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 1
994-1998) Geoffrey Walker, Paulo Maques
