Business Overview of ARC & WCB

1. Business Overview of ARC & WCB

2. ARC – How do make money? Currently there are nine distinct businesses: Club Members Comp Members Private Lessons Visiting Crews Juniors Program Retail Sales Member Rentals ITR / Classes Regattas Together, these businesses form ARC

3. ARC – How do make money? Businesses that are stable or growing: Juniors Program Regattas Comp Members Club Members Retail Sales Member Rentals Businesses that are shrinking / more competitive: ITR / Classes Visiting Crews Private Lessons

4. How Profitable is each ARC Business? The table below shows ARC revenues and expenses (through Aug 2013) by program, excluding WCB & ARC overhead

5. Six Entities Under One Roof ARC WCB Congress Ave Kayaks In Motion Fitness Power to Perform Alta’s Cafe $130 to $140 thousand in annual facility overhead to share Key expenses that are included in WCB overhead are utilities, facility maintenance, Executive Director salary & front desk staffing. Not included for purposes of this presentation are advertising & bookkeeping.

6. Splitting Overhead Below are estimated figures to illustrate how overhead would be split given the below revenues EntityRevenuesOverhead ARC: $600k $82k (58%) Congress Avenue Kayaks: $215k $29k (21%) Waller Creek Boathouse: $100k $14k (10%)Alta’s Café: $100k $14k(10%) Fitness in Motion: $15k $2k (1%) Power to Perform: $0k $0k (0%) Total: $1,030k $140k (100%) In this example, WCB overhead is approximately 14%

7. ARC’s Actual Share of WCB Overhead Below is an estimation of ARC’s share of total WCB overhead YTD through Aug 2013. While the below estimate is not perfect, it is accurate enough to use for planning purposes.

8. ARC Overhead The below estimates ARC’s overhead YTD (through Aug 2013). This includes actual 2013 facility overhead, but also includes expenses unique to ARC that are directly attributable to any one program:

9. ARC’s Share of WCB Overhead + ARC Overhead

10. Allocating in the Overhead – Example 1 The table below proportionally allocates the WCB & ARC overhead by the revenue of each program. After allocating in overhead, the club is running its core programs at a deficit.

11. Allocating in the Overhead – Example 2: Exclude Regattas The table below is the same analysis as is on the previous slide, but excludes regattas (since they are held offsite & typically are not ‘overhead intensive’)

12. Allocating in the Overhead – Example 3: Exclude Regattas & Juniors Taking the analysis one step further, some might argue that the Junior’s program is a separate entity that should be excluding from having overhead allocated to it. If so, almost all of our core program become unprofitable.

13. Waller Creek Boathouse We have made approximately $38 thousand from event rentals YTD (after allocating in expenses & overhead). Event rentals are critical to funding our equipment budget & are the only reason that we are in the black for the year.

14. Key Takeaways 1) ARC is going to be the largest revenue driver for the foreseeable future, we need to plan to be responsible for 50-60% of the WCB Overhead 2) ARC’s overhead is high. It is not enough to look at a program & it’s direct expenses. Every program must also pull its weight in terms of overhead allocation. 3) Our highest margin businesses (visiting crews & classes / clinics) are the areas of our business that are shrinking. This puts additional pressure on our business model. 4) Event rental is key to funding our equipment budget. 5) Once we exclude the juniors program & regattas, very few of our core revenue drivers are profitable

15. Appendix: Additional Details by Program

16. Comp Team, Regular Rowers, Visiting Crews

17. Juniors, Private Lessons, Member Rentals

18. Retail, ITR / Clinics, Regattas, Other