ACCT 90041: ACCOUNTING ANALYSIS AND DECISIONS: The management of the Rolling Hills Golf Club (RHGC), a club located about 100 kms from Melbourne CBD,  is presently considering a major upgrade to its facility, namely:

The construction of 4 accommodation units on site – to be built within easy walking distance of the Clubhouse. Each of the units would include 2 bedrooms and a very small kitchen, as well as a separate sitting/TV room, bathroom and toilet. The vision of the Club is to use the units to develop a number of attractive ‘stay and play’ type packages, to attract more golfers to the course.

 

The estimated cost for each unit is around $350,000, and this is a relatively precise costing. The Club presently has enough room for the units, so no additional land needs to be purchased.

 

Being a relatively small Club, RHGC does not presently have enough funds available for the purchase, but believes this to be a very good long term strategic investment. Therefore the Board has indicated they are happy to consider alternative, innovative ways to finance the construction costs. As such, the Board has approached your group for assistance on the following matters.

 

1. Should the Club pursue the project? Board members feel the intuition behind the proposal is strong, but do not yet have a clear sense of the potential advantages and disadvantages of the project and requires greater clarity in this regard. Assume the estimated construction costs indicated above are relatively accurate.

 

2. If the Club was to pursue the development, how would you advise the construction should be financed? Remember, the Board is happy to explore innovative approaches to financing the project.

 

In providing the above advice, you should consider the costs, benefits and risks associated with the project, over both the short and medium term. This should be supported by a solid analysis of the Club’s financial position and recent financial performance and projections for what is possible regarding the accommodation units. (Note: the financial information for the RHGC is provided via a separate Excel document downloaded from the Canvas site for the subject) Your advice should also indicate whether you believe the project ‘fits’ with the core values and key focus areas of the Club and should also consider any broader trends relevant to the industry. Note, in undertaking these tasks, discounted cash flow calculations are not required as we have not covered this technique in this subject.  Your analysis should also take into account the current and likely future implications of COVID 19.

 

Requirement for ACCT 90041: ACCOUNTING ANALYSIS AND DECISIONS assignment

 

Provide advice in the form of a business case. While you have considerable flexibility regarding the structure of the business case, your submission should include sections typically contained in such documents including: (i) Executive Summary; (ii) Background; (iii) Analysis; and (iv) Key

Recommendations. In preparing your business case, where possible, support your views with reference to calculations and any other appropriate supporting evidence. If you feel that your advice is limited in any way, identify the limitations. The remainder of this document contains additional information to assist you in this task.

 

The mark allocation is as follows:  Part 1: 30%; Part 2: 60%. 10% of your result will be allocated to formatting and presentation, which should be suitable for professional delivery to the board members of the RHGC.

 

BACKGROUND

Surrounded by magnificent natural bush, Rolling Hills Golf Club (RHGC) is a beautiful 18 hole all weather golf course located more than 100 kms south east of Melbourne. Rated in the top 100 public access courses in Australia, the 18 holes are varied and challenging. No matter the number of players, the course retains a sense of quiet seclusion. This has further enhanced the course’s reputation as being one of the very best in rural Victoria. A number of the large greens are bunkered and spectacular vistas of the rich surrounding countryside emerge at vantage points around the course. The Rolling Hills Golf club is run by a volunteer Board of Management who employ a Club Manager, a Golf Professional, an experienced curator and other support staff. The club commenced a strategic planning process in early 2018 and the consultation with members and other key stakeholders has been extensive. The plan aims to provide strong strategic direction for the Board that will enable to the club to continue to grow and be recognised as the premier golf club in the region.

 

THE CLUB – VALUES AND KEY FOCUS AREAS

The Club attributes much of its past success to its strategic focus and core values.

Values

To create an enjoyable and inclusive golf club with premier facilities for our members, visitors and wider community

Key Focus Areas  

1. Leadership – Build a strong and effective governance structure;
2. Participation & Growth – Building membership numbers and loyalty while increasing the numbers of people playing golf;
3. Volunteer Management – Recognise and reward the work of volunteers at the club;
4. Financial Management – Ensure that club is sustainable well into the future;
5. Player Development & Competition Golf – Increase the variety of competitions, so that more players can participate and offer opportunities for members to improve their golf;
6. Marketing, Promotion and Communication – Develop new marketing initiatives and increase the profile of the club while communicating clearly with club members about all planned changes;
7. Course and Facility Upgrades – Improve the ranking of the course and plan for realistic course and facility improvements.

 

HISTORY

On 24th March 1950, 138 acres of land was purchased on what is now known as Golf Course drive, approximately 17km north of the local township. The Rolling Hills Golf Club officially opened for business on the 11th March 1961.

In addition to the golf course itself, the club has constructed the clubhouse (in three stages – completed in 1979), the managers residence (1990) and course maintenance equipment buildings. In 1982, the club purchased an additional 25 acre property close to the golf course. The purpose of this land acquisition was to construct a dam so that the club would not suffer water shortages during dry seasons. This dam has a surface area of approximately 10 acres.

MEGA TRENDS

The RHGC remain aware of several recent trends that impact on golf when managing the operations of the Club – a few of which have been re-produced here. Participation: individualised sport and fitness activities are on the rise. People are fitting sport into increasingly busy lifestyles to achieve their personal health objectives. Participation rates in general fitness activities as well as social sporting activities have risen sharply over the past decade, while participation rates for some organised team sports have declined. People increasingly are playing sport to get fit rather than getting fit to play sport. More than Sport: the broader benefits of sport and being increasingly recognised by Governments, companies & communities. Sport can help achieve mental and physical health, crime prevention and social development. Sport for children and adults is an effective means of helping reduce rising rates of obesity and chronic illness. It can also be utilised as an effective mechanism for facilitating social inclusion for marginalised groups. Everybody’s Game: There are indications that Australians are embracing sport into their old age. To retain strong participation rates, sports of the future will need to cater for senior citizens. They will also need to cater for the changed cultural make-up of Australia. Golf Participation – Since 2000, the number of playing members at golf clubs in Australia has been slowly declining at an average of 1.48% per year (National Golf Census 2012). This equates to a decrease of 80,236 playing members. The Australian Bureau of Statistics estimated that 860,500 people aged 15 years and above participated in the game of golf on at least one occasion for the year 2011/12. According to the National Golf Census 2012, there were 409,449 affiliated club playing members as at the end of 2012. Therefore it can be estimated that over 450,000 participants engaged in the game on a casual (non-club member) basis. Currently the total playing membership at Australian golf clubs was 78% male and 22% female (National Golf Census 2012). Australia’s 55+ age group segment, whose overall participation in sport is low, represents the largest golf club membership cohort at 62%, followed by 35-54 years (26%), 18-34 years (8%) and less than 18 years (4%) (National Golf Census.

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