A Healthy Bottom Line

By Michael Mashburn

In recent years, the trend in local government is to operate recreation facilities more like private-sector businesses. Facilities are often built and operate with great success initially, but the challenge that directors face comes in maintaining the facilities and staying relevant in the market beyond the first 10 years. Several factors contribute to the long-term success of facilities. The following are some helpful tips that decision makers can utilize to lay a foundation and take steps towards increasing profitability.


Develop A Clear Roadmap To Success
Success doesn’t happen by accident, nor do successful facilities wait for direction from elected officials. Astute decision makers have an eye for the future, notice trends, and identify where there are gaps in market offerings and seek to fill them. Developing a roadmap for staff members that clearly outlines where the facility currently is, what it should be in the future, what the revenue goals are, what upcoming capital expenditures need to be planned for, and ways these goals will be attained is a must. With this roadmap in hand, a department can stay on course when city leadership changes as well.

Determine What Your Market Differentiators Are
If another facility in your area does something extremely well, don’t try to copy it. Identify what makes your facility special and focus on those areas. For example, I managed a facility in an area that had a high percentage of affluent families with school-aged children. Our birthday party program at the time was moderately successful because it was inexpensive and catered to non-residents with lower incomes. Rather than continue with that model, we decided to completely change our offering to an all-inclusive service that appealed to our residents, and gave parents the option to add a character appearance for an additional fee. All phone calls were then funneled through a select few staff members with sales experience who explained and sold the parties a certain way. The result was a 40 percent increase in the base package price and an additional $60,000 in annual revenue.

Know Your Numbers
Many of us are in the field of recreation because it is fun, and we have a passion for service. Budgets are boring and in good economic times they can often be an afterthought. Nevertheless, success in achieving 100-percent cost-recovery begins with knowing the numbers, making sure your staff members know the numbers, and constantly revisiting these throughout the year. If your staff members don’t know the difference of various budget types, what net revenue is, or what fixed costs, variable costs, and marginal costs are, teach them. The more they understand, the more ownership and accountability they will have.

The International Health, Racquet and Sportsclub Association (IHRSA) produces an annual publication called the IHRSA Profiles of Success (https://www.ihrsa.org/publications/ihrsa-2017-profiles-of-success), and is a good place to start when developing the foundation of where a facility should be financially.


Identify Target Markets
It is essential to generate as much revenue through membership dues on a monthly basis as possible. This is achieved by maintaining a full membership roster through continuous brand awareness and new member acquisition. The first step in identifying where new prospective members may come from is by assessing the demographics of those within a 5-, 10-, and 15-minute drive time to determine income level, household makeup, average age, etc. This information is all easily attainable online and most of the time is listed on each city’s economic development webpage. What most professionals don’t realize is how helpful their GIS departments can be in taking this information a step further. Many GIS departments use a software program called Esri. This software is able to drill down and help create highly detailed maps so decision makers are able to shift efforts to a more focused approach.

Years ago, I had my GIS department create a map of the city that showed colored rings signifying 5-, 10-, and 15-minute drive times on a typical Wednesday at 5 p.m. Research shows that a majority of members come from a 5-minute drive-time radius, while very few come from outside a 15-minute drive-time radius. Next, I segmented out areas of the city in various colors that showed all the different income levels, while blocking out any commercial space. This allowed for targeted marketing efforts depending on who we were trying to attract. Finally, I had the map populated with our facility in the center, along with colored dots showing where all our current members reside and where each of our competitors was located. The map allowed me to see where we did well in pulling in members, and where we should focus future efforts.

Monitor Your Brand Reputation
Knowing what your members and guests are saying is critical to the success of any business. Everyone knows about the common social-media outlets, but few businesses engage in actively seeking feedback outside these platforms. Listen 360 is a software program that gives facility operators real-time feedback every day through a brief two-question survey. The information contained in the survey measures the businesses’ Net Promotor Score (NPS), which is a key measurement when it comes to guest satisfaction. Through this system, businesses may be able to recover a disgruntled member before leaving, and address concerns directly with the member in real time.

Listen 360 is also helpful when it comes to deciding on future improvements since it allows for key word searches. For example, if an operator wants to know how many times someone has complained about dirty locker rooms over a three-month span, the operator can easily find out who complained, when, and how many times with a simple query. It also has an option that will prompt positive reviewers to transfer that review to the agency’s review sites with the click of a button.

Plan For Future Capital Expenditures
It is easy to get caught up in daily operations with so much happening in a recreation center. Before you know it, the facility will be 10 years old and will have definitely shown its age. When a proper capital-replacement plan is not in place, managers and directors are often at the mercy of city council and/or city management as to whether or not they will receive the funding necessary to update and fix the facility. If funding doesn’t come, or the facility is not maintained at a continuously high level, revenue will suffer as a result.

When managers are equipped with this information, it allows for proper budgeting and timely repairs, and all but eliminates the daunting task of a full-blown renovation down the road. Members will continue to visit as they appreciate the level of attention their facility receives, which in turn keeps the budget healthy.

Create Processes And Procedures
Make sure there are processes and procedures on paper for everything, for every role, program, and selling approach to ensure consistent training practices and a high level of service throughout. Not only will guests experience a dependable product every time, but new employees will have a starting point on what is expected in the position and how things should be done.

Keep It Simple
A key component that often gets overlooked is the membership pricing structure. Research has shown that people are most at ease and able to make a decision when presented with three or fewer choices. Members are also likely to stay at a facility nearly two times longer when they are signed up for automatic payments, rather than paying monthly. With this in mind, keep your membership pricing simple. Offer a few options (individual, family, senior), then offer two payment options (annual, or EFT). This sounds too easy to be true, but is a surefire way to spike revenue for those facilities that do not already do this.

Michael Mashburn is the Assistant Director of Parks & Recreation for the city of Farmers Branch in Texas. Michael previously served as the Manager of The Keller Pointe Recreation and Aquatics Center from 2014 to 2018, achieving the four most profitable years in the facility’s history. Reach him at michael.mashburn@farmersbranchtx.gov.