Diversify or perish (or at least be in a world of pain!)

The sustainability of Queensland clubs may well come down to their ability to diversify revenue streams, the KPMG report into the future viability of the State’s sector has found.

The report, commissioned by Clubs Queensland, states the intrinsic value of community clubs across Queensland “extends beyond the quantifiable economic worth, to the cultural, social, physical and mental wellbeing of Queenslanders”.

However, the sector continues to be under siege on a number of fronts including online gaming and gambling (70% of those placing bets of horses in 2017 did so using a mobile device), emerging technologies such as Uber Eats to home entertainment streaming services and increased in-home consumption of alcohol.

“The challenge for clubs is that without innovation…they are at significant risk of being unable to maintain the same level of community contribution, attract members and maintain and evolve their physical assets,” the report states.

“To do this, industry participants need to develop a market-based approach to income diversification strategies and assess and allocate assets into strategic pathways.”

This may take the form of finding additional uses for land owned by the club, seeking ways to diversify income such as the provision of accommodation or non-traditional entertainment, embracing technological innovation and considering amalgamations with clubs that require expertise and capital to reinvent themselves.

Diversification Pathways

For clubs, the type and nature of diversification can be put into two distinct categories: asset diversification and market/product diversification. Each category has its own sets of unique characteristics and challenges, but simply means that clubs need to develop an understanding of what they have to work with in terms of their asset and the markets they want to attract to build revenue. Any opportunities available to clubs will fall out of this.

“Understanding the business of the club is critical. At its simplest, the business of a club is to ‘generate revenue to provide facilities and services to the community ‘– accepting that community includes club members.” said Laura Bos, Communications and Government Relations Manager Clubs Queensland. 

Ms Bos, who is a marketing strategist and has worked with companies the length and breadth of the ‘not-for-profit’ spectrum (including clubs) says that many organizations don’t develop a diversification strategy until it is too late and becomes too complicated and too risky. 

‘Human beings have an enormous capacity to over-complicate things. Diversification sounds complicated but it genuinely isn’t. Once you understand the ‘why’ and ‘how’ you are in business, the ‘what’ you do naturally falls out of that and if you are keeping true to your business purpose, the ‘what’ makes sense to the business strategy and our markets.”

“The ‘what’ clubs do to achieve this revenue is where diversification comes in and should be part of every club board’s strategic plan. Having a strong commitment to diversified revenue streams underpins sustainability and is a critical risk mitigant – it keeps our offers fresh and ensures we are aren’t vulnerable to negative market swings in one product area.

“The type of tenure a club has on its land will determine how it can be used and what hurdles lay in the way of that usage. From there, it is important for boards to understand what those hurdles really mean – some are able to be jumped and others are incredibly difficult. But there is no harm in asking the question ‘can it be done?’

‘Marketing and product opportunities are the same, but often the real barrier here is our imaginations. Attracting new markets requires new thinking, as does attracting additional spend from existing mar-kets.” 

There have been a number of early adopters who have found ways to diversifying their revenue streams while sticking to the core community values of their club who are paving the way and have been able to learn plenty of lessons along the way.

Camp Hills Bowls Club

Making bowls clubs family recreation destinations 

When the Camp Hills Bowls Club opened 75 years ago, the idea of having a hundred or so young kids running barefoot around the bowling green each week would have been nothing short of blasphemous to the membership.

Acknowledging the reality that lay before them however, the club in 2017 dedicated one of its two greens to the community where families with children of all ages are encouraged to get barefoot (or not) and into the game.
“For a few decades we were a bowling powerhouse and that had been enough in itself to keep the lights on,” Camp Hill Bowls Club Secretary, Luke Murnane (pictured above), explained to Clubs Queensland.

“But in around 2000, the local area underwent a significant demographic shift with a lot of young professionals and families moving into the area, while our membership base was not changing outside of retired seniors.

“We faced shrinking revenue, shrinking relevance to our community and the costs of being in business continued to go up. We had a persistent financial challenge and we were struggling to break even for a number for years with little prospect of change.”

The result was that in 2017 the club had an “epiphany” where it decided that one of its greens would be kept for the exclusive use of bowls members and serious competition, while the second green would be repurposed as a community asset.

“It’s been a great success,” Murnane said. “We have a steady stream of bookings and walk-ins each weekend. People genuinely love the club. And the feedback we keep getting is that we are not like anywhere else. We want the kids on the green.

“On any given weekend there could be 100 kids coming through on an afternoon and not a single iPad or smartphone in sight.

“We are still a proud bowls club but we are now a one green club and using our other green as a community hub is paying dividends. Our next generation of lawn bowlers already frequent the club but in a social setting. We hope this will lead to the long-term sustainability of the club as a going concern including on the bowling side of things.”

