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Feature Article - June 2016

2016 State of the Industry

A Look at What's Happening in Recreation, Sports and Fitness Facilities

By Emily Tipping

Revenues & Expenditures

Over the course of the past 10 years, we've seen revenues and operating budgets take a hit, sharper in some areas and facilities than others, and then begin to recover. And, as budgets tightened, facilities started to look for ways to streamline their operations or reduce expenditures, in order to continue operations and provide much-needed services to their communities. Some facilities closed entirely, while others reduced their seasons, their staffs and their hours. The past couple of years have shown a recovery to a "new normal" as more facilities that were formerly subsidized must now earn more revenue to support their operations.

Since 2010, a mostly increasing number of respondents have reported increasing revenues, year-over-year. The only exception was 2012 to 2013. Since then, the number of respondents who said revenues did or will grow has increased from 39.5 percent (2012-2013) to 48.3 percent (projected for 2016-2017). (See Figure 11.)

At the same time, the number of respondents reporting decreasing revenues has steadily fallen, from 20.8 percent who reported that revenues decreased from 2010 to 2011, to 4.7 percent projecting a decrease from 2016 to 2017.

From 2014 to 2015, a majority of respondents said their revenues either remained the same (44.7 percent) or increased (44.1 percent). Just 11.1 percent reported that revenues decreased in this time frame, down from 12.4 percent who saw decreases in the preceding year.

Looking forward, the vast majority of respondents feel their revenues will either hold steady or increase, with a shrinking percentage expecting revenues to drop. From 2015 to 2016, nearly half (47.5 percent) said revenues will increase, and 46 percent said revenues will stay the same. And from 2016 to 2017, 48.3 percent projected an increase to revenues, while 47 percent expect revenues to remain the same.

Respondents from urban communities were the most likely to report that their revenues had increased from 2014 to 2015, and also were the most likely to project further increases in 2016 and 2017. While 48.4 percent of urban respondents said they had seen an increase in revenues in 2015, just 43.5 percent of suburban and 42.4 percent of rural respondents reported increases. Looking ahead, 52 percent of urban respondents expect revenues to increase in 2016, and 53.3 percent expect an increase in 2017. Respondents from rural communities were the most likely to report decreasing revenues in every year covered by the study, with 12.8 percent reporting decreases in 2015, 8.8 percent projecting a decrease in 2016 and 6.3 percent projecting a decrease in 2017.

Respondents from camps, YMCAs and health clubs were the most likely to report that their revenues were not stable from 2014 to 2015. In fact, these three industry groups were the most likely to report that revenues had increased in that time period, and also were the most likely to report a decrease in revenue in that time. Some 56.7 percent of camp respondents, 56.5 percent of YMCA respondents and 48.4 percent of health club respondents said revenues had increased from 2014 to 2015. At the same time, 24.2 percent of health club respondents reported a decrease, as did 19.1 percent of YMCA respondents and 14.9 percent of camp respondents.

School respondents were the least likely to see increasing revenues from 2014 to 2015, with just 12.5 percent reporting an increase. Parks respondents were least likely to report a decrease in revenue, at 7.6 percent.

Looking forward, health clubs, YMCAs and camps again were the most likely to project increases to their revenues in 2016 and 2017. In 2016, 78.3 percent of health club respondents, 59.8 percent of YMCA respondents and 58.8 percent of camp respondents said they expect to see revenues increase. And in 2017, 80.7 percent of health clubs, 66 percent of YMCAs and 59.2 percent of camps expect an increase.

Respondents from schools and school districts, as well as colleges and universities were the most likely to expect decreases to revenues in the next two years. From 2015 to 2016, 11.9 percent of school respondents and 10.6 percent of college respondents said they thought revenues would drop. And from 2016 to 2017, 13.2 percent of schools and 7.3 percent of colleges expect a decrease.

After a substantial increase in fiscal 2014, operating expenditures fell slightly in 2015, by 2.6 percent to an average of $1,740,000. This is 21.9 percent higher than the average in fiscal 2010 of $1,427,000. However, it is 4.4 percent lower than the projected operating expenditure for 2015 from last year's salary survey.

Looking forward, respondents expect to see modest increases in operating expenditures, with a 2.6 percent increase from 2015 to 2016, and a further 3.1 percent increase in 2017. (See Figure 12.)

Respondents from urban communities reported the highest average operating expenditures for 2015, and also were the only type of community to report an increase to average operating expenditures from 2014 to 2015. Urban respondents saw their average operating expenditures increase by 16 percent from $2,128,000 in 2014 to $2,468,000 in 2015. In this same time period, suburban and rural respondents saw their average operating expenditures drop. The greatest decrease was reported by rural respondents with a 10.6 percent decrease form $1,245,000 in 2014 to $1,113,000 in 2015. Suburban respondents reported a 5.8 decrease from an average operating expenditure of $2,017,000 in 2014 to $1,900,000 in 2015.

Looking forward, however, respondents from suburban and rural communities projected a greater increase to operating expenditures over the next two years than urban respondents. Suburban respondents are expecting operating expenditures to increase by 6.4 percent from an average of $1,900,000 in 2015 to $2,021,000 in 2017. They were followed by rural respondents, who projected a 5.9 percent increase from $1,113,000 in 2015 to $1,179,000 in 2017. Urban respondents are expecting their average operating expenditures to rise by a more modest 3.9 percent in the same time period, from $2,468,000 to $2,565,000.

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