With 2019 CRCA Board Elections concluding this week, the Club’s new leadership team will soon be announced. As that transition approaches we have a summary of the 2018 financials and a preliminary 2019 budget that will be taken up for consideration by the 2019 Board.
Key Line Items: 2018 Actual and 2019 Budgeting
Membership revenue decreased by nearly 10% in 2018 to $82,000 due to a decline in CRCA membership levels and additional early registration discounts aimed at reducing the cost of CRCA membership. Our initial 2019 budget projects a further decline in CRCA membership inline with recent trends and a resulting ~5% decrease in membership revenue. We hope to secure additional donor members to offset some of this lost revenue and ultimately hope to return the Club to membership growth in the near-to-medium term.
2018 partnership revenue increased to $26,000, the highest on record, reflecting increased interest from sponsors in supporting the CRCA race calendar (Open Racing + Club) in the midst of CRCA’s hosting of both the State Criterium Championships and the State Road Race Championships. Most of this sponsorship was secured during the course of 2018 - looking forward to 2019 we have only have $10,000 of sponsorship on the books at the moment. We hope to fill in the sponsorship budget, particularly with additional Open Race expenses looming and expectations for reduced Membership revenue, throughout the course of 2019.
Club race expenses increased significantly with the transition to professional third party results. Club racing expenses totaled just over $62,000 for 2018 (excluding expenses vital to club racing like information technology to run the membership database). Looking to 2019 we expect expenses to increase to at least $70,000 as the Club is budgeting paid marshals to support the current race calendar which, at current membership levels, stretches marshal availability very thinly. Note that Club Racing expenses include charitable donations to Central Park Medical and the Central Park Conservancy as part of our ongoing use of Central Park for our racing and development events.
Open racing generated record registration revenue thanks to strong turn out for the State Championships the Club hosted in 2018. Though note that proceeds from the best performing event, the Grant’s Tomb Criterium, are allocated to support the Century Road Club Development Foundation 501c3 per the terms of our NYC permits. Excluding Grant’s Tomb, Open Racing still generated approximately $20,000 in net proceeds to the Club to help offset Club Racing expenses. Looking to 2019 the structure of Open Racing is expected to change significantly with increased use of paid race directors at the same time that record 2018 registration revenue is expected to decline without the State Championships. As such the preliminary 2019 budget models Open Racing net proceeds to decline to approximately $10,000, though this remains the most volatile line item in the Club’s budget due to a significant fixed cost structure for open racing, weather uncertainty, and continued shifts toward great last minute registration (despite significant early registration discounts for all CRCA events).
Development expenses, which are primarily comprised of coaching fees and the Club’s MindBody subscription for RSVP’s, were approximately flat with prior year levels in 2018 at $8,000 excluding a one-time donation/event expense described below. Looking forward to 2019 we expect to maintain Development expenses in this general context. In 2018 the Board did authorize a special one time $5,000 contribution to the Star Track fundraising dinner that was aimed at supporting youth cycling in the area. The event also served as the annual CRCA Donor Dinner, removing that expense from the 2018 budget.
Other Line Items
Remaining line items were largely unchanged in 2018 from the prior year. Information Technology expenses, which are primarily related to maintenance of the membership database and hosting fees were approximately $3,000. Board meeting expenses declined significantly to less than $500 with the use of video conferencing for many meetings, significant website development fees from 2017 did not recur in 2018, and the remaining major line items (storage, insurance, and special events) were approximately flat year-over-year at $1,000-$1,500 each.
2018 Net PRoceeds
Total net proceeds to CRCA were approximately $20,000 for 2018. The increase from 2017 largely reflected additional Open Racing net proceeds and Partnership revenue (both volatile line items that are difficult to predict at the start of the calendar year), partially offset by additional Club Racing expenses and lower Membership Revenue. As a result of these net proceeds and working capital cash generation reflecting 2017 prepayment of certain expenses, the Club ended 2018 with a financial reserve of approximately $250,000.
2019 Operating Budget
Reflecting the various line-item assumptions noted above the current budget for 2019 calls for modest net proceeds of $5,000. The decline versus 2018 largely reflects significantly reduced Open Racing proceeds due to the non-recurrence of the State Championships that boosted 2018 registration revenue and additional staff expenses as well as reduced membership revenues reflecting the trends experienced in 2018. The Club may also choose to make additional investments in promoting CRCA membership with the hope of returning to growth but ultimately hope to deliver another year at or slightly above breakeven.
Finally, the Club is currently exploring options to increase non-operations related revenue, including by allocating the Club’s financial reserves to interest generating FDIC insured accounts to take advantage of rising interest rates. Doing so may be an important source of revenue for the club in 2019 and beyond. Simultaneously we are re-negotiating our banking and credit card processing relationships with the hope of reducing these expenses in 2019. These actions are not currently included in the 2019 budget but will be accounted for once final interest income/fees are estimable.