Where the club previously had no formal social membership arrangement, it now boasts some 300 social members. 

Murnane said the club invested around $50,000 in preparing the community green for its new purpose by reclaiming three metres of the green along one side where outdoor furniture is now housed. The club also installed new irrigation while the works were underway and a dedicated barbecue space is now being planned for the community green area. 

The bowls club has also entered into an external sublease with a Thai restaurant which has its own children’s menu again ensuring inclusivity of children and families in their recreational and dining experience.

“One of the things we have done and that I would recommend to other clubs in a similar position to us, is to understand that bowls clubs were never designed to be modern social venues” Murnane continued.

“Bowls clubs were built with a view of finishing your match and then getting out of the sun. We are working to change that mindset by encouraging people to sit outside our clubhouse, letting kids get out and about and playing. 

“Even if you don’t have kids, it makes for a wonderful atmosphere to see the community on show. We don’t just say families are welcome but show it through our actions and amenities.

“A relatively modest investment in the community green has completely repositioned and reinvigorated our club. Our surrounding neighbourhood is grateful for what we are doing and we hope we have gone a long way towards ensuring the club is here for another 75 years.

“Our older members love what’s going. They think this is a model for the future and they are proud to know that their little club is not only a place where you can come to enjoy lawn bowls, but it’s a place where families and the community come together.”

Bankstown Sports Club - boldly diversifying and succeeding 

Bankstown Sports Club could well be the poster child for diversification, having expanded its services and footprint, opened up a brewery which now sells to other venues, has a 216-room hotel, has completed building a $60 million commercial tower and over the years, has amalgamated with five smaller clubs.

It also acquired a 30% stake in procurement company Clubco, formed with North Sydney Leagues Club, which the club’s CEO Mark Condi says now sells about 200 consumable products online and since opening it up to the hospitality industry now has 100 clubs buying from them regularly.

The club, founded in 1958 as a small communal meeting place for various local sporting groups, now boasts a growing membership base now sitting at 75,000, supports more than 40 local sporting groups and employs in excess of 700 staff.

Condi says the club’s growth and development over the years is a vital part of ensuring its future.

“There are highs and lows in every industry, and hospitality is no different,” he said. “Gaming has been quite flat recently, which does impact our overall revenue. But we’ve been preparing for this; hence our diversification plans.

“While gaming machines do account for a portion of our income, we have invested in other areas so we appeal to a wider audience. We are now a one-stop community entertainment precinct.
“We have multiple bars and restaurants and various entertainment offerings across all six of our venues, which appeal to people who may not be interested in gaming. And we have to try and appeal to different age groups too. 

“I recently attended an RSL conference where people were saying young people aren’t going to their clubs, because they’re going to the pub instead. You have to keep in mind, 18-year olds want different things to 45-year olds and to 60-year olds.

“Our answer was to convert our sports bar and TAB – which had been stereotypically male dominated in the past – into a craft brewhouse, with 26 beer taps. We sell only craft beers at the venue, and 12 of them have been brewed in-house, in our microbrewery.”

Bankstown Sports has also invested $60 million in the development of a 10-story commercial officer tower which enjoys a 75% occupancy rate

Condi says the reasoning behind investing in the commercial tower was both sound and simple.

“The tower sits adjacent to the club and we expect that when it’s at full capacity, there will be between 1000 to 1500 people working in the building,” he said. “Those people will in turn, then come into the club to eat and drink, and use our conference facilities.

“Bankstown Sports and the Flinders Centre office tower is located right near Bankstown’s busy transport hub, which means we are in a prime position to attract local and metro business opportuni-ties. And when the tower is at full capacity, it will be generating approximately $6.5 million 
in rent.”

As part of its diversification strategy, Bankstown Sports Club has also enthusiastically amalgamated with other smaller clubs which were struggling to make ends meet, including Baulkham Hills Sports Club, Birrong Sports Club, Bankstown Bowls, Auburn Tennis Club and The Acres Club.

Condi says The Acres Club is a great example of what has been achieved through amalgamation.

“We took an old traditional bowling club, which had been losing hundreds of thousands of dollars a year, and within two years, we turned it around to be making a profit,” he explained. “As with our other clubs, we moved a lot of its administrative function to our main offices at Bankstown Sports to keep everything more streamlined. This also meant we reduced our overall running costs.

“We have also updated the venue, inside and out, to make its services and facilities more relevant for its members and the local community. We re-developed two of the three bowling greens into a large outdoor dining area, complete with a meat smoker, lounge area and kids’ playground. 

“The club is now thriving with all of the new additions and it’s really great to see”.