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BEXLEY SWIMMING AND LEISURE CENTRE FEASIBILITY REPORT FOR ROCKDALE CITY COUNCIL

COPYRIGHT TOMPKINSMDA ARCHITECTS 28 NOVEMBER 2011

RECREATION PLANNING REPORT prepared by Recreation Planning Associates, October 2011

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Rockdale City Council

Bexley Pool

Redevelopment Feasibility Study – STAGE 2 REPORT

Draft

November 2011 Recreation Planning Associates

Bexley Pool Redevelopment Feasibility Study – Stage 2

Recreation Planning Associates

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TABLE OF CONTENTS

EXECUTIVE SUMMARY 4

CHAPTER ONE: INTRODUCTION 11 1.1 PURPOSE OF STUDY 11 1.2 EXISTING SERVICE LEVELS 11 1.3 COMMUNITY NEEDS 11 1.4 DEVELOPMENT RATIONALE AND CONCEPT 12 1.5 PRELIMINARY BUSINESS CASE 13

CHAPTER TWO: THE PROJECT PROPOSAL 14 2.1 THE PROPOSED CONCEPT 14 2.2 PROJECT ALTERNATIVES 14 2.3 CONSISTENCY WITH COMMUNITY STRATEGIC PLAN 14

CHAPTER THREE: CRITICAL SUCCESS FACTORS 16

CHAPTER FOUR: BUSINESS OBJECTIVES 17 4.1 MISSION AND GOALS 17 4.2 SERVICE OBJECTIVES 17 4.3 SERVICE PRINCIPLES/PHILOSOPHY 18

CHAPTER FIVE: BUSINESS STRUCTURE 20 5.1 BUSINESS STRUCTURE OPTIONS 20 5.2 CHOOSING A STRUCTURE 20 5.3 PROPOSED BUSINESS STRUCTURE & MANAGEMENT MODEL 22

CHAPTER SIX: STAFFING/PERSONNEL 24 6.1 KEY MANAGEMENT RESPONSIBILITIES 24 6.2 CENTRE MANAGER 25 6.3 STAFFING PLAN/STRUCTURE 25

CHAPTER SEVEN: PROGRAMS & SERVICES 27 7.1 PROGRAMS AND SERVICES 27 7.2 OPENING HOURS 28 7.3 CHILD CARE 28 7.4 ENTRY AND PROGRAM FEES 28

CHAPTER EIGHT: CENTRE MARKETING 30 8.1 MARKET POSITIONING 30 8.2 MARKETING STRATEGY 30 8.3 INCLUSIVE PROGRAMING 31 8.4 CUSTOMER SERVICE 32

CHAPTER NINE: RISK & ASSET MANAGEMENT 33 9.1 OPERATIONAL PROCEDURES 33 9.2 ASSET MAINTENANCE 33

CHAPTER TEN: PERFORMANCE MEASUREMENT 34 10.1 MONITORING PERFORMANCE 34 10.2 EXTERNAL BENCHMARKING 34



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CHAPTER ELEVEN: FINANCIAL FORECASTS 35 11.1 OPERATIONAL COST AND REVENUE PROJECTIONS 35

CHAPTER TWELVE: MARKET APPRAISAL 39 12.1 APPRAISAL METHOD 39 12.2 BENEFITS 39 12.3 COSTS 41 12.4 CONCLUSIONS 45

ATTACHMENT A: BUSINESS PLAN ASSUMTIONS 46

ATTACHMENT B: BUSINESS PLAN PRO FORMA 52

ATTACHMENT C: BUSINESS PLAN FORECASTS IN DETAIL 57



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EXECUTIVE SUMMARY

Background

In late 2008, Council resolved to investigate options for upgrading the Bexley

Pool to a facility of ‗national standing‘. To assist it in this process, Council

established a Pool Reference Group (comprising representatives of Rockdale

Swim Club, public schools and high schools, a community representative, the

Pool Operator and Council staff) to review the options.

Options were developed by the Reference Group and Council commissioned a

study to test the feasibility of the options. That study was completed in late 2010.

Since then Council has continued to investigate options - including via

discussions with a range of facility management organisations – and at its

meeting of 6 July 2011, adopted the following concept:

Refurbished/rebuilt outdoor 50m pool

Indoor 25m x 8 lane indoor pool

Program 20 x 12m x 5 lane pool

Leisure pool of 165 m2 (with built in spa)

700m2 multi-space gym (with weights/cardio space and group

fitness/functions) of

Multi-purpose space for child-minding/birthday parties (100 m2)

Kiosk (50m2)

Amenities and support facilities (change, toilets, storage, first aid, wet

lounge etc)

Study Purpose

The purpose of this study is to assess the feasibility of the concept in accordance

with the assessment requirements established in the NSW Government‘s Capital

Expenditure Guidelines.

Capital Expenditure Guidelines

The NSW Government has prepared guidelines for the assessment of council

proposals to buy, construct, renovate or acquire assets1. As stated in the

document, the aim of the guidelines is ―to ensure that a council‘s evaluation of the

proposed capital expenditure is consistent and rigorous, the merits of projects

can be compared and resource allocation can be made on an informed basis.

1 NSW Department of Premier and Cabinet, Division of Local Government, December 2010, Capital Expenditure

Guidelines



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Consistent with the Guidelines, the study has:

Reconfirmed the initial business case developed in the Stage 1 Study,

Identified the community needs for the proposed facility,

Confirmed the project‘s consistency with Council‘s Community

Strategic Plan, and

Identified critical success factors for the project

The critical success factors are detailed at length in this report and include the

following key elements of successful aquatic/leisure centre management:

Clear statement of business and service objectives

A management structure consistent with achievement of the objectives

Appropriately skilled management and operational staff with the ability

to grow and adapt services as expectations and needs change

Program offerings relevant to community needs and aspirations and

the effective scheduling and marketing of those programs

Asset and risk management systems and processes, and

Performance measurement and monitoring processes

Business Operational Forecasts

Based on the adopted concept and the outline Business Plan, income and

expenditure estimates for the proposed upgraded facility - over the first three-

year period of operation – have been prepared.

The performance parameters for the estimates were derived from the current use

of facilities, the current and projected demographics of the catchment (in

particular, size, projected growth and distribution), the CERM PI Project national

benchmarks, program and service needs identified through previous

consultations and detailed discussions with the contract managers of other,

similar facilities within the sub-region.

In accordance with risk management principles, sensitivity (ie 'what if') analyses

including base case, worst-case and best case scenarios – have been

undertaken.

The key findings are as follows.

Baseline Scenario

The projected revenue and expenditure for the ‗baseline‘ scenario for the first

three years of operation is as follows:



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Proposed Concept – ‘Baseline' Forecasts

Year 1 Year 2 Year 3

INCOME 3,987,505 4,186,880 4,396,224

EXPENDITURE 3,994,590 4,138,395 4,287,377

NET RESULT -7,085 48,485 108,847

With the baseline scenario, it is anticipated that the proposal will require an

operational subsidy of around $7,000 in year one, and will produce an operational

surplus of around $109,000 by year 3. It should stabilise there with further

improvements in line with the forecast increase in the catchment population size.

Best Case Scenario

The projected revenue and expenditure for the ‗best case‘ scenario for the first


Proposed Concept – ‘Best Case' Forecasts


TOTAL INCOME 4,386,256 4,605,568 4,835,847

TOTAL EXPENDITURE 4,243,429 4,396,193 4,554,456

NET RESULT 142,826 209,376 281,391

With the ‗best case‘ scenario, it is anticipated that the proposal will generate an

operational surplus of around $143,000 in year one improving to a surplus of

around $281,000 by year 3 (which is a 106% recovery rate which compares with

the most successful centres in Australia),.

