A recent note from a member to the BoG regarding why they voted ‘no’ on borrowing more money…
The club is closed until it normalizes to surrounding businesses. I can take clients to any restaurant in Tokyo – except TAC. I can work out at a gym any time I want to – except TAC. I have an option, to wear a mask, or not, at any establishment I know of in Tokyo – except TAC. I could go on…
My fear is the availability of additional funds will allow us to maintain this absurd risk-adverseness. This fear multiplies when I think of the triple whammy of increased indebtedness, maintaining the clubs closed status; then, we raise dues – leading to an exodus of members, leading to borrowing the entire $10 mm, leading to $2.5 mm per year increase in debt service on top of the massive amount we already have. The net result, of course, handing over the keys to Mitsubishi. I bet they are just licking their chops.
I can’t speak for others, but I am hoping in the unlikely event that the loan is rejected by the members it will force us to look at our only other ways to survive: increased revenue (open the club), and decrease expenses. I also hope it might force us to consider creative solutions such as the proposed new membership tier where people can buy into an elite status with certain perks.
I like to think the businessmen who built TAC without borrowing money, and ran it primarily on membership dues with a balanced budget were also smart enough to write into the Bi-laws the check-and-balance found in the requirement for 80% of American members voting in favor in order to put a lien on their property. I think this is exactly the type of circumstance they feared.
I have been a member most of my adult life. My kids grew up at TAC. My social circle is at TAC. Believe me when I tell you that this is no flippant response. The turd is circling, and in my opinion we need to make some difficult decisions and take a little risk to survive. Perhaps running out of money just might shake things up enough for force bold action. Borrowing more money should be our last resort, not our first.
TAC must focus on cutting costs: Payroll at 58% of OR must be reduced to under 50%, as clubs are scalable. The majority of Japan cos. are cutting costs and reducing staff. Reduce pay of high paid FT staff by 15-20% and no bonuses.
Dramatically cut the Y1 billion Main.&Engin. dept. & outsource Dept.
Benchmark all depts. against 4 reciprocal clubs: HK Amer. Club; LRC H Kong; Sing. Amer. Club; Tangling Club Sing.
Open Club to members and guests; accept some risks.
In 2007 ground broke on new TAC after a 2006 debt-free TAC decision to borrow 100 million dollars and take-down the 34 year old TAC and Azabu Towers. Since then 3 major perturbations have proved the folly and imprudence of those decisions.