COVID-19 Unincorporated Association scenarios for Irish Golf Clubs

The Club, which is 108 years old, operates as an unincorporated association. It is located not far from Limerick and has a tidy heathland course with 18 holes. The Club, like many others, has suffered in recent years from falling membership numbers, rising costs and low visitor footfall and, because of its location, it is largely dependent on attracting its membership from the local area.

The club employs a Secretary who undertakes the administration work, three greenkeepers, three bar staff, four catering and waiting staff and a cleaner, a total of 12 employees on the payroll. Their PGA Professional has been retained at the Club for the last three years and provides the full range of golf services to members and visitors, but the lack of practice and coaching facilities hamper him from providing the quality of service he would like to deliver.

The business of the Golf Club is directed by a volunteer committee of 10 members, and it is becoming more and more difficult to attract members to serve on it. The Club Captain leads the committee, but the captaincy is for only one year, leading to a short term and constantly changing approach to running the Club.

Membership numbers have fallen from over 400 in 2017 to just under 300 in 2020, and the Club has made losses of £20,000, £16,000 and £23,000 in its last three financial years. Consequently, successive committees have had to approach the membership for increased subscriptions in each of the last 3 years, contributing significantly to the fall in membership numbers. Membership subscriptions are due to be paid by March 31 each year.

With no defined strategic direction, the club has not managed to balance the books for some time and consequently has no reserves set aside to help it through times of unanticipated business interruption such as has recently arisen in the closing down of golf throughout the island of Ireland because of the COVID pandemic.

The Club’s operations have effectively been mothballed since the middle of March, and the committee decided to keep the Secretary and two greenkeepers in post but on reduced hours in order that the club administration can be kept up to date and essential on-course maintenance undertaken. Reluctantly, the decision was made to lay off the other staff members in the middle of March 2020. Consideration was given to seeking to access funding under the terms of the COVID-19 Wage Subsidy Scheme to allow the Club to keep these staff on the payroll but since none of them were particularly well paid it seemed to be more advantageous, both to the Club and the individuals, to encourage them to apply for social welfare support through the COVID-19 Pandemic Unemployment Payment Scheme.

Because the staff had to stop working in the middle of March due to COVID-19, they are likely to be eligible for the COVID-19 Pandemic Unemployment Payment from March 24, if they meet the age and residency criteria. This government support takes the form of a direct payment of up to €350 per week, can be applied for on-line through mywelfare.ie and the is likely to be in place for the duration of the crisis.

Some of the laid off staff may also be eligible for Jobseeker’s Allowance, while the Secretary and retained greenkeepers might want to investigate additional funding through the Short Time Work Support scheme.

The PGA Professional also had to mothball his business when the lockdown started and, as a self-employed person, was able to apply for the COVID-19 Pandemic Unemployment Payment since he:

Is aged between 18 and 66 years old
Lives in the Republic of Ireland
Has ceased having trading income due to COVID-19.

While helpful to have some income, the PGA Professional in concerned because in a normal year between 25% and 30% of his annual turnover is generated in April and May, and that income stream has completely dried up since lockdown started.

For the time being, the Committee and the Secretary, in communication with The PGA Professional, are keeping watch on the whole COVID-19 situation, particularly as it relates to golf, so that they are ready to react when activity restarts.

The Committee is aware that cash flow is likely to be under pressure, particularly since a number of members who were due to pay their subscriptions by March 31, 2020 have held off until it becomes clearer that golf will be restarting over the summer months.

They heard of the MicroFinance Ireland COVID-19 Business Loan and believe they meet the criteria since the Club’s turnover and profits are likely to be more than 15% down on normal, and turnover is well below the €2m maximum. In addition, since laying a number of staff off in mid-March, there are fewer than 10 employees on the payroll.

The Club is unlikely to be able to access loan funding through the Irish banks should it require finance to support the business post-pandemic, so access to a MicroFinance Ireland COVID-19 Business Loan of between €5,000 and €50,000 could be particularly useful in the short term since the loan attracts 0% interest in the first 6 months, and there are no penalty clauses for early repayment.