Low Case Scenario

The projected revenue and expenditure for the ‗low case‘ scenario for the first


Proposed Concept – ‘Low Case' Forecasts


TOTAL INCOME 3,588,755 3,768,192 3,956,602


NET RESULT -184,536 -140,937 -93,256

With the ‗low case‘ scenario, it is anticipated that the proposal will require an

operational subsidy of around $185,000 in year one, reducing to around $93,000

by year 3. It should stabilise there but improve gradually in line with the forecast

population growth.



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Market Appraisal

The Capital Expenditure Guidelines require a market appraisal – comprising

either a cost/benefit analysis (where major benefits can be quantified) or a cost-

effectiveness analysis (where outputs can not be readily measured in monetary

terms).

As the forecast benefits for the current proposal are largely non-quantifiable, a

cost-effectiveness appraisal has been undertaken.

Social benefits

The proposed centre will generate substantial community and personal benefits –

including more diverse recreation opportunities, enhanced access and equity,

improved health, improved water safety, social connectedness and positive

economic impacts – as summarised below:

Increased Recreation Participation

Provision of year-round facilities and programs (e.g. leisure pool,

leisure centre-based health club, warm water therapy, spa) not

currently available in the City

Provision of opportunity for residents whose needs are not met by the

existing facility – including warm water facilities for a rapidly ageing

population

Access and equity

Provision of year-round aquatic facilities already enjoyed by most of the

other LGA‘s in the region

Health, Active Lifestyles

The upgraded centre – in providing greatly enhanced opportunities for

exercise and enjoyable physical activity – will play an important role in

combating significant current health problems (including the ‗obesity

epidemic‘ and chidhood diabetes).

In this way, the centre will contribute significantly to community–based

health promotion - thereby enhancing the vitality and productivity of

Rockdale‘s population and reducing potential costs associated with

primary and acute care in the public health care system

Water Safety

The upgraded facility will provide specially designated (leisure water)

areas for children and this, together with appropriate supervision by

qualified lifeguards, will enhance water awareness and confidence.

Water safety is a particular issue in communities, such as Rockdale

City, with high CALD populations2. Accordingly, any improvements in

water safety education in Rockdale City will reap greater than average

benefits in terms of potential lives saved.

Social Capital

The proposed facility - through providing a high quality place to

exercise, relax, unwind, meet and socialize - will generate social

cohesion and community-building opportunities

Economic Development

The upgraded facility will generate jobs – both short term in the

construction phase and on-going for the expanded operations

It will likely increase the value of adjacent private properties which

benefits not just the owners, but also the community because the

added value is capitalized in land values for the purpose of rating

2 Australian Water Safety Council, 2008, Australian Water Safety Strategy 2008 – 2011 - Reducing drowning

deaths by 50% by 2020



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Economic Impact Costs

The proposed facility is likely to attract visits away from existing facilities

(commercial pools and fitness centres). This will result in a possible loss of

income for owners of these existing facilities , which could lead to their closure

and associated impacts on current users of those facilities who may not wish or

be able to switch to the upgraded Bexley facility.

These impacts however are difficult to assess and quantify. It is likely however

that any closures of wet or dry centres in the LGA or surrounding areas will be

offset by the spaces provided in the upgraded Bexley facility.

As well, such closures will generate a net community benefit where the shut-

down facilities are replaced by a facility which better meets consumer needs.

Nevertheless the potential costs or dis-benefits that may be experienced by some

small businesses is a legitimate issue for Council to consider – particularly with

respect to competitive neutrality requirements.

Annual Service (Life Cycle) Costs

While the proposed facility is forecast (on base and best case scenarios, as

identified in Chapter Eleven) to generate an operational surplus, it will require an

operational subsidy once full life cycle costing is taken into account.

Life cycle costs include the operational costs and revenues (as identified in

Chapter Eleven) as well as all asset renewal and asset depreciation costs.

The Annual Service Cost (ASC) is a method for identifying full life cycle costs and

expressing them as an average annual cost. The ASC for the proposed upgraded

Bexley facility – for the base, best and low cases - is detailed below:

Item Capital cost ($)

Annual Service cost ($)

Base case Best case Low case

Funding source

Asset renewal 5,000,000

S94 13,200,000

Restricted reserves 763,000

Asset sales 4,687,000

Grants 3,000,000

Budget Impact: cash

Net operational result -108,847 -281,391 93,256

Asset renewal 266,400 266,400 266,400

Net cash flow impact 157,553 -14,991 359,656

Budget Impact: non cash

Depreciation 533,000 533,000 533,000

TOTAL 26,650,000 690,553 518,009 892,656



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The forecast ASC ranges from a low of $518,000, for the best case scenario, to a

potential high of $890,000, for the low case scenario. For the base-case scenario,

the forecast cost is $690,000 per annum.

The Annual Service Costs – for the existing Bexley Pool and the three proposed

pool scenarios - represent the annual Community Service Obligation (CSO)

values for the respective facilities and scenarios.

Based on these CSO‘s, the varying cost-effectiveness outcomes for the different

scenarios –– in terms of CSO‘s per visit and proportion of costs paid by Council -

are as follows:

Indicator Existing Pool Proposed Upgrade


Annual Service Cost $470,000 $690,000 $518,000 $893,000

No. of annual visits 130,000 541,000 590,000 489,000

CSO per visit $3.62 $1.28 $0.88 $1.83

Average fees paid by visitors (including secondary spend)

$5.00 $8.12 $8.20 $8.10

Total cost per visit $8.62 $9.40 $9.08 $9.93

Proportion of costs paid by users

58% 86% 90% 82%

Proportion of costs paid by Council

42% 14% 10% 18%

The CSO‘s per visit range from $0.88 for the proposed pool, best case scenario,

to $3.62 for the existing pool.

The comparative contributions of Council and users to total pool costs, at both

the existing and proposed centres, are also illustrated in the table. At the existing

Bexley Pool, Council pays around 42% of total costs per visit (in the form of

operational subsidies). For the proposed pool (base case), this is forecast to drop

by around $2.30 to 14% per visit.

The NPV under the base case scenario for the proposed upgraded centre, at an

internal rate of return of 5.00% is a negative $14.05 million which is a proxy

measure of the full life cycle CSO value of the project.

Conclusions

The social benefits of the proposed upgrading to the Rockdale community are

substantial. They include greater diversity of opportunities, increased participation

in aquatic and fitness recreation, improved health and wellbeing, enhanced

access and equity, improved water safety through more people learning to swim,

more opportunities for family outings and positive economic impacts.

While these benefits are substantial, many are difficult or impossible to quantify in

dollar terms. However, just the community health benefits have the potential to



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offset up to half of those costs (in the form of reduced demand for health and

medical services).3 The other benefits, generated via millions of visits over the life

of the facility, are likely to offset the other costs many times over.

3 That is, if the upgraded centre is successful in encouraging 5-10% of the population to achieve the

Commonwealth Government recommended weekly physical activity levels



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CHAPTER ONE: INTRODUCTION

1 . 1 P U R P O S E O F S T U D Y

The purpose of this study is to assess the feasibility of the concept for the Bexley

Pool Redevelopment adopted by Rockdale City Council at its meeting of 6 July

2011. The study is to comply with the assessment requirements established in

the NSW Government‘s Capital Expenditure Guidelines4

1 . 2 E X I S T I N G S E R V I C E L E V E L S

Rockdale City Council currently delivers aquatic recreation services to its 99,000

population through its Bexley outdoor swimming centre (comprising a 50 metre

lap pool, a teaching pool and a wading pool).

