A Brief History of TMCC’s financial results

Reminder: This info is directly from TMCC’s Form 990 submissions to the IRS so it is precisely the info TMCC and more recently MCA has kept from the eyes of MCA homeowners. This blog is intended to provide some “color” to the numbers we recently posted and help you understand the sequence of events.

If anyone believes anything is inaccurate please let us know at ForTheMeadows@SarasotaMeadows.com.

2013 – TMCC has more than $10 million in equity (its excess of assets over its liabilities)

2014 – LOSS of  $823,848. Equity falls to $9.2 million.

2015 – LOSS of  $880,250. Equity falls to $8.1 million

2016 – LOSS of  $1,646,977. Equity falls to $6.5 million

2017 – LOSS of  $5,330,721. Equity falls to $1.2 million

This loss includes a loss on write-down of fixed assets to the value they were sold at in 2018. We estimate the write-down at $3,700,000 (the difference in Other Expense between 2016 ($277,834) and 2017 ($4,008,799)). So the operating loss is likely in the neighborhood of $1,600,000, which is consistent with 2016.

At the end of 2017 TMCC had $545,832 of accounts receivable and $1,182,340 of accounts payable. They owed $636,508 more then they were going to collect in the near-term.

TMCC had $4,253 in the bank, and $77,806 in outstanding written checks that there was no cash to cover (per Sch D, Part X (approx pg 16)). Yes, they wrote $73,553 of checks in excess of their cash available.

They had $1,045,885 in Deferred Revenue which means they had already received the cash, but not yet provided the services. This is likely over $1 million of annual memberships paid upfront, yet they still only had $4,253 in the bank!

Losing money at a rate of $1.6 million per year, TMCC is on track to have eaten up $10 million of equity in 5 years through loss after loss after loss.

2018 – LOSS of  $884,182. Equity falls to $0.3 million

During 2018 MCA acquired the debt and then assets of TMCC so TMCC only has interest and depreciation for half a year. TMCC “saved” $430,000 (estimated) of interest and depreciation compared to 2017, which is half of their loss reduction from 2017. Instead, the depreciation is now being borne by the homeowners of MCA and the MCA is down about $3.7 million in cash (so it has lost interest revenue in addition to draining its reserves). It also owes $2.3 million to TMCC.

In its May 21, 2018 letter to MCA members, the MCA President stated that MCA was leasing the $6 million of assets it acquired from TMCC back to TMCC for $10/year:

• “Three rent-free years are required for the club to get back on its feet. We will then renegotiate the lease and adjust the payments”.
• “Joint team has developed a plan that projects profit for the club by year three (2020).”

SIDE NOTE: It is now 2024 and MCA is now leasing $10 million of assets to TMCC FOR $10/YEAR. (MCA also added the fitness section of the $4 million wellness center to TMCC’s $10/year lease in 2023).

One more item that needs comment from the MCA President’s letter:

• “For the last two years, under the guidance of Billy Casper Golf, the club’s operating losses have declined sharply”

As you can see from TMCC’s own records, the operating losses INCREASED sharply to $1.6 million/year in the previous 2 years. Exactly the opposite of what MCA homeowners were told by their Board. Seems like a line-by-line review of that letter might be in order for a future blog. One year after leaving the position of MCA President that person became a TMCC Director and then later TMCC President.

2019 – LOSS of  $782,671. Equity is now NEGATIVE $0.5 million

Since MCA owned the assets and paid the debt, TMCC “saved” $786,327 in interest and depreciation compared to 2017. Again, MCA homeowners are now bearing that depreciation and forgoing interest on the millions MCA spent.

At 2019 year end, TMCC had negative net assets (they owed more than they had) of $481,032. They were effectively insolvent/bankrupt even though the MCA had relieved them of more than $1,200,000 of interest and depreciation in 2018 & 2019. That was until the MCA Board again came to the rescue of TMCC with their annual $600,000 Renaissance Access payments.

The timing of TMCC being on the verge of bankruptcy for the second time, and the introduction of the Renaissance Access Plan is inescapable. It appears that in 2018 and 2019 seven EIGHT of the nine MCA Directors (or their spouse) were members of TMCC. More on that in a future blog.

2020 – LOSS of  $120,951. Equity falls to NEGATIVE $0.7 million.
This loss occurred even with

• The addition of $500,000 from MCA for “Renaissance Access” (this the primary reason for the loss declining by $661,720 from 2019 to 2020)
• AND MCA having saved TMCC interest and depreciation (estimated at $800,000)
• AND there being a Covid BOOM in golf (may have also been some negative impact for an initial period)
• AND Bobby Jones players coming to The Highlands in the fall

Remember that 2020 is when TMCC was supposed to be making a profit WITHOUT the Renaissance Access subsidy, and the $10/year lease was supposed to be re-negotiated.

2021 – NET INCOME of $162,080. Equity is now NEGATIVE $0.6 million. Again, this is with

• TMCC still paying MCA only $10/year for use of $6 million of assets despite the MCA Board’s commitment that the amount would be adjusted.
• AND The addition of $600,000/year from MCA for “Renaissance Access”
• AND MCA having saved TMCC interest and depreciation (estimated at $800,000/year)
• AND there being a Covid BOOM in golf,
• AND Bobby Jones players playing The Highlands for the whole year.

This is of course better than a loss, but MCA homeowners are providing a subsidy that covers about 20% of a private club’s expenses. More on why the Renaissance Access fee can reasonably be viewed as a subsidy in a future blog.

2022 – We don’t have TMCC’s 2022 Form 990 yet (we’re trying). But here is what TMCC told their members at their March 2023 annual meeting (amounts presented as unaudited):

1. Actual revenue over expenses: $199,000 (including all the same points noted in 2021)
2. Golf course maintenance was under budget by $109,000. Often expenses being under budget is a good thing but if you played the Highlands last year, the greens (more like “browns”) were in horrible shape. Just check out the GolfNow.com reviews for the Highlands last year. Under the terms of TMCC’s lease from MCA it is required to properly maintain the courses. It didn’t do that and ran the Highlands reputation into the ground to save $109,000 in maintenance.

Consider helping us out by requesting a copy of TMCC’s Form 990 for 2022 and sending it to us. As described in our last blog, TMCC is legally obligated to provide it to you.

Long story short: TMCC’s operating model has been money-losing for at least a decade and shows no signs of getting better.

• We do think the MCA Board made a wise decision in 2018 to purchase the assets of TMCC, rather than have a third party purchase them for who-knows-what. It was a “lesser of two evils” kind of choice.
• BUT in doing so, the MCA Board took on a HUGE new responsibility: Ownership of a large and complex golf, tennis, recreation, and dining facility.
• Instead of embracing this responsibility, the MCA Board passed control of the assets right back to TMCC. And added the new fitness center in 2023.
• Up until mid-2018 the losses were borne by TMCC until there was no more money to lose.
• Since mid-2018 MCA homeowners have owned the assets (costing $10 million) and borne the costs (depreciation, foregone interest, re-paying debt, and re-establishing reserves).

SOMETHING HAS TO CHANGE

Contact us at ForTheMeadows@SarasotaMeadows.com