The west of Ireland golf club that last year hosted the Dubai Duty Free (DDF) Irish Open has run out of its own cash due to the impact of Covid-19.
In a stark assessment of Lahinch Golf Club's finances, chairperson of the club council, Martin O'Sullivan has told members "overnight and without warning" the club's projected income for 2020 reduced by almost €3 million due to the collapse of overseas visitors as a result of Covid-19.
Mr O'Sullivan said the onset of the Covid 19 following DDF Irish Open and capital spend was like “the perfect storm”.
Green fees
At peak Summer season, visiting golfers pay €240 to play a round of golf at Lahinch and at the start of 2020, the club was projecting green fee income of €2.5 million.
However, due to Covid 19, the club now expects green fee income of €215,000 this year and a worst case scenario of €500,000 next year.
The club at the start of the year was also projecting a €487,000 gross profit from its golf shop for 2020 and that has now been reduced to €70,000 for the year.
Mr O’Sullivan stated that the drop in green fee income highlights the club's "over-reliance" on overseas visitors.
Mr O’Sullivan’s report has been circulated to members ahead of the club’s deferred agm, which will be held virtually on Thursday evening via Zoom.
Subscription hike
At the meeting, members will be asked to sanction a 7.5 per cent subscription hike for 2021 to help recoup some funding lost by the drop in green fee income.
In his report, Mr O’Sullivan said: “the impact of the Covid 19 pandemic on the club’s finances cannot be overstated enough”.
He said the club is projecting an operating loss of €400,000 for 2020 even after a “significant reduction in overheads”. These have been reduced by €920,000, while the club has availed of €250,000 in income support from the Government’s Covid Wage Subsidy Scheme which, he said, has allowed the golf club maintain full time staff.
Mr O’Sullivan said that the club’s balance sheet for 2020 will take a €1.24 million hit after depreciation costs are taken into account. “These negative results come on the back of a significant deficit for 2019, a consequence of hosting the very successful DDF Irish Open," he said.
'Cash rich' perception
"Despite the financial impact of Covid-19 on the club finances, the general perception is that the club continues to be ‘cash rich’ and financially secure”. However, Mr O’Sullivan said that while the club’s efforts in establishing a contingency fund for unexpected eventualities over the past number of years has proved extremely beneficial, “all of these funds have now been utilised and the club has no cash of its own”.
The club is projecting cash in hand at the end of 2020 and 2021 in excess of €1 million, but he pointed out but that these funds are made up of deposits received from the club's green fee visitors.
Mr O’Sullivan said that in taking a pragmatic but prudent approach, the club “intends to ensure that the club trades its way through the current crisis and, over time, build up cash reserves similar to what occurred following the financial crisis of 2008/12”.