The centre is an important venue for school activities – including annual swim

carnivals, intensive learn-to-swim, lifesaving and weekly sports programs. This

use accounts for around 30% of the 130,000 annual visits to Bexley Pool.

Other key programs include children‘s learn-to-swim (LTS) and squad training.

There are currently no adult programs (LTS, squad or aquarobics) at the Pool.

Lap swimming (for fitness) and family visits (for cooling off) in the warmer months

appear to be the other main uses of the Pool.

Usage is below average on a national benchmark basis. Thus, based on the

national facility use benchmarks produced by the Centre for Environmental and

Recreation Management (CERM) at the University of South Australia, average

participation within the catchment would generate around 170,000 visits to the

Pool – around 30% more than the 131,000 visits actually achieved in 2008/2009.

1 . 3 C O M M U N I T Y N E E D S

In late 2008, Council resolved to investigate options for upgrading the Bexley

Pool to a facility of ‗national standing‘. To assist it in this process, Council

established a Pool Reference Group (comprising representatives of Rockdale

Swim Club, public schools and high schools, a community representative, the

Pool Operator and Council staff) to review the options.

In early 2010, Tompkins MDA were commissioned to review the options

developed by the Reference Group and other appropriate concepts.

4 NSW Division of Local Government, Department of Premier and Cabinet, December 2010, Capital Expenditure

Guidelines



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The review, completed in September 2010, concluded that there was a

demonstrated demand and need for year-round indoor aquatic facilities in the

City based on:

Specific aquatic, leisure and fitness participation needs identified in the

course of this study, combined with the lack of indoor year-round water

space in the City,

The poor physical condition and limited capacity of the existing facility,

The demonstrated need for year-round facilities for schools, swim

clubs, fitness swimmers and other sports people,

The demonstrated need for ‗leisure‘ water for the City‘s large and

growing population,

The demonstrated need for year-round warm water for the City‘s

growing aged population,

The need for diverse physical activity opportunities to build a more

active and healthier population,

The capacity of the Bexley Pool site to accommodate the additional

required facilities, and

The need to provide a ‗package‘ of facilities which best meets Council‘s

long term operational and financial viability objectives for the Pool.

The strength of the need was confirmed in the consultations undertaken for this

study, the relatively long travel distances to existing facilities in neighbouring local

government areas (for many but not all of the City‘s residents) and the full

capacity use of the existing pool at peak times.

Additionally, according to planning benchmarks, the catchment population

(growing towards 100,000 people) is sufficient to financially support a modest-

scale indoor heated pool and associated facilities.

The need is also confirmed by the use of similar facilities (Annette Kellerman Aquatic Centre, Hurstville Leisure Centre) in surrounding council areas. The high use of these facilities confirmed substantial ‗pent-up‘ demand in the community before they were established.

1 . 4 D E V E L O P M E N T R A T I O N A L E A N D C O N C E P T

Based on the identified needs, the following development rationale was

proposed:

The upgraded Bexley Pool will play a central role in meeting a wide diversity of

leisure, sport, fitness, health and social needs throughout Rockdale City.

In doing so, the Pool will seek to meet a range of needs which are not adequately

provided for in the City. These needs include year-round fitness, school and club

swimming, leisure swimming and warm water therapy.



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Based on this development rationale, Council‘s consultants recommended the

following facility mix:


25m x 6 lane indoor heated pool

Combined indoor teaching/program/therapy/leisure pool with water

play features, beach entry etc (minimum 350m2)

New sauna/spa (associated with indoor pool)

Multi-space gym (i.e. with weights/cardio space and group

fitness/functions space – minimum total 600m2) and subject to

compliance with Council‘s competition policy

Multi-purpose space for child-minding/birthday parties (120m2)

Café/dry lounge


lounge etc)

The preliminary cost estimate for the proposal was $19.34 million.

1 . 5 P R E L I M I N A R Y B U S I N E S S C A S E

The preliminary business case for the proposed facility was completed in

conjunction with the first stage of the feasibility study5.

The bottom line was positive – with the base case forecasts anticipating visits of

around 450,000 and an operational subsidy of around $250,000 in year one

(reducing to $160,000 deficit in Year 2 and around $60,000 by year 3).

The forecast first year operating result entailed a subsidy of around 55c per

centre visit (compared to the current $1.25 per visit) with a forecast reduction to

13c/visit by the third year of operation.

5 The business case was based on a concept that was only slightly different from the one now proposed.



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CHAPTER TWO: THE PROJECT PROPOSAL

2 . 1 T H E P R O P O S E D C O N C E P T

Council has discussed the Consultant‘s inititial concept (as detailed in the

previous chapter) with several aquatic facility contract management groups

(including the YMCA, Bluefit and Belgravia Leisure) and resolved to develop the

following, slightly modified, facility mix:


Indoor 25m x 8 lane indoor pool

Program 20 x 12m x 5 lane pool

Leisure pool of 165 m2 (with built in spa)

700m2 multi-space gym (with weights/cardio space and group

fitness/functions) of

Multi-purpose space for child-minding/birthday parties (100 m2)

Kiosk (50m2)


lounge etc)

This report presents the feasibility report for this modified proposal.

2 . 2 P R O J E C T A L T E R N A T I V E S

Council has considered several concept options for the redevelopment of the

Bexley Pool over the past three years – including the consequences of not

proceeding with the project. It has aso addressed a range of service delivery

options (including direct and outsourced management).

Project options have been developed in conjunction with a community-based

Reference Group and experienced aquatic industry consultants. The options have

been scrutinised by and discussed in detail with three independent leisure industry

contract management companies. These companies have, collectively, made

several significant suggestions based on their extensive hands-on experience in

aquatic centre management.

There has also been considerable consultation with the community - including with

schools, swimming clubs and wellness providers – and with surrounding councils

with experience in indoor aquatic centre management.

The proposed concept is the outcome of all these inputs over a three-year period.

2 . 3 C O N S I S T E N C Y W I T H C O M M U N I T Y S T R A T E G I C P L A N

The proposed concept is fully consistent with the Council‘s long term visions and

desired outcomes – as documented in its Community Strategic Plan 2010-19, as

summarised in Table 1.



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Table 1: Consistency with Council’s Corporate Objectives

Desired Outcome Strategy Consistency of Proposal

A community that has an

enjoyable, active, healthy and

safe environment for all ages and

abilities (1.2)

Ensure the development of

planned services and

programs to progressively

improve the social, health and

education indicators of the

City‘s people.

Enhanced opportunities for adopting active, healthy lifestyles

Ensure equitable access to

Council services and facilities

to support a better quality of

life for the community

Diverse programming, disability access and subsidised fee structures will ensure access and equity

Rockdale is a place with a range

of entertainment events and a

built environment that contributes

to community well being (1.5)

Ensure appropriate provision,

access, use and management

of all open space and

recreation facilities

The provisiion of year-round aquatic facilities will add to the apropriate ‗range‘ of recreation activity opportunities in Rockdale

The provision of parks, reserves

and recreation areas which reflect

the qualities of the City‘s natural

environment and provide

enhanced biodiversity (2.5)

Ensure that Council‘s open

space and recreational areas

meets existing and future

community needs.

