Feature Article - June 2017
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State of the INDUSTRY

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

By Emily Tipping


Respondents from health clubs and community centers were the only facility types to report that they expect their average operating costs to decrease between 2016 and 2018. Health club respondents projected a decrease of 7 percent to their average operating expenditures, from $1,804,000 in 2016 to $1,678,000 in 2018. And community center respondents said they expect their operating costs to fall by 1.3 percent, from $1,187,000 in 2016 to $1,172,000 in 2018.

Over the past couple of decades, there has been a growing expectation, particularly for public organizations like parks and recreation departments and districts, that facilities can be run like businesses. Many local leaders expect facilities to recover much of their operating costs via revenues. While this is the business model for for-profit facilities like health clubs, it's a relatively recent development for publicly owned facilities, which have typically been subsidized via tax dollars and other funding sources.

On average, for all respondents, 49.9 percent of costs are recovered via revenues, representing virtually no change from 2016, when 49.6 percent of costs were recovered. Interestingly, 23 percent of respondents said they recover only 0 to 20 percent of their costs via revenues. On the other end of the spectrum, 23.8 percent said they recover 80 percent or more of their costs via revenue. And, 18.2 percent said they recover at least 90 percent of their costs via revenues.

There is quite a bit of variability in cost recovery, depending on the industry segment one is considering. Respondents from Ys, health clubs, are the most effective at using their revenues to cover their operating costs. Y respondents said they recover nearly a quarter (73 percent) of their operating costs, while health clubs cover 67.6 percent, and camps cover 67.3 percent. (See Figure 14.) Colleges and schools recover the smallest percentage of their operating costs via revenues, with colleges earning back 33.5 percent and schools earning back 35.4 percent.


From 2016 to 2017, only schools and community centers saw an increase in the percentage of operating costs recovered via revenues. For school districts, that percentage grew from 32.4 percent to 35.4 percent, and for community centers, it increased from 55.6 percent to 59.9 percent.

As one might expect, respondents from private, for-profit organizations reported earning the greatest share of their operating costs back via revenues, at 70.4 percent. They were followed by private nonprofits, at 60.2 percent. Those from public organizations reported earning the smallest share of operating costs back via revenues, at 43.2 percent. These numbers changed very little from 2016, when 42.9 percent of costs were earned via revenues by public organizations, 61.5 percent for private nonprofits, and 69 percent for private for-profit organizations

While a majority of respondents (83.3 percent) reported that they had taken action to reduce their operating expenses, that number has fallen gradually from a high of 90.3 percent in 2011. Perhaps as the economy has recovered, and revenues have increased, facilities have less need to reduce expenses.

The most common action taken to reduce expenditures, as in past years, was improving energy efficiency. More than half (52.7 percent) of respondents said that they had improved energy efficiency in order to reduce operating expenses, up slightly from 51.6 percent in 2016. Other commonly used methods of reducing expenditures included: increasing fees (43.7 percent); reducing staffing levels (31.3 percent); putting construction and renovation plans on hold (29.2 percent); and cutting programs or services (18.8 percent). (See Figure 15.) Smaller numbers of respondents said they had reduced their hours of operation (16.8 percent), shortened their season of operation (7 percent) or closed facilities entirely (5.4 percent).


Respondents from camps, Ys and parks were the most likely to report that they had taken action to reduce their expenditures. Some 90.1 percent of camps, 88.4 percent of Ys and 84.8 percent of parks respondents said they had taken such actions. School respondents were the least likely to indicate that they had acted to reduce operating expenses, though 77 percent had done so. In the middle were colleges (80.5 percent), health clubs (80.8 percent) and community centers (80.8 percent).

Camps were more likely than other facility types to report that they had improved energy efficiency (61.3 percent), increased fees (62.2 percent) or put construction plans on hold (37.8 percent). Ys were the most likely to report that they had reduced staffing levels (51.2 percent) or cut programs and services (27.3 percent). Colleges and universities were the most likely to report that they had reduced their hours of operation (27.6 percent) or closed facilities (7.6 percent). Finally, parks were the most likely to report that they had shortened their season of operation (11.4 percent).