by Angeline C and Paul Ho 6 Nov 2017
For some of us, it is only when we go through tough times that we take time to look at our personal finances rigorously and cut off unnecessary spending.
When you have enough money to let cash accumulate in your bank at near zero interest, you don’t really think much about spending a little more on taxi, clothes, travelling or the bills that get debited on your bank account via giro as there are sufficient funds not to have you incur fees related to non-payment.
But when times are bad, you look at every single expenditure and consider it in terms of priority.
For an average person, say imaginary Mr Tan, one of the items that could be cut off from his expenses is club membership at Singapore Swimming Club (SSC).
Every month, there is a subscription fee of about S$70 and there is an imposed spending levy of $90 per quarter.
While it is not that much, the amount can roll up to something significant and with the club in deficit, it is possible for the club to increase fees and other levies.
There is also the question of whether it is worthwhile as the facilities provided such as swimming pool, gym, tennis courts are easily available in public spaces, etc, where it is possibly more accessible via public transport.
Mr Tan was also hoping to recoup back some of his original entrance fee which was about $5,000 for conversion from child to adult membership.
So he called up the membership manager to enquire for sale of membership and she referred him to 3 third party brokers who will find another single member to pair up for sale.
As it turns out, there is a huge pool of sellers of single membership waiting to be paired up for sale. Further, the price has dropped over the years and is estimated at $10,000 – 10,500 for a family membership versus $14,000 if purchased directly from the club. After deduction of transfer fee of $8,560 to the club and an agent fee of $250 per single member, Mr Tan would only receive about $700 from the sale.
According to http://eresources.nlb.gov.sg/infopedia/articles/SIP_164_2004-12-30.html, the SSC bought back inactive memberships at S$10,000 in 1994 and sold to new members at $20,000 to raise funds and make room for new members. So the price has dropped much since then.
The SSC has a long and rich history, founded in 1894 by a group of Europeans who used to relax in the area.
According to the SSC’s annual report 2016/2017, there were a total of 16,446 members as at 1 January 2017 including honorary members, life members, ordinary members, lady members, absent members, junior members, child members and term members.
For FY16/17, there was a deficit of S$3.2 million compared with S$3.9 million in the previous year.
The three largest revenue contributors were from jackpot (35.3%), F&B (32%) and membership subscriptions (19.3%).
Thinking from the club perspective, ways to improve its financial situation include increasing number of paying members, increasing membership fees, increasing F&B spending levy, increasing fees for use of facilities and widening range of services.
At the same time, the club will also probably face rising expenses on refurbishment and maintenance costs going forward.
This will largely mean rising fees for existing members.
From current trends, it is also probable to project declining interest in jackpot given the availability of casinos, cruises. As the profile of members shifts to the younger generation, the club could see declining interest in the concept of a club membership since this generation may not see the value in owning a club membership and even the facilities including jackpot, which would mean a reduction in revenue.
Cashing out “en bloc style”?
While it is possible the club manages to reinvent itself to stay relevant in this digital age, it is interesting to consider the likelihood of members cashing out “en bloc “ style.
Let’s look at some examples.
In January this year, the government made known its intention to acquire the Raffles Country Club’s (RCC) 143 ha plot of land in Tuas to make way for the Singapore-Kuala Lumpur high speed rail (HSR) and the Cross Island Line’s western depot.
This follows the $89.8 million acquisition of another golf club’s plot of land - Jurong Country Club’s 67ha leasehold land by the government for the HSR project in 2015. This works out to about $33,000 per member based on 2,700 members. Of course, this has not taken into account the debts of the club and expenses related to closure of club.
The actual amount of how much each member stands to get or if they will get anything at all, perhaps an existing club member can share with us, www.iCompareLoan.com/contact.
While SSC is not located near the HSR, it is located in the highly sought after District 15.
It is built on a huge plot of land of over 27,000 sqm in the Tanjong Rhu/ Fort Road, opposite Dunman High School, near the Sports Hub and eateries along Katong and a short drive to city via the ECP.
For reference, the condo next door the 502 unit The Waterside is built on a land area of about 48,000 sqm. According to recent transactions, the average price psf is about S$1,400.
Recently, Amber Park which is located also in district 15 was sold enbloc for S$906.7 million or S$1,515 psf ppr. The size of the plot of freehold land was 213,675 sq ft.
Enbloc sounds like a good idea especially amid the current “enbloc fever” but the likelihood is low.
Meanwhile Mr Tan has the difficult decision of continuing paying the monthly fees, finding another single seller and buyer or giving up his membership.
Talk to us as we walk you through the process and analyse from your standpoint.