Provisiion of year-round aquatic facilities will meet existing demonstrated needs and also cater to the future growth in population



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CHAPTER THREE: CRITICAL SUCCESS FACTORS

This project will be successful because there is a demonstrated strong need and

demand for the services it will provide. Additionally, the project will attend to the

following key elements of successful aquatic/leisure centre management:

Clear statement of business and service objectives

A management structure consistent with achievement of the objectives

Appropriately skilled management and operational staff with the ability

to grow and adapt services as expectations and needs change

Program offerings relevant to community needs and aspirations and

the effective scheduling and marketing of those programs

Asset and risk management systems and processes, and

Performance measurement and monitoring processes

Council‘s approach to addressing these key elements of the project is identified in

the following sections.



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CHAPTER FOUR: BUSINESS OBJECTIVES

4 . 1 M I S S I O N A N D G O A L S

The mission of the proposed Bexley Aquatic Leisure Centre will pursue and

accord with the overall vision and objectives of Rockdale City Council.

That is, the Centre will be developed and managed consisten with Council‘s

overall vision of providing ―quality local government services that protect our

environment, are respectful to our community‘s needs and are delivered in a

financially, socially and environmentally responsible way‖.

4 . 2 S E R V I C E O B J E C T I V E S

The specific goals and objectives for the centre flow from Council‘s overall

mission and goals. They cover all aspects of the proposed centre‘s roles and

functions and, where possible, are measurable.

Proposed model objectives - which can be refined and added to following full

commitment to the project and finalisation of business planning - are detailed in

Table 2

Table 2: Model Centre Management Objectives

BROAD OBJECTIVE SPECIFIC OBJECTIVES

Purpose To provide year-round aquatic leisure facilities and

programs consistent with the community‘s curent and

forecast needs and preferences

Positive image/ identity To establish and maintain a good public image for the

proposed centre

Sound governance To manage the centre as efficiently and effectively as

possible

Financial sustainability To operate within pre-determined operating budgets

and to maximize operating income.

To commit to an annual facility, plant and equipment

maintenance spend

Needs Based Programming To provide a balanced and broad-based program of

opportunities that meet the leisure and sporting needs

of the whole community

To contribute to the health, fitness and general well-

being of the community

To build partnerships with other community providers to

facilitate a greater range of services.

To provide events that deliver social connectivity

inclusive to all community users.

Effective Marketing To promote the centre to its maximum potential within

the budget available

To maximise use of the facility to its fullest potential



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BROAD OBJECTIVE SPECIFIC OBJECTIVES

Access and Equity To provide access to programs and services for the

total community regardless of age, gender, cultural

background, level of income or disability

Sound people management To ensure that staff are adequately informed, motivated

and trained to meet the requirements of the centre and

able to fulfil the duties expected of them

Effective asset management To provide and maintain a safe, accessible, well

presented, clean and hygienic building, plant and

equipment.

To commit to the maintenance of the building, plant

and equipment.

To develop and implement environmentally sustainable

energy and water consumption practices and

technologies

4 . 3 S E R V I C E P R I N C I P L E S / P H I L O S O P H Y

The proposed operating principles complement the mission and objectives. They

provide the service philosophy and values behind management action –

particularly in regard to duties and obligations to the centre owner (ie Council) and

the centre users.

Proposed model operating principles - which can be refined and added to following

full commitment to the project and finalisation of business planning - are listed in

Table 3.

Table 3: Model Centre Operating Principles

Principle Service Philosophy/Approach

Governance

Engagement with Council

Management will consult with relevant council officers - to ensure that the centre's programs are responsive to community needs and complementary to other council programs and services in the centre

Engagement with customers

Management will develop ongoing customer and community consultation processes - to ensure that programs remain responsive to customer and community need and keep up with leisure and recreation trends

Economic sustainability Outsourcing

Centre management will directly operate the majority of programs and services except where improved economies can be realised via outsourcing (e.g. catering/merchandising)

Cost recovery

The proposed facility‘s cost recovery and pricing philosophy will be based on the identification of personal and community benefits and will be fair, equitable, affordable and transparent

Environmental sustainability Climate change

The facility will be designed and managed to incorporate best practice energy and water saving technologies and be fully consistent with Council‘s climate change adaptation strategy



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Principle Service Philosophy/Approach

Social capital Inclusiveness

The programs and spaces will reflect and respond to the needs of all age groups and those with special needs (parents with children, older people, people with disabilities, CALD).

The integration of people with physical and intellectual disabilities will be a priority for all program areas. Where integration is not possible, programs that cater for people with physical and intellectual disabilities will be introduced.

Welcoming and friendly

The centre staff will be well trained in customer service and will proactively seek to meet visitor expectations



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CHAPTER FIVE: BUSINESS STRUCTURE

5 . 1 B U S I N E S S S T R U C T U R E O P T I O N S

The appropriate business or management structure for the proposed facility is

one that assures that it is managed effectively, efficiently and sustainably - in

accordance with industry standards and best practice guidelines – and one that

also optimises use and user satisfaction, while requiring minimum subsidisation.

To ensure these outcomes, Council will seek to retain direct overall control of the

proposed facility either through in-house direct management or through an

outsourcing model where it retains responsibility for major strategic elements

(such as program fees, cyclical building and plant maintenance and capital

improvements).

5 . 2 C H O O S I N G A S T R U C T U R E

There is no clear consensus on the best management model for indoor aquatic

and recreation centres. Final decisions will, to a large extent, be dictated by the

community service values of Councillors and senior Council officers and by

financial constraints.

On the one hand, there is the view that adequately resourced and appropriately

structured business units within government can do at least as good a job as

outsiders without relinquishing day to day control. Such units are able to retain

control over programming and marketing (and market responsiveness) without

having to forecast needs and write them into management agreements.

On the other hand, there is the view that private sector agencies can maximise

efficiencies and customer service through better management skills, greater

responsiveness to the needs of users, more innovative management approaches,

and the ability to adopt more flexible labour market arrangements.

The relative advantages and disadvantages of the two key models (direct council

management and contract management by a specialist venue management

company or organisation) are detailed summarised below.

Direct Council Management

The main advantage of the direct management model is that, with full day-to-day

control of operations, management flexibility and the capability to respond more

immediately to Council objectives and policy changes are optimised

On the other hand, performance can be hampered by local government

regulations and practices and inappropriate financial, staffing and reporting



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systems. Council managed facilities can also be susceptible to the influence of

dominant user groups and local political pressures.

Contract Management

Over the past 15 years an increasing number of Councils have contracted the

management of aquatic and leisure services to commercial management

organisations (such as LeisureCo, Belgravia Leisure and Bluefit) and non-profit

organisations (such as the YMCA and PCYC)6.

These organisations have introduced a more business-oriented ‗approach – with

a stronger focus on visitor numbers, service delivery, cost efficiency and financial

outcomes (rather than the traditional focus on inputs and budget line items).

The key advantage that management organisations have over individual lessees

is their ability to draw on substantial corporate back-up resources and experience

(developed through the management of multiple centres across the country).

Contract managers also have the advantage of being able to avoid various

encumbrances and constraints inherent in both the Local Government Act (1993)

and the Local Government (State) Award 7.

They can determine and implement decisions on fees and charges, employment

of staff, centre programs and other important matters in a more immediate, more

streamlined way than a Council can.

