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Dedicated Ice-- Membership Numbers and Revenue
Wed, 02/19/2014 - 4:12pm
I've been thinking a lot about membership levels and revenue in the context of the club's dedicated ice initiative, including the development of a membership model for the finance committee. I am on the finance committee but not on the dedicated ice committee. Since the dedicated ice plan is now being publicly debated, I wanted to offer some thoughts on membership levels and how members can choose to think about membership and revenue levels at a potential dedicated ice facility.
I intend to lay out in a few forum posts the variables that go into these computations. I don't necessarily know what assumptions were made in the final business model, so I'm not intending this as a point-for-point analysis of it. But I do think the variables outlined in this series of posts are ones that members can use to judge whether or not they believe the released plan is viable.
This post will discuss curling frequency.
I pick this variable because I heard it came up in a question at the San Jose discussion last night (I was at work and could not attend). The finance committee used an assumption that an SFBACC member who curls at the dedicated facility will do so in three leagues per year. Members who choose to curl at arena sites (if they continue to exist) are not counted for the purposes of this computation. Curling frequency is very important in determining revenue from the membership level since the proposed revenue model continues a pay-as-you curl structure like we have now of paying for each league as one registers for it.
Presently, people who primarily curl in Oakland curl in 2.45 leagues per year. People who primarily curl in San Jose curl in 1.6 leagues per year. This imbalance with more curling per person in Oakland than San Jose has existed for many years and is likely caused by the availability of more ice time in Oakland and earlier draw times (which are more convenient). Richard reported the 2.45 figure last night in the meeting, and I think that is the best answer to the question of how frequently people curl now since the draw availability and times in Oakland more closely match what we can achieve at a dedicated facility than the one-draw/late-night San Jose situation.
The estimate of 3.0 leagues per person represents a 22% increase over the existing three-season curling frequency for Oakland curlers (none of these numbers include the summer since the dedicated ice plan does not include summer operation). Most people assume that a dedicated ice facility will result in more curling per person since there are more days on which one can curl and potentially a variety of draw times to cater to different schedules.
Note that this does not include lifetime members, youth members, people who live far away but are members, etc. They are certainly members, but they won't be routinely curling in leagues and hence shouldn't be considered in any model predicting revenue from league fees. The same applies to members who might primarily curl at Sharks Ice locations--they may or may not curl somewhat at the dedicated facility also, but they aren't counted. The modeling counts relatively active dedicated ice curlers who will curl one league per season on average.
This presents a problem when dealing with newly-recruited curlers--both during the Olympic season and during ongoing operations in non-Olympics years. The model chooses to count all newly-recruited curlers during non-Olympics periods as identical to existing curlers--they'll curl at a rate of 3.0 leagues per year. In reality, this assumption is probably wrong since there is likely a higher probability that new curlers will become disinterested in curling at a greater rate than those who have already renewed membership at least once. I'll talk about this more when it comes to recruitment and retention.
New curlers recruited during the Olympics are treated differently. History says that a lot of these curlers will sign up as members in the spring and curl in one league or two leagues and then stop curling. The model deals with this reduced level of curling by assigning each curler recruited during the Olympics a curling frequency of 1.5 leagues during the 2014-15 curling season. This is done by assuming we only recruit half as many people as we actually do during the Olympics--that allows us to continue to use the 3.0 average for everyone. That is why the draft finance committee report has the concept of "effective members" in the year after the Olympics with a lower number than the actual number of members. After Olympics-era new curlers renew their membership, they are assumed to curl at the same 3.0 rate as all other club members using the dedicated facility.
If you've read this far (Thank you!), I would suggest that you take some time to think about whether or not you'd curl more as a dedicated ice facility user and, if so, how much more. The model assumes 3.0 leagues per year (a 22% increase over present Oakland-area 9-month rates and an 88% increase over existing San Jose rates).
If the dedicated ice facility has 125 members and league fees are $385 per league (the assumption the finance committee used), then each decrease (or increase) of average curling frequency results in a change of revenue of about $5,000 ($4812.50 to be exact). If people curl 10% less than expected, for example, there would be a revenue shortfall versus the assumed revenue of $15,000. Same thing for 10% more curling (an average of 3.3 leagues per year). That would result in $15,000 more revenue.
I'll try to add some of my thoughts on other variables involved in dedicated ice membership levels and revenue if people seem to want to read this sort of thing.