There is no guarantee that the Club will be able to access the loan, however, since it is an unincorporated association which does not have a legal identity separate from that of its members, so any loan agreement would have to be entered into by office bearers or management as defined in its constitution. In addition, prior to laying off staff in the middle of March, it had more than 10 employees on the payroll, so that may impact on any loan decision. The Club has also made fairly significant losses in the last three years of trading, which would also be taken into consideration when assessing any application.

The committee decided to make a loan application via MicroFinance Ireland and hope that it might be considered favourably.

In the meantime, the Committee decided to take advantage of the Revenue’s decision to suspend interest on late payment of PAYE liabilities for February, March and April and to delay payment of these liabilities for the time being to assist its cash flow position during this time of uncertainty.

The Club is registered for VAT and its bi-monthly VAT submission for January/February 2020 was submitted on time by March 19, so it was able to take advantage of the suspension of interest on late payments to delay paying that VAT liability for the time being, and thus support its cash flow position. The late payment of interest suspension has since been extended to cover the return due for March/April 2020 and, while the VAT return has to be submitted on time by May 19, the VAT payment for that period can again be delayed, should the Committee so wish.

The Committee also got to thinking about the Club’s Business Rates payments which are a further drain on cash flow. The Irish Government has confirmed with local authorities that they should agree to defer rates payments due from the most immediately impacted sectors, and in particular the leisure sector, until the end of May. The Secretary was asked to contact the local authority to start discussions about the deferral of the Club’s Business Rates.

They Committee should, however, be mindful of accumulating deferred debts, such as VAT and PAYE repayments, Business Rates and any MicroFinance Ireland COVID-19 Business Loan that might be secured, to avoid excessive calls on the cash flow in future months.

In summary, the Committee explored all avenues available to it in aiming to mitigate the impact of the COVID-19 pandemic on the Club’s operations. While it reacted as quickly as its governance arrangements allowed in terms of trying to save costs, it has had little or no success in replacing income streams, but instead has managed to defer the payment of certain liabilities such as PAYE, VAT and, still to be confirmed, Business Rates.

The Committee is holding out hope of being able to access loan funding through a MicroFinance Ireland COVID-19 Business Loan but has not yet had any confirmation either way.

In any event, all of these deferrals and/or loans will fall due for payment in the coming months and the Committee is mindful of the need to prepare, as a business, to meet these liabilities.

The restart of golf in Ireland cannot come soon enough for the Club, so the Government’s announcement that golf could restart on 18 May, albeit in 5 clearly defined phases with safety at the heart of its objectives, was met with some delight.

The Committee is now considering the practicalities and believes, since it is a club with membership largely from the local area, that demand for access to the course for casual golf might be reasonably high from the first day of opening, since a good proportion of local membership live within 5km of the Club. Members from Limerick, though, will not be able to access the facilities until the Irish Government lifts the 5km travel restriction.

The PGA Professional is willing to open the pro shop, with appropriate safeguards in place, as a service to the members and the club, although this will mean that his COVID-19 Pandemic Unemployment Payment is likely to cease on his return to work, and there is little prospect of any compensating income earning activity from retail, coaching etc in the immediate future.

Similarly, the Golf Club is unlikely to start generating any additional income until at least the end of June, when its catering facility is likely to be able to re-open, subject to strict guidelines. However any additional income even at that time is likely to be offset with the costs of the Secretary and two greenkeepers moving back to full time employment, and the return of other laid-off staff, specifically the third greenkeeper and, eventually, some catering staff.

In the meantime, the Secretary has been tasked with pursuing outstanding membership subscriptions with a view to minimising the loss of members this year.

In conclusion, the Committee of Bachrum Golf Club has taken reasonable steps to access what Government support, deferrals and loans as might be available to mitigate the impact of the COVID-19 pandemic on its financial position and operational activities. It will, however, need to carefully manage its position as golf restarts in Ireland to secure its future, particularly given its loss-making performance in recent years and the absence of financial reserves to support the Club through unforeseen business interruptions such as the one experienced since March.