Bridge Clubs. Owning your own premises or renting for your exclusive use. A Guide and discussion document

Transcription

1 1 Bridge Clubs Owning your own premises or renting for your exclusive use. A Guide and discussion document Introduction The majority of the most successful bridge clubs in England either own their premises outright or lease space for their exclusive use. Having your own space means that you can run bridge sessions when you want to suit the bridge players in your area. You can arrange special events and also run teaching sessions on the same premises. This helps new players to become familiar with the club and makes transition from student to full club player easier. Also if you have times when you do not require the space for bridge you can consider renting out to other organisations to generate additional income. A club doesn t necessarily have to be large to consider such a move but does need a sufficiently large catchment area to be able to support running bridge sessions on several days of the week. This could be achieved by several clubs in an area deciding to come together and share the same premises. The purpose of this note is to examine the steps to consider when a club intends to buy or lease premises. In addition it looks at the most cost efficient structure for the club and possible alternative means of raising finance either for buying or equipping if entering into a lease. Summary-Key Points Need a committee which is willing to put in a significant amount of work to make this happen. Particularly if buying premises or building new premises. Need a clear and well produced business plan to demonstrate to members and other potential funders that the proposed scheme is viable and is sustainable. Need to convert the club to charity as a Charitable Incorporated Organisation (CIO) in order to get maximum financial benefits such as relief on rates, reduced VAT (on utilities) and be in a better position to apply for grants. Need to use the talents of the club members to keep costs down. Solicitors, architects, planners, builders etc. Can raise significant amount from members by issue of debentures. Other sources of funding are grants and loans from banks (eg Charity Bank) Need to engage with local authority to ensure that planning permission is granted either for a new build or change of use of existing premises. They may be able to assist with location of land and grant lease on land for a nominal amount.

2 2 Background Is it only large clubs in large conurbations that can consider owning or leasing their own premises? The answer is no. Providing the club has a reasonable membership (say more than 150 members) and some money in reserve (probably needs at least 20-30K). Indeed several smaller clubs in the same area could come together to provide the necessary membership numbers and player sessions per week to make this viable. The club also does not need to be in a larger conurbation to be able to attract increased membership. The example of Stamford BC in Lincolnshire is relevant to this discussion; this was a club with about 200 members situated in a small market town of only 22,000 people and therefore drawing its members from a wide area. They had about 70k in reserves when they embarked upon a new build of premises. Today, two years after moving into their new premises their membership has increased to over 400. Many clubs hire a local community facility for one or two sessions of bridge a week and are unable to expand the number of sessions they offer because the community facility is used by other groups. Also they are often unable to run bridge classes for students in the same premises or at the same time as sessions are going on. This means that students do not mix with existing club members and therefore transition into the club duplicate sessions when students have completed their course is made more difficult. Having dedicated premises enables the club to have an integrated approach to teaching and development of existing club players. The club is also able to expand the number of sessions it offers to cater for more daytime bridge and also hire out the space to other organisations when not used for bridge. Typical organisations might be chess clubs backgammon clubs, U3A groups and WEA etc. It is quite possible for several clubs in an area to come together to buy or lease premises. Obviously this is slightly more complex than a single club being involved. It does require full commitment from all the involved clubs not just their committees but also their members. There are currently about 80 EBU affiliated clubs who have their own premises and several more who lease premises for their exclusive use Club Structure If a single club is involved then it should form a Charitable Incorporated Organisation (CIO) and become a registered charity with the Charity Commission. A CIO has the benefits of limited liability (as with a company) and also charitable status. Several bridge clubs around England have become Charities over the past three years and there is plenty of advice which can be obtained from the EBU or clubs about what is required. It is a very simple process and does not need to involve legal fees. The advantages of charitable status if the club is about to own or lease premises are as follows.

