Category: Member Comment

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Every December Club Members Are Stranded Outside the Gym The Last Two Weeks Of The Month

Dear Tokyo American Club Management,

Every year members are stranded outside the club on the cold December mornings before the new year.  A quick review of the club website showed no clear schedule of when the gym was actually opening before the hour changes.

Would you PLEASE do a better job of communicating the hours of the gym?  Frankly, opening 1 hour later is a pain for growing majority of us who are still working through the remain business days in the calendar!Thank you for your efforts to make your year-end hours clearer and reconsidering shutting down the prime time many of us use the club during our week.-MABT

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An Inside Job? TAC Members Speak Out

Dear TAC Member,
There is a new movie called “Inside Job” that is a must see  It details the root causes of the global financial crisis; the heist by Wall Street with the compliance of government.
An analogy can be seen at TAC where over the past 25 years, members have seen a devaluation of their memberships as management and the BOG orchestrated a reversal of roles whereby members now serve the interests of management. This has resulted in the top 10 executive staff`s (staggering) average compensation p.a. at Y28 million ( $350 thousand) and the average full time staff salary over Y8 million ($100+thousand). Over staffing and not outsourcing have added to the debacle.
New TAC is the final countdown as to whether the greed, bad decisions, the  heisting (TAC-jack) will survive. A complacent/transient membership has provided the culture for these excesses. The enemy does lie within. It is an Inside Job. It is us.
TAC`s budget for 2011 shows little change in payroll — Y1.8 bn.($22+million) that is 77% of operating revenue ( industry norm between 40% to 50%). At TAC in 1983 it was 52%.
TAC`s F&B Cost of Goods (COGs) is budgeted at 27% next year, an unscrupulous mark-up of just under 4 times cost ( marketplace norm about 33% to 35%). TAC in 1983 was 41% a 2.5 times mark-up. And sales were higher in 1983 than the 2011 budget and with 2600 members versus a plan of 3600. 1983 per member sales Y488 thousand; 2011 plan about Y280,000, a 41% decline without adjusting for inflationary price increases. Over the past 15 years TAC has experienced plummeting F&B sales per member. Perhaps the COGs data tell why.
TAC is a simple business to run. A captive membership pays entrance fees and dues accounting for 60% of its revenue. In 1983 it was 45% when it delivered value to members. Entrance fees are not part of operating revenue and are meant to be reserved for renovation and rebuilding. In the past 25 years these amounted to over Y200 oku ($250 million) most of which went to payroll. Voila.
A recent announcement by TAC is to charge members a 3% service charge from January if they pay by cash or credit card. No charge for bank debit. TAC should have a credit card(s) rate of about 1% (maybe less) but has one of about 3% due to lack of common business sense. This is another shining example of how members are not getting value for their money by a management focused on its own perks to the detriment of  members who are its employers. Members should reject any service charge.
The Y11bn. ($130+ million) 4% interest loan is a dead weight around the neck of TAC. After paying the 25 year loan to term there is still a principal of almost Y9bn. (over $100 million) to pay. The 1% amortization makes it almost an interest only loan. Extremely imprudent and potentially fatal. Members should demand that all of the entrance fees be used to accelerate the principal repayment which would be 4% annual amortization, not the 1% planned. This would force payroll cuts and encourage outsourcing.
The “Inside Job” movie shows Wall Street hasn`t changed that much. What about TAC? Will the Inside Job, TAC-jack, muddle through and carry on regardless? Or will the invisable hand of the marketplace win in 2011 and render it the equivalent of the Tokyo Banana Republic Club? A hint — to date your BOG battling average is just about zero.
Members voted down the dues levy in June and are outraged by the executive salaries, F&B prices, and the enormous (coup de TAC) loan. In a show of defiance, your tax and spend BOG renewed the GMs contract in September and passed a 2011 budget with no significant cuts. The financial accounts show that the Club has negative equity. You should Vote against the 2011 Budget and the BOG that approved it. God save the member.
Signed: Greg Carley (TAC President 1994-1998) Geoffrey Walker, Paulo Maques
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Following The Smoke- Whose Idea Was This?