The strong business focus of contractors does not necessarily guarantee better

overall outcomes for the community – in terms of enhanced diversity of

opportunity, social sustainability (improved personal and community health and

well-being), economic sustainability (job-creation initiatives) or the

implementation of ESD principles.

In fact, some independent management groups have been found to 'skimp' on

building maintenance and cleanliness, OH&S issues, adequate staffing levels

and skills, programming for less viable market segments, and on the quality of

support services (e.g. cafe food types, re-enrolment skill assessments, life

guarding).

6 This change in approach was largely driven by the emergence of compulsory competitive tendering,

local government downsizing and economic rationalism during the 1990s.

7 However, the latter advantage is declining, and will continue to do so as the Award

becomes more flexible.



22

Additionally, some management groups have failed in recent years and gone into

administration and closure. This has been substantially disruptive for the Councils

and pool users affected by these failures.

In the face of these issues, some Councils are returning to in-house management

models.

5 . 3 P R O P O S E D B U S I N E S S S T R U C T U R E & M A N A G E M E N T M O D E L

The business structure will be designed to deliver a diverse and community-

responsive mix of services that ensure optimum access and equity for all residents

and maximum benefits to the community (in social, economic and environmental

terms).

Specifically, the structure will have the ability to:

• Provide programs and services that meet the needs of all members of the

community

• Promote high levels of use and high levels of user satisfaction

• Be flexible, pro-active and responsive in the provision of programs and

services so as to meet changing needs

• Establish and implement high quality asset maintenance and management

processes

• Devise programs which optimise family time together and social capital

building

• Minimise operational costs and to cover operational and day-to-day

maintenance and potentially longer term capital replacement costs

(consistent with promoting the above-mentioned 'social outcomes'), and

• Secure community acceptance of the proposed manager/management team

The key requirement is a market-oriented, responsive and efficient management

regime, which retains a high ability to meet access and equity and community

service obligations.

This requires a high degree of Council management involvement and 'control' –

at policy, strategic and operational levels.

Accordingly, the business structure will likely be one of the following options:

Direct Council management options:

Management and operation by Council employees

Management by a Council committee (Local Government Act) with

Council employees



23

Management by Council or a Council committee (Local Government

Act) with operational management contracted to a specialist venue

management company or organisation agency

Indirect (arms length) Council management options:

Management by an incorporated association (comprising Council, user

groups and community representatives)

Management by a company limited by guarantee (comprising Council,

user group and community representatives)

Management by an incorporated association or a company limited by

guarantee with operational management contracted to a specialist

venue management company or organisation agency

If a direct Council management option is chosen, steps will be taken to ensure

that operations are not hampered by 'inappropriate' financial, staffing and

reporting mechanisms and that program planning is not influenced by dominant

user groups and/or local political pressures.

Similarly, if an indirect option is chosen, processes will be adoted to ensure that

sufficient control (over policy, strategy and operations) is retained via facility

management and business plans, contract specifications and/or sufficient

representation on the management board.



24

CHAPTER SIX: STAFFING/PERSONNEL

6 . 1 K E Y M A N A G E M E N T R E S P O N S I B I L I T I E S

The key staffing functions at the proposed Centre will include overall

management, financial management, administration, reception, program delivery,

marketing, asset management and maintenance, cleaning, child care, catering,

safety/risk management and customer service – as summarised in Table 4.

Table 4: Key Staff Functions

Staff Function Requirements

Overall centre management

Implementing Council‘s operational and performance objectives under an agreed set of service standards

Developing and monitoring facility management and operational plans

Overseeing staff recruitment and training

Overall responsibility for centre operations

Customer service Reception, program registration, membership sales, selling merchandise, telephone reception, distribution of promotional material

Program delivery & marketing

Organising and scheduling aquatic and group fitness programs, personal training, child minding, lane hire and special events

Coordinating event planning and liaising with promoters in respect of commercial activities including carnivals, special events and larger community events

Liaising with patrons, user groups, swimming clubs, schools and other groups to co-ordinate regular bookings

Implementing marketing strategies to maximise facility visits, memberships and other revenues

Market research to identify market opportunities, target markets, new programs and services, opening hours, pricing policies

Catering Organising and co-ordinating catering, merchandising and equipment hire operations

Asset management Asset management processes including asset inventories, maintenance schedules, energy consumption, risk management, and quality assurance systems

Assisting with the preparation, revision and implementation of the facility‘s Strategic Asset Maintenance Plan

Safety/risk management Preparing and implementing the centre Risk Management Plan

Ensuring appropriate risk management training

Financial Management Budgeting and financial projections

Bookkeeping, payroll, tax

Financial reporting

Performance monitoring & evaluation

Identify functions to be measured (visits x number x type; revenues; customer satisfaction)

Manage performance indicators (e.g. benchmarking by Centre for Environmental and Recreation Management)



25

6 . 2 C E N T R E M A N A G E R

It is critical that the people selected to manage the facility – whether employees,

lessees or contractors – have adequate training and experience and appropriate

attitudes and approaches.

The venue manager would need a higher level mix of management and

marketing skills, combined with the professional knowledge of aquatic, sport,

leisure and recreation services, and a capacity to understand and influence the

development of the Region‟s future „Health, Lifestyle and Sport‟ based policies

and procedures. A business and market oriented approach to the management

and operation of the aquatic centre is essential for this option if usage and

viability are to be maximised by seeking commercial outcomes and events. A

strong emphasis on customer service should drive recruitment because

contemporary venues are designed and operated as high profile facilities for

residents, tourists and community organisations.

Again, irrespective of which management option is chosen, a facility manager

who possesses the above attributes should be appointed at least six months prior

to the centre opening. The manager will be responsible, in this period, for:

centre fit-out and establishment

preparation of annual budget

preparation of a business plan to include a program and marketing

plan

recruitment and selection of key staff

public relations and community consultation on project development,

and

preparation of the facility management plan.

6 . 3 S T A F F I N G P L A N / S T R U C T U R E

A contemporary leisure venue with swimming pools, fitness/wellness facilities,

merchandising and creche and operating 12 months of the year will require a

combination of casual, permanent part time, full time and contracted staff.

An indicative staff complement could include:

Centre Manager

Aquatics Co-ordinator

Health Club Co-ordinator

Membership Consultants

Duty Officers

Administration Co-ordinator

Receptionists



26

Cafe/kiosk Manager and casual staff

Health Club program staff;

Head Swimming Coach

Assistant coaches / swimming instructors

Lifeguards

Creche Co-ordinator and casual staff

Cleaners and Maintenance staff

The hours of operation will vary from centre to centre but a facility with indoor

fitness and program pools, health and fitness centres, cafe with significant food

and beverage service can be open to the public for 15+ hours a day or around

100 hours per week.

Assuming a minimum core staff of around four at any one time (duty manager,

health and fitness instructor, centre receptionist, lifeguard) this can equate to

more than 10 effective full time (EFT) staff per week plus program staff (learn to

swim, group fitness and school programs) and multiple lifeguards/recepotionists

during busy peak use periods.



27

CHAPTER SEVEN: PROGRAMS & SERVICES

7 . 1 P R O G R A M S A N D S E R V I C E S

Council will confirm the activities and programs to be provided in the upgraded

centre – in conjunction with development of the centre Business Plan - once full

commitment to the upgrading is finalised.

Programming will reflect demonstrated community needs and demands as well

as best practice programming in existing successful centres with similar similar

populations to that in Rockdale City.

Accordingly, core programs are likely to include health club memberships, learn

to swim program, squads, school programs, casual lap swimming, leisure

swimming, spa, personal training, birthday parties and cafe/merchandise.

