At its most basic, financial analysis is not all that hard. If you see that your organization is bringing in less revenue but costs are going up, you don’t need to be a rocket scientist to figure out that, eventually, you won’t be able to pay your bills anymore unless things change.
That, in a nutshell, is the situation the Burntwood Curling Club finds itself in, as the number of members drop but the cost of insurance stays high and the cost of water and sewer services rises, as it has for everyone in Thompson, almost without fail, over the 11 years that have passed since water started being billed for on the basis of actual consumption as measured by water meters.
And while one answer to the problem is to increase revenues, that may be easier said than done. The economic concept of cost elasticity says that the demand for a given product or service varies depending upon how much it costs, so while raising membership fees can increase the amount of cash coming in, it only does so if everybody who is a member at a lower price continues to be one as prices go up, or at least that not so many people opt out that the overall revenue goes down.
On the other side, the club could reduce its expenses, which is what it is trying to do by appealing to the city to cover the costs of insurance and water and sewer service.
If the city is smart, it might want to consider that deal. Since the building is owned by the city, if the curling club board and volunteers were to walk away and hand over the keys, it would be paying the insurance and water bill anyways. If the city didn’t decide to run the club itself at that point, it would be paying those costs for an empty building. If it did decide to run the curling club itself, it would cost the city even more, and more than the curling club spends now, given that it would have to hire employees at union rates, rather than being able to rely on volunteers and a few seasonal workers, like the curling club does.
If anyone should sympathize with the members of the curling club who are desperately trying to find a solution to the financial quicksand they are in, it should be the city. Much like the curling club, it is saddled with a cost it has no control over — the policing contract covering RCMP services — and a shrinking tax base with which to fund municipal government. Raise taxes too much and the city won’t be an attractive place to live. Cutting spending? Between policing services and negotiated contracts with its employees. maybe one-third of the city budget is unaccounted for in any given year. At a certain point, cutting services has the same effect as cutting taxes.
The concept of user pay is a good one, but the curling club may be a bit of an odd man out. Why should its members have to pay for its share of the city insurance bill it has no say in and the water bill, when other sports groups mere metres away may not? Recreation is a subsidized service provided by the city to improve the quality of life and it seems unlikely that, say, the fitness centre pays for itself out of memberships and drop-in fees.
This editorial appeared in the Aug. 26 print edition of the Thompson Citizen.
