forma

	^{2017 Budget}	^{2018 Forecast}	^{2019 Forecast}	^{2020 Forecast}	^{2021 Forecast}	^{Growth Assumed}
^Revenues
^{Golf Fees ‐ Non‐Member}	^$1,003,084	^$1,038,192	^$1,074,529	^$1,112,137	^$1,151,062	^3.5%
^{Golf Fees ‐ Member}	^$144,772	^$149,839	^$155,083	^$160,511	^$166,129	^3.5%
^{Golf ‐ Group Services}	^$825	^$854	^$884	^$915	^$947	^3.5%
^{Range, Rental & Other}	^$36,200	^$37,467	^$38,778	^$40,136	^$41,540	^3.5%
^{Golf Lessons}	^$7,575	^$7,840	^$8,115	^$8,399	^$8,692	^3.5%
^{Membership Dues}	^$1,153,655	^$1,194,032	^$1,235,824	^$1,279,077	^$1,323,845	^3.5%
^Fitness	^{$ ‐}	^{$ ‐}	^{$ ‐}	^{$ ‐}	^{$ ‐}
^Swim/Tennis	^$322,640	^$333,932	^$345,620	^$357,717	^$370,237	^3.5%
^{Building Maint}	^{$ ‐}	^{$ ‐}	^{$ ‐}	^{$ ‐}	^{$ ‐}
^Merchandise	^$261,489	^$270,641	^$280,114	^$289,917	^$300,065	^3.5%
^{Food & Beverage}	^$813,575	^$842,050	^$871,522	^$902,025	^$933,596	^3.5%
^Other	^$1,200	^$1,242	^$1,285	^$1,330	^$1,377	^3.5%
^{Total Revenues}	^$3,745,014	^$3,876,090	^$4,011,753	^$4,152,164	^$4,297,490
		^3.50%	^3.50%	^3.50%	^3.50%
^{Cost of Sales}
^Golf	^{$ ‐}	^{$ ‐}	^{$ ‐}	^{$ ‐}	^{$ ‐}
^{Group Services Golf}	^$660	^$673	^$673	^$687	^$687	^3.5%
Golf Lessons	^$6,818	^$6,954	^$6,954	^$7,093	^$7,093	^3.5%
^{Service Commissions}	^{$ ‐}	^{$ ‐}	^{$ ‐}	^{$ ‐}	^{$ ‐}	^3.5%
^Merchandise	^$163,923	^$167,202	^$167,202	^$170,546	^$170,546	^3.5%
^{Food & Beverage ‐ Total}	^$273,305	^$278,771	^$278,771	^$284,346	^$284,346	^3.5%
^Other	^$185,460	^$189,169	^$189,169	^$192,953	^$192,953	^3.5%
^{Total Cost of Sales}	^$630,166	^$642,769	^$642,769	^$655,624	^$655,624	^3.5%
^{Gross Margin Operating Expenses}	^$3,114,849	^$3,233,321	^$3,368,984	^$3,496,540	^$3,641,866	^3.5%
^Payroll	^$1,667,026	^$1,717,037	^$1,768,548	^$1,821,604	^$1,876,252	^3.5%
^{Employee Benefits}	^$394,021	^$405,841	^$418,017	^$430,557	^$443,474	^3.5%
^{Employee Related Exp}	^$49,537	^$51,024	^$52,554	^$54,131	^$55,755	^3.5%
^{Professional Fees}	^$300	^$309	^$318	^$328	^$338	^3.5%
^{Advertising & Marketing}	^$47,900	^$49,337	^$50,817	^$52,341	^$53,912	^3.5%
^{Repair & Maintenance}	^$545,025	^$561,376	^$578,217	^$595,564	^$613,430	^3.5%
^{Other Operating Expense}	^$304,467	^$313,601	^$323,009	^$332,699	^$342,680	^3.5%
^{Total Operating Expenses}	^$3,008,275	^$3,098,524	^$3,191,479	^$3,287,224	^$3,385,840
^{Fixed Operating Expenses}	^$106,573	^$134,797	^$177,505	^$209,316	^$256,025
^{Leases ‐ Carts}	^$99,000	^$112,000	^$112,000	^$112,000	^$112,000	^0%
^{Leases ‐ Equipment}	^$251,568	^$251,568	^$251,568	^$251,568	^$251,568	^0%
^Utilities	^$1,144,898	^$1,144,898	^$1,144,898	^$1,144,898	^$1,144,898	^Flat
^{Total Fixed Operating}	^$1,495,466	^$1,508,466	^$1,508,466	^$1,508,466	^$1,508,466
^{Gross Operating Profit (Loss)}	^($1,388,892)	^($1,373,668)	^($1,330,961)	^($1,299,149)	^($1,252,440)
^{GOP %}	^‐37%	^‐35%	^‐33%	^‐31%	^‐29%
^{Other Expenses}
^Insurance	^$1,613	^{$ ‐}	^{$ ‐}	^{$ ‐}	^{$ ‐}
^{Property Taxes}	^{$ ‐}	^{$ ‐}	^{$ ‐}	^{$ ‐}	^{$ ‐}
^{Fees, Permits, Licenses}	^{$ ‐}	^{$ ‐}	^{$ ‐}	^{$ ‐}	^{$ ‐}
^{Base Management Fees}	^$144,000	^$144,000	^$144,000	^$144,000	^$144,000
^{Bad Debt}	^{$ ‐}	^{$ ‐}	^{$ ‐}	^{$ ‐}	^{$ ‐}
^Other	^{$ ‐}	^{$ ‐}	^{$ ‐}	^{$ ‐}	^{$ ‐}
Total Other Expenses	^$145,613	^$144,000	^$144,000	^$144,000	^$144,000
Net Operating Income (Loss)	^($1,534,505)	^($1,517,668)	^($1,474,961)	^($1,443,149)	^($1,396,440)
NOI %	^‐41%	^‐39%	^‐37%	^‐35%	^‐32%

Key Assumption:
Assumes continued strategic, laddered capital investment strategy that blends capital improvements and repairs. Food and beverage department is key component with break even operating departments. Membership levels are approximated at just over 300 golf related memberships.

Current conditions do not inspire confidence