The programs8 itemised in Table 5 are indicative of the types and range of

programs that could be developed at the upgraded Bexley facility:

Table 5: Possible programs and services at the upgraded centre

Program Details

Health and Fitness Club

Cardiovascular and resistance weights

machines used as part of a fitness

program (provided by a qualified Gym

Instructor or Personal Trainer)

Group Fitness Classes - General Pump, Pilates, Cardio Box, Zumba, X-

circuit,Yoga, Boot Camp, Aero Combat etc

Group Fitness Classes - Targeted Living Longer Living Stronger

Pregnancy Be Active

Sports Teams Boot Camps

Kids Get Active

Tai Chi

Gentle Exercise for seniors

Swimming programs Learn to Swim

Swim Squad

Aqua Play Group (babies and toddlers)

Aqua Aerobics

Junior Lifeguard

Birthday Parties

Schools Programs

School Swim and Survive

School ‗Activate‘ Program

Junior Fun Days

School Carnivals

School Holiday Madness

8 Program provided by Belgravia Leisure at Melton Waves Leisure Centre and documented in Melton Waves

Leisure Centre Service Delivery Plan 2010-11



28

Program Details

Water Education Outreach

Joint Programs (with other community

providers – schools, universities, State Health

Department, Council departments etc)

Osteocise (osteoporosis program)

Your Choice (teenagers obesity)

Men on the Move (strength program for Men‘s

Shed members)

Biomechanics Studies (for high school phys ed

students)

7 . 2 O P E N I N G H O U R S

Specific operating hours will be confirmed in conjunction with the Business Plan

for the upgraded facility but, based on typical operating hours for aquatic leisure

centres, are likely to be similar to the following:

Monday- Friday 6 am to 9 pm Saturday 8 am to 6 pm Sunday 8 am to 6 pm Public Holidays 8 am to 6 pm Closed Christmas Day and Good Friday

Some components of the centre – such as the Health Club - may be open for

shorter hours, depending upon the amount and spread of demand.

7 . 3 C H I L D C A R E

Child care is typically a loss leader for aquatic leisure centres. However, it is

proposed for the upgraded centre due to its importance for access and equity

reasons. It is noted also that losses can be minimised by offering the service

during peak use times only.

7 . 4 E N T R Y A N D P R O G R A M F E E S

Entry, program and membership fees provide the main revenue sources for

aquatic leisure centres. Some income is also generated from secondary spending

(cafe and merchandise) and sometimes from donations and small program

grants.

The fees are normally established through reference to the ‗going rate‘ – or the

fees being charged at other comparative facilities within the region or other areas.

There is good sense in this because it minimises the possibility of unfair

competition between public aquatic leisure centres within reasonable travel



29

distance of each other. It also helps to ensure that prices reflect the cost of

providing the service, in keeping with the principles of competitive neutrality.

It is also proposed, in conjuction with the Business Plan, to develop a Pricing and

Cost Recovery Policy – to identify the appropriateness of different levels of

recovery (e.g. higher levels for non residents, lower levels for people with

particular hardships etc).

The business case analysis documented in Chapter 10 of this report uses an

entry and program fee schedule that is both current and typical for the type of

centre being proposed for Bexley.

Bexley Pool Redevelopment Feasibility Study

30

CHAPTER EIGHT: CENTRE MARKETING

8 . 1 M A R K E T P O S I T I O N I N G

The Stage 1 feasibility study concluded that the Bexley Pool (in its current and

proposed form) has an ‗effective‘ catchment population of 96,000, taking into

consideration the estimated competition from surrounding pools.

It was emphasised, also, that in the early life of the project (i.e. in the five years to

2016), the population was forecast to grow by at least 10,000 people – taking the

effective catchment population to around 110,000.

The Stage 1 study also concluded that many aquatic/fitness facilities in the

surrounding sub-region were not seen to be competitive threats to the proposed

Bexley facility because they were either too distant (Fanny Durack Pool and

Canterbury Aquatic Centre) or too limited in their program offerings (Roselands

Aquatic Centre, Col Jones Swim Fitness and Carss Park Pool).9

However, some facilities in the region (such as the Hurstville Aquatic Centre,

Sans Souci Leisure Centre and the Annette Kellerman Leisure Centre) were seen

to have a competitive advantage over the Bexley pool (in its current form) due to

their wider range of leisure offerings and particularly when the weather is poor.

With the new facility, it is proposed to optimise its competitive position – to ensure

its success – through not only providing the facilities that are needed, but also

through a range of strategies (including strategic marketing, inclusive

programming, and excellent customer service) intended to capture the majority of

the 110,000-strong potential market.

8 . 2 M A R K E T I N G S T R A T E G Y

The Business Plan for the proposed upgraded facility will include a marketing

strategy to optimise centre visits. It will address the potential barriers to

participation (cost, ease of access, information and unwelcoming atmosphere). It

will seek to remove or minimise these barriers by:

Preparing and implementing an annual marketing strategy (covering all

potential target markets x marketing activity type x each month of the

year)

Ensuring entry and program fee affordability

Providing ‗come and try‘ introductory programs

9 Exceptions to this would include club swimmers ‗following‘ a particular coach (based at one

of the other centres) or where a family (or individuals) visit the centre in conjunction with a

shopping or business trip (or some other purpose)



31

Providing an easy to follow and inspiring on-line portal

Working with other organisations to mutually promote services and

programs

Developing information flyers in multilingual languages and distributing

widely

Promoting the upgraded Centre via Council and relevant community-

based publications

Developing and implementing a member retention program

(comprising welcome and ‗we miss you‘ letters, birthday cards and

motivational health tips)

Providing programs and services of relevance to all population groups

(as summarised in Section 8.3)

Providing excellent customer service (as detailed in Section 8.4) .

8 . 3 I N C L U S I V E P R O G R A M I N G

The upgraded facility will contribute to Council‘s social sustainability and social

capital goals by providing services not just to mainstream markets, but also to

population groups with particular needs – as summarised in Table 6.

Table 6: Inclusive Programming Objectives

Target population Programming

Older Adults

Healthy ageing programs

Distribution of health information for older

people

Disability Services

Staff training on disability awareness and

specific training on the use of equipment

used by patrons with special needs.

Develop new programs or improve existing

programs swimming lessons to cater to the

needs of people with disabilities

CALD populations

Develop new programs or improve existing

programs to cater to the needs of people

who are culturally and linguistically diverse:

Implement systems for the identification of

CALD visitors that may require additional

assistance from life guards and duty

managers to ensure they can swim and are

actively supervising their children.

Develop staff awareness on service

delivery and provide specialist instructors

and/or interpreters for programmes that are

being offered to the CALD community.



32

Target population Programming

Young People

Provide recreation opportunities for young

people (e.g Junior Lifeguard Program, Teen

Gym, Kids Get Active)

Build partnership programs with other

community providers.

Continue to provide free water safety

education seminars at local play groups,

kinders and schools. 20 site visits were

made in the past 18 months

All

Organisation of special events to build

social connectivity (e.g. fun runs, free

after-noon teas for older adults, annual

free Open Day and annual Health and

Wellness Expo

8 . 4 C U S T O M E R S E R V I C E

Excellent customer service will be a key component of the upgraded Centre‘s

marketing strategy.

Visitor expectations will be met (and exceeded) by staff who pay detailed

attention to visitor needs, get to know visitor‘s names, offer unprompted

assistance and generally create a responsive, welcoming environment.