We have had several highly charged Townhall Meetings as certain members of the board of governors tried to push through rate increases contrary to their original promises that, ‘you can have a new clubhouse, and rates will not change for existing members’.  The membership did not buy that, and many groups have arisen to find out what is going on.  Much has come to light.  Who made these promises and who is trying to break them?

Of course, you can blame things on the economy as well as the drop in membership.  But how could any restaurant or hotel think that they would do any business on the backside of Shinagawa station no matter how captive the audience?

What is going on in the background?  Who actually could have skin in the game, or at least pride on the line?You’ll have to decide what you think, but we’ve been following the smoke.  The three names on the presentation pushing to spend millions and build a new clubhouse are-

1) Mike Bumgardner
2) Tom Brown
3) Dan Thomas

If you were at the last Townhall meeting, you are probably connecting the dots about now.  If you missed it, you can read the notes from the meeting here, you will likely find some interesting connections.

Elections are right around the corner.

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TAC Elections: President: Recommendations

Here at MABT, we’ve been poring over the candidate data trying to figure who deserves your vote this time around. We’re still trying to figure out how to insert a poll in here to get your feedback – in the meantime, hit us with your comments!

We will be asking all candidates to respond to a survey on their views on the key issues. Stay tuned!

[Naturally, all the opinions expressed here are solely those of the authors and do not represent the views of TAC or (obviously) the candidates!.]

Here’s our quick take on El Presidente:

Nominee:Lance LeeRod Nussbaum
Recommendation

No way!

Yes way!

Principal says …Doesn’t play well with other boys.New to the school. Still making friends.
Wagtail Comment:Sorry, Lance, but you signed the new GM contract. That’s got people angry. And if you sup with The Devil, you have to accept that sometimes the chalice is poisoned.And that 3% charge on cash payments … Say goodnight, Dick!.The gossip says Rod is closely connected tied to the status quo. Even so, his policy statement hits the right buttons in terms of the key issues: strategy, governance, and transparency.Still, the proof will be in the pudding!
One-Liner:Problem with Lance is it’s always someone else’s fault.A vote for Rod at least gives the Club a chance.
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New TAC Service Fee For Paying Cash?

Member Comment-

I have just received notification of the 3% “handling charge” for monthly bills paid in cash and other means other than direct debit, effective 1/11.
I don’t know about the rest of you, but I have never been charged a handling fee for paying by cash. On the contrary, cash is free, credit cards sometimes x% plus.
I wonder if this is related to the President’s pre-TH meeting email to members telling us basically that there was nothing to worry about, all was well and good, and we could all relax because our Board had found ingenious ways to solve all financial problems?
What else is coming down the pike to squeeze us by the proverbials? 100 yen for butter we have already had, next perhaps a cover charge in Traders?
I wonder why this decision was not raised by those responsible for it at the meeting last week. This secretive, dictatorial approach is repeated time and again by the so-called leaders of the Club.
I recommend that this topic – both the surcharge itself and the manner in which it has been introduced – be on the list of questions for candidates at the upcoming TH meeting with BOG candidates (as promised by the President last week).

Quoted from P.Cove

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Summary Of TAC Townhall Meeting 27 Oct 2010

As the management of the American Club has apparently managed the TAC to the brink of financial failure, a group of 4 TAC members teamed up with 4 TAC board of governors.  This group was named ‘The Working Group 2” or TWG2.

This TWG2 presented their recommendations for how to fix the problems of the TAC.  They were very candid about what needed to be done.  Following their presentation, when asked if they “were confident that their recommended changes would be implemented?”.   the group unanimously responded “No”.  They responded on how getting information was slow and painful at TAC.

It was apparent to all present that there was a split between TWG2’s recommendations and some members on the board.  Although the positions of all the BoG (board of governors) was unclear, one board member made clear that he was against their recommendations in several instances.  In one case, he responded that the loan could not be renegotiated.  When asked by another member, he revealed that he was the one who negotiated the loan at 4 plus % interest for the club but did not clarify why he was unwilling to renegotiate and his position varied from that of the 4 TWG2 members.

The overall conclusion was that the problem of the club is not just an inept general manager playing the committee and board system, but also some individuals on the board of governors.  There are definitely some good people there, but there are also some people that need to move on.