3 3 80% relief from business rates. The other 20% is discretionary by the local authority and some do grant the other 20%. You have to notify your local authority to get the 80% relief and apply for the further 20%. Reduced VAT on utility bills. It is likely that you will qualify for VAT to be charged at 5% rather than the standard 20% but care needs to be taken when applying Able to claim gift aid on annual subscription if a member is a standard rate taxpayer. As a charity, more likely to be able to apply for grants to help with the purchase or fitting out of the premises. If negotiations are taking place with a local authority about obtaining land or getting change of use they may look more favourably on a charity. If a new build is being considered then as a charity the work will be exempt from VAT. Should several clubs be thinking of joining together to obtain premises then there are two avenues open to them. They can merge and form a new bridge club which would then own/lease the new premises and all previous members of the old clubs would become members of the new club. Whilst this is the ideal approach there are often historical reasons for clubs wishing to retain their identities. This can be achieved by forming a CIO just to manage the premises where all the involved clubs would have trustees on the board of this management company. The individual clubs could then hire sessions from the management company and retain their own identity. The management company (charity) would manage the building and be responsible for building maintenance, utility bills, rates etc and set the hire rates for individual sessions. Club Committees and Business plan Before embarking upon a planned purchase or lease it is essential that the committee of the club is fully behind this approach and are willing to devote sufficient time towards making it happen. They also need to carry all the members with them and so it is essential that a well thought out business plan is produced for members and potential funders. It is probably a good idea to establish a subcommittee which is dedicated to work on the purchase or lease. Most bridge clubs have a vast pool of talent and professions amongst their members and ones with relevant skills should be co-opted onto this committee (solicitors, accountants, architects, surveyors, builders etc). Doing so will help keep the cost down. A business plan needs to cover the purchase/setting up phase and the ongoing phase when a building is bought or leased. If it is proposed to buy a building or land on which to build then this phase needs to have realistic estimates with contingencies for the land purchase (if relevant), architects fees, planning permission, building costs and fitting out costs. It may be that some tasks can be done by members thus reducing costs. An important consideration when buying or leasing will be car parking. A bridge session which is attracting say 12 or even 20 tables requires significant parking and this can be quite difficult to obtain. The planning authority are likely

4 4 to want to ensure that there is adequate parking. This is likely to be more important for daytime sessions. The business plan will then need to cover how the necessary funds are to be raised (particularly if buying or building). This could be from a variety of sources:- club reserves, grants from funders both local and national, debentures from club members and a loan from a bank,such as the Charity Bank which is familiar with lending to charities. The club may need a separate group of members just concentrating on fund raising from various sources. The second part of the business plan needs to cover the ongoing phase to demonstrate that the venture will be sustainable. The plan will need to cover the likely income over the first five years of occupation to show how the revenue streams from sessions, teaching and hire to other organisations will grow over that period and will be sufficient not only to pay for day to day costs such as rates, utilities, repairs etc but also the need for a part time manager, increased accounting, repaying any bank loans or members debentures and also providing a sinking fund for the building to cover any major repairs in the future. Obviously if the club in only intending to lease premises then this becomes a lot simpler since it is unlikely that members debentures or bank loans will be involved. Alternative buildings Leasing It could take some time before the club locates suitable premises. It is likely that premises which have had industrial use may be cheaper to rent than office space but they are likely to require a change of use from the local authority. It is quite likely that this will be granted since one will find that organisations such as fitness clubs, boxing clubs etc have already been established in industrial areas and they will have required a change of use. So a precedent has been established. Provision of adequate car parking will also be an important consideration particularly if one is seeking a change of use from the planning authority. If there is inadequate parking it may deter members so it is important to get it right. The club needs to make adequate provision for the costs of fitting out the premises particularly if it was previously an industrial unit. This may involve upgrading the heating and lighting, moving internal wall/partitions etc. It maybe that grants can be obtained to cover some of this work. The terms of the lease need to be negotiated and in today s climate various concessions may be possible (particularly if you are improving the premises with your upgrades and fitting out). These may include reduced rent for the first few years. Buying This may be buying an existing building when many of the considerations about leasing will also apply but in addition the building will need to be surveyed to

5 5 determine if any immediate works are required and you will have to ensure that all your funds are in place before the purchase can go ahead. If the club are intending to buy land or lease land from a local authority then the club will be involved with architects, surveyors, builders etc and the whole programme will be that much more complex and the timescale that much longer. An approach to a sympathetic local authority and local councillors may be the best way forward. Local authorities own considerable land which is used for community use and sports purposes and there may be space to build either adjacent to an existing community centre or sports pavilion or on land in that area. The local authority may be willing to rent the land on a long term lease at a nominal rent. This also has the added advantage that there is often more than adequate parking facilities at these sites. In addition many Authorities are seeking to sell off/dispose of assets which they deem to be surplus to requirements. It may well be that these buildings are currently used by community groups. If so they can be registered as assets of community value with the local authority and then the authority has to notify you of their wish to dispose and provide an opportunity to acquire. There is also some funding available to acquire such assets. Timescales It is important that sufficient time is given to the initial planning process and that all the necessary steps are put in place before the club considers a specific building or site. 1. Ensuring that all members of the club committee are fully behind such a venture and are willing to spend sufficient time on it 2. Producing a business plan and ensuring that all members support the venture 3. Forming a charity 4. If necessary having initial discussions with the local authority and councillors. 5. Forming the necessary subcommittees ( building and fundraising) All the above could take up to six months If just leasing is involved then once a suitable building has been identified the lease can be concluded reasonably quickly but then there may need to be modifications and fitting out which could take a few months. Overall this phase could take six months but it may well be that finding suitable premises will take most time. If buying an existing building then this could take longer since the club will have to raise the necessary funds before buying. If buying land and new build then there will be both a fundraising phase and land purchase and then the build phase. This could take well in excess of a year.