Supportive customer service systems will include:

Customer service training programs (with modules geared to assisting

the delivery of superior customer service, understanding visitor needs,

visitor satisfaction etc)

Customer feedback forms (and rapid management response to all

submitted feedback)

Annual centre exit surveys



33

CHAPTER NINE: RISK & ASSET MANAGEMENT

9 . 1 O P E R A T I O N A L P R O C E D U R E S

In conjunction with the Business Plan preparation for the upgraded centre,

Council will develop quality and risk management procedures policies and

manuals – including at least the following:

Occupational Health and Safety Policy

Public Health and Safety Plan

Emergency procedures

Administration Procedures

Child Care Procedures

Merchandise Procedures

Operations Procedures

The procedures will help to ensure that the following (and other) critical asset

management issues are attended to in a timely and comprehensive manner:

Monitoring of environmental conditions: water quality, heating and

ventilation, lighting levels

Compliance with public health and safety regulations

Continuity of insurance currency

Maintenance of an incident log and a complaints register

External risk auditing

Maintenance of an asset register

Maintenance of the Centre is in a clean, safe and hygienic condition

Keeping the Centre secure at all times outside of opening hours

Undertaking major building and plant maintenance and servicing

functions

9 . 2 A S S E T M A I N T E N A N C E

Major scheduled maintenance will be required to minimise the life cycle cost of

the upgraded centre.

To ensure optimal customer service, it will be necessary to schedule the

maintenance at times with the lowest impact on facility use (with consideration to

the season and numbers of users). Where closure is necessary, only

components of the facility should be closed (if possible) to minimise impacts on

visits and programs.



34

CHAPTER TEN: PERFORMANCE MEASUREMENT

1 0 . 1 M O N I T O R I N G P E R F O R M A N C E

A performance monitoring and evaluation process will be established in

conjunction with preparation of the centre Business Plan.

Detailed monitoring is a core requirement for securing optimal operational and

financial performance and will likely include the following components:

The establishment of quantifiable performance measures and

indicators (e.g. on visits x adult/child, programs used, capacity space

utilisation, peak and non-peak variations in use, membership retention

rates, place of residence of visitors, gender/age of visitors etc)

The deployment of centre management hardware and software that

facilitates the accurate and economic capture of visitor statistics

Staff performance evaluations

Benchmarking against the performance of other similar facilities

Visitor surveys (e.g. on where visitors obtain information about the

centre, satisfaction levels, unmet needs, program ideas)

Visitor feedback forms or cards (for complaints and/or program ideas)

1 0 . 2 E X T E R N A L B E N C H M A R K I N G

External benchmarking entails the study of other providers‘ (including

competitors‘) services and programs in order to identify opportunities to improve

performance.

In Australia, the Centre for Tourism and Leisure Centre Management co-

ordinates a national benchmarking project (the CERM PI Project) which provides

an excellent vehicle for the administrative benchmarking of aquatic and indoor

sports facilities.

The CERM project currently benchmarks more than 150 facilities across Australia

and tailors the analysis for specific types of facility (including ‗indoor wet and dry

centres with outdoor pools‘ such as that proposed for Bexley). The project

provides two key indicators (‗expense recovery‘ and ‗visits per year‘) and 24 other

indicators (covering services, marketing, organisation, facilities and finance).

Council proposes to subscribe to the CERM PI Project, once the proposed

upgrading is completed, to facilitate effective external benchmarking.



35

CHAPTER ELEVEN: FINANCIAL FORECASTS

1 1 . 1 O P E R A T I O N A L C O S T A N D R E V E N U E P R O J E C T I O N S

Income and expenditure estimates for the proposed upgraded facility - over the

first three-year period of operation – have been prepared. These include both

‗direct‘ and ‗indirect‘ costs as required by the Capital Expenditure Guidelines but

do not include asset renewal/whole of life costs (which are covered in the full

market appraisal in chapter twelve)

The performance parameters for the estimates have been derived from the

current use of facilities, the current and projected demographics of the catchment

(in particular, size, projected growth and distribution), the CERM PI Project

national benchmarks, program and service needs identified through previous

consultations and detailed discussions with the contract managers of other,

similar facilities within the sub-region.

In accordance with risk management principles, we have also undertaken

sensitivity (ie 'what if') analyses through the application of a range of alternate

cost, fees and participation values and other measures. These include base case

worst-case and best case scenarios.

The detailed analysis is at Attachments A and B. The key findings are

summarised below.

Baseline Scenario

Table 7 summarises the projected revenue and expenditure for the ‗baseline‘

scenario for the first three years of operation.

Table 7 – Proposed Concept – ‘Baseline' Forecasts


INCOME Memberships 1,584,000 1,663,200 1,746,360

Aquatics General entry 540,275 567,289 595,653

LTS 1,088,350 1,142,768 1,199,906

Squad 89,000 93,450 98,123

Casual Aqua 14,400 15,120 15,876

Schools 238,000 249,900 262,395

41,000 43,050 45,203

Total aquatics 2,011,025 2,111,576 2,217,155

Other

Casual Health/Fitness 60,480 63,504 66,679

School holiday programs 21,000 22,050 23,153

Ancillary income 311,000 326,550 342,878



36


TOTAL INCOME 3,987,505 4,186,880 4,396,224

EXPENDITURE Staff/salaries 2,753,990 2,853,134 2,955,846

Administration/office expenses 200,000 207,200 214,659

Trading (cost of sales) 180,600 187,102 193,837

Facilities 650,000 673,400 697,642

Programs 210,000 217,560 225,392


NET RESULT -7,085 48,485 108,847





The forecast first year operating result (not including depreciation) entails a

subsidy of around 0.2c per centre visit (compared to the pre-YMCA subsidy of

$1.25 per visit). This is forecast to become a 23c/visit surplus by the third year of

operation.

Best Case Scenario

Table 8 summarises the projected revenue and expenditure for the ‗best case‘


Table 8 – Proposed Concept – ‘Best Case' Forecasts



Aquatics

General admissions 594,303 624,018 655,219

LTS 1,197,185 1,257,044 1,319,896

Squad 97,900 102,795 107,935

Casual Aqua 15,840 16,632 17,464

Schools 261,800 274,890 288,635

45,100 47,355 49,723

Total aquatics 2,212,128 2,322,734 2,438,871

Other




TOTAL INCOME 4,386,256 4,605,568 4,835,847





37



Facilities 663,000 686,868 711,595

Programs 231,000 239,316 247,931


NET RESULT 142,826 209,376 281,391






surplus of around 30c per centre visit – and this is forecast to increase to 59c/visit

by year 3.

Low Case Scenario

Table 9 summarises the projected revenue and expenditure for the ‗low case‘


Table 9 – Proposed Concept – ‘Low Case' Forecasts



Aquatics


LTS 979,515 1,028,491 1,079,915

Squad 80,100 84,105 88,310

Casual Aqua 12,960 13,608 14,288

Schools 214,200 224,910 236,156

36,900 38,745 40,682

Total aquatics 1,809,923 1,900,419 1,995,440

Other




TOTAL INCOME 3,588,755 3,768,192 3,956,602




Facilities 637,000 659,932 683,690

Programs 189,000 195,804 202,853


NET RESULT -184,536 -140,937 -93,256



38




population growth.


subsidy of around 39c per centre visit (which is still a significant per capita

improvement on the current operation).