A recommendation was made, and accepted by the President, to have a further meeting for the Board of Governor candidates to debate or state their positions as being for change or of the group that would continue the status quo and continue to block change and not make the changes necessary.

An American Chamber of Commerce (ACCJ) board member asked the General Manager if he paid for the development of yet another new TAC site that was described earlier in the meeting.  With a bit of stumbling around saying something about a ‘backend’ the GM confirmed that he did use budget to develop a new website.  The member went on to explain that the TAC must shift their thinking.  “The paradigm must change” he stated.  He illustrated his points by explaining how at ACCJ he paid nothing for web development, the chamber magazine, the upkeep of the website or virtually anything else.  This comment was a brilliant illustration that TAC needs people with fresh minds.

Although we have not covered all the questions and comments of the membership in this summary,  the conclusion we made from all that we need to rid the club of blockers on the board of governors and elect people who are willing to implement the changes.  One BoG member (mentioned above) seemed to indict himself at the meeting as being against change later on multiple points.  Later arguing with the TWG2 members about providing information that the 4 clearly stated they had not received.  The positions of the other BOG members and BOG candidates for the upcoming election remains unclear at this point.

The great work of the 4 board of governors and the TWG2 made it known that their work must be implemented otherwise we will have to continue “these

If you have any comments or would like to add any further points, please feel free to do so in the comment section below.  We will edit this summary accordingly to incorporate your comments.

Stay tuned!

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Opinion- F&B August Meeting Notes Observation by Greg Carley

TAC continues to move toward the precipice. How about some real benchmarking and common sense solutions.

“Capping the well” (cutting the $20 million payroll by $5 million+) is necessary as well as delivering value to members with inexpensive, casual dining.

The mind-boggling Aug. F&B committee meeting sets the stage by using the Roppongi Hills Club (RHC) as the benchmark and weaves a strategy for new TAC’s F&B around it with a Cost of Goods target of 26% which is a mark-up of 4 times to reach the member’s price. And more poison for the patient.

This strikes me as an ultra “bunker” strategy, divorced from realiity. The premise is that TAC members want a RHC equivalent dining experience with an American focus (whatever that may mean). I wonder how many members have ever been to (or heard of) the RHC. More likely, the cheap-and-cheerful dining experience of Global Dining (La Boheme, Monsoon, etc.) and the like is the goal of most members. No one seems to have impressed on TAC that fine dining started to decline (replaced by casual dining) in clubs around the world about 20 years ago. New TAC went big on F&B and now the tail is waging the dog.

RHC is in a business hub and a destination for shopping. TAC is not. The belief that “build it and they will come” will go live early next year.

The dramatic decline in TAC’s F&B sales over the past 15 years is directly due to the internationalized, super-competitive marketplace. TAC does not offer value for money and members have voted with their hip pockets and for diversity. It’s that simple.

The F&B centric TAC is sailing against the head-winds and all will be revealed next year. I have attached to this email a two page financial report which appeared in the Sept. issue of the New York Athletic Club’s magazine (NYAC). The NYAC seems to be doing everything right and offers real value to members with low entrance fees, reasonable monthly dues and good F&B value. And no debt. TAC should be benchmarking against the likes of the NYAC and clubs in Asia, not the RHC. The NYAC has a staff to member ratio of 1:24 vs. TAC’s 1:11. The NYAC marks up their F&B about 2.2 times versus TAC’s plan of 4 times (Historically TAC was a about 2.5 times)  Now that’s benchmarking. But that might be just too much common sense to take into the next committee meeting. It is also important to strip room rental (about 10%) out from F&B revenues as this distorts COGs and comparisons, exaggerating mark-ups. “Wastage” may be the culprit in what seems to be a 5 or 6 times mark-up over COGs.

There will be many course corrections next year but the overwhelming $125 million loan at 4% looks like the fatal coup de TAC. TAC has managed to snatch defeat from the jaws of success. A fatal flaw is its “reversal of roles” whereby members serve the interests of a small number of “lottery winners” with a transfer of wealth from member to elite staff. Over the past 25 years most of about $250 million in Entrance Fees which should have gone into reserves for renovation and rebuilding went instead to salaries.

Greg