Feature Article - June 2018
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2018 State of the Managed Recreation Industry

A Look At What's Happening in Recreation, Sports & Fitness Facilities

By Emily Tipping

Looking forward, respondents expect to see further increases to their operating expenses over the next two years. From 2017 to 2018, respondents said they expect their operating expenses to increase by 1.7 percent, to an average of $1,830,000. And from 2018 to 2019, they projected a further increase of 4.9 percent, to an average of $1,920,000 in fiscal 2019.

Respondents from urban communities reported the greatest decrease to their operating expenses from 2016 to 2017, while suburban and rural respondents reported a more moderate decrease. For urban respondents, average operating expenditures fell 22.6 percent, from $2,713,000 in fiscal 2016 to $2,100,000 in 2017. They were followed by suburban respondents, who reported a 6.2 percent decrease from $2,409,000 in 2016 to $2,260,000 in 2017. Finally, respondents from rural communities saw a 1.6 percent decrease, from an average of $1,057,000 in 2016 to $1,040,000 in 2017.

Looking forward, rural respondents bucked the usual trend to report the greatest increase to average operating expenditures over the next two years. From 2017 to 2019, rural respondents said they expect their average operating expense to grow 11.5 percent, to $1,160,000. They were followed by urban respondents, who projected a 10 percent decrease, to $2,310,000. Suburban respondents projected a 4 percent increase in average operating expenditures from 2017 to 2019, to an average of $2,350,000.

Between fiscal 2016 and 2017, community centers, schools, and colleges and universities reported increases to their average operating expenditure, while all other types of facilities reported decreases. The greatest increase was seen by community center respondents, who saw their average operating expense rise 10.4 percent, to $1,310,000. They were followed by schools, with a 9.2 percent increase, to $1,690,000; and colleges, with a 1.3 percent increase, to $1,930,000. (See Figure 13.)

The greatest decrease in average operating costs from 2016 to 2017 was reported by parks and recreation respondents. They saw their operating expenses fall 16.8 percent in that time frame, to an average of $2,020,000. They were followed by health clubs, with a 12.4 percent decrease, to $1,580,000; and camps with an 11.1 percent decrease, to $880,000. Ys also reported a decrease, with operating expenses falling 4.8 percent, to an average of $2,910,000.

Looking forward, only health clubs expect their operating expenses to decrease between 2017 and 2019. The greatest increases are expected by colleges and universities, who projected their operating expenses to rise 11.9 percent, to an average of $2,160,000. They were followed by community centers, where a 7.6 percent increase will raise operating expenses to an average of $1,410,000 by 2019; and parks, with a 7.4 percent increase resulting in an average cost of $2,170,000. More modest increases are expected among respondents from schools (5.9 percent), camps (4.5 percent) and Ys (1 percent). Health club respondents projected a 9.5 decrease to operating expenses from 2017 to 2019.

When it comes to costs and revenues, few facilities covered by the survey reported that they recover more than 90 percent of their operating costs via revenue. The percentage recovered tends to depend upon the type of organization covered, with private organizations recovering a much higher percentage of operating costs than public organizations.

Typically, the average percentage of costs recovered for all respondents tends to hover near 50 percent, and this year is no exception. On average, respondents in 2018 said they recover 48.5 percent of operating costs in revenue. This is down slightly from 2017, when the average was 49.9 percent. Some 22.5 percent of respondents said they recover just 0 to 20 percent of their operating costs via revenues, while 20.3 percent said they recover 80 percent of more of their operating costs via revenues. More than one in 10 (15 percent) respondents earn back at least 90 percent of their operating costs via revenues, down from 18.2 percent in 2017.

As always, there is a lot a variance in cost recovery, with some industry segments obviously relying more heavily on tax dollars, and others receiving very little outside support. Respondents from camps, Ys and health clubs are the most effective at covering their operating costs with revenues. Camp respondents said they recover nearly a quarter (73.4 percent) of their operating costs, while Ys earn back 68.6 percent, and health clubs earn back 65.1 percent. (See Figure 14.) Colleges and schools recover the smallest percentage of their operating costs, with colleges earning back 33.5 percent and schools earning back 34.1 percent.