39

CHAPTER TWELVE: MARKET APPRAISAL

1 2 . 1 A P P R A I S A L M E T H O D

The Stage 1 feasibility study identified substantial demand and needs for

upgraded swimming and wellness facilities at the Bexley Pool site.

Meeting these needs and demands will generate substantial community and

personal benefits – including more diverse recreation opportunities, improved

health, enhanced access and equity, improved water safety, social

connectedness and positive economic impacts (construction and on-going

operational jobs).

As real as all these benefits are, most cannot be accurately quantified in dollar

terms. Therefore, for this project, a cost-effectiveness appraisal is more

appropriate than a cost-benefit appraisal10.

1 2 . 2 B E N E F I T S

Increased Recreation Participation

The upgraded centre will boost recreation participation by providing a year-round

facility and a range of programs (e.g. leisure pool, leisure centre-based health

club, warm water therapy, spa) not currently available in Rockdale City.

The new and extended facilities are likely to encourage many existing users to

participate more regularly as well as tapping into new demand from residents

whose needs are not met by the existing facility.

With its warm water facilities, the upgraded centre will also play a leading role in

meeting the future recreation demands of a rapidly ageing population.

Access and equity

The upgraded facility will improve regional equity by providing similar access to

year-round aquatic facilities already enjoyed by most of the other LGA‘s in the

region.

This is particularly significant given Rockdale City‘s lower than average personal

and household incomes, and the associated greater expense and difficulties for

many residents in accessing aquatic centres in other parts of Sydney.

10

―Cost-effectiveness analysis relaxes the requirement of cost-benefit analysis that benefits, as well as costs, be specified as far as possible in money terms. The method can be useful where it is easier to identify benefits than to value them. It is not surprising therefore to find that cost-effectiveness analysis is used widely in health, safety and education fields where there are difficulties in expressing in money terms the benefits of output values such as reduced mortality, reduced morbidity and educational quality‖. Commonwealth Government, January 2006, Handbook of Cost Benefit Analysis, page 108



40

Health, Active Lifestyles.

Over the past 10-15 years, there has been strong growth in the active

lifestyle/wellness industry, prompted by concerns about the poor health outcomes

of modern lifestyles (including inadequate exercise). The Commonwealth

Government‘s Active Australia and Healthy Communities Initiatives and the NSW

Government‘s support of the Premier‘s Council for Active Living have supported

this growth.

The upgraded centre – in providing greatly enhanced opportunities for exercise

and enjoyable physical activity – will play an important role in combating

significant current health problems (including the ‗obesity epidemic‘ and chidhood

diabetes).

In this way, the centre will contribute significantly to community–based health

promotion - thereby enhancing the vitality and productivity of Rockdale‘s

population and reducing potential costs associated with primary and acute care in

the public health care system.

In fact, if the upgraded centre was to encourage just ten percent of Rockdale

City‘s adult (+15 years) population to increase their physical activity to

recommended levels11 — a high but not unreasonable target given the

substantial and broad community use of such facilities — the net economic

benefits would be substantial and amount to around $1.2 million per annum (or

$16 per capita of the City‘s adult population)12.

Water Safety

While ‗learn to swim‘ programs are currently available in Rockdale City (at the

existing Bexley Pool and at private facilities) any increased usage of aquatic

facilities generated by the upgraded centre would generate water safety benefits.

The upgraded facility will, in fact, provide specially designated (leisure water)

areas for children and this, together with appropriate supervision by qualified

lifeguards, will enhance water awareness and confidence.

Water safety is a particular issue in communities, such as Rockdale City, with

high CALD populations13. Accordingly, any improvements in water safety

education in Rockdale City will reap greater than average benefits in terms of

potential lives saved.

11

The Commonwealth Government recommended level of physical activity is 3 sessions of at least 20 minutes vigorous exercise or 5 sessions of at least 30 minutes moderate exercise per week 12

Comprising $460,000 in reduced health sector costs, $340,000 in home-based production savings, $380,000 in leisure-based production savings and $58,000 in improved workforce productivity. Cadilhac et al. The economic benefits of reducing physical inactivity: an Australian example, International Journal of Behavioral Nutrition and Physical Activity 2011, 8:99 13

Australian Water Safety Council, 2008, Australian Water Safety Strategy 2008 – 2011 - Reducing drowning

deaths by 50% by 2020



41

Given the existing learn to swim and other educational programs available in the

sub-region (at private pools and in public pools in surrounding LGA‘s), it is difficult

to estimate how many additional people will learn to swim as a result of the

Bexley Pool upgrading. However, based on travel times to other facilities, it is

likely to be significant.

Social Capital

The proposed facility - through providing a high quality place to exercise, relax,

unwind, meet and socialize - will generate social cohesion and community-

building opportunities.

Many studies have documented the actual and potential roles that participation in

sport and recreational activities can have in improving social cohesion,

community integration, bonding, cooperation and community identity and pride14.

While these benefits definitely exist, it is difficult to quantify them in any

measurable terms.

Economic Development

The upgraded facility will generate economic benefits for Rockdale City in the

following ways:

It will generate jobs – both short term in the construction phase and on-

going for the expanded operations

It will likely increase the value of adjacent private properties which

benefits not just the owners, but also the community because the

added value is capitalized in land values for the purpose of rating

It may contribute to attracting residents and businesses (for whom

such facilities are significant attributes) to Rockdale City, thereby

boosting the tax base and local economy

1 2 . 3 C O S T S

There are two categories of economic cost – one comprising the negative

economic impacts on existing service providers that the upgraded pool will

compete with and, the other, the ‗annual service cost‘ or the subsidy required to

meet the full life cycle costs of the upgraded facility.

Economic Impact Costs

Based on the Stage 1 feasibility study consultations and benchmarking, it is clear

that the proposed facility will generate significant new demand. But it is also likely

14

For example, Kim M. Atherley, Department of Sport and Recreation, WA, 2006, Sport and Community Cohesion in the 21st Century: Understanding linkages between sport, social capital and the community



42

to attract visits away from existing facilities (commercial pools and fitness

centres).

The major dis-benefit is a possible loss of income for owners of these existing

facilities , which could lead to their closure and associated impacts on current

users of those facilities who may not wish or be able to switch to the upgraded

Bexley facility.

These impacts however are difficult to assess and quantify. It is likely however

that any closures of wet or dry centres in the LGA or surrounding areas will be

offset by the spaces provided in the upgraded Bexley facility.

As well, such closures will generate a net community benefit where the shut-

down facilities are replaced by a facility which better meets consumer needs.

Nevertheless the potential costs or dis-benefits that may be experienced by some

small businesses is a legitimate issue for Council to consider.

The main implication is full and proper adherence to, and consistency with, the

principles of competitive neutrality and the requirements of the Trade Practices

Act and other policies and regulations of relevance to market competition.

In particular, Council will need to adopt transparent business planning and

costing and pricing processes so that it is seen to be 'competing' fairly with

private providers. This will require at least the following:

compliance with the Trade Practices Act

clear definition of business activities

appropriate costing

identification and application of pricing principles

implementation of complaints mechanism

appropriate auditing and management reporting

Annual Service (Life Cycle) Costs

While the proposed facility is forecast (on base and best case scenarios, as

identified in Chapter Eleven) to generate an operational surplus, it will require an

operational subsidy once full life cycle costing is taken into account15.

Life cycle costs include the operational costs and revenues (as identified in

Chapter Eleven) as well as all asset renewal and asset depreciation costs.

15

This accords with CERM‘s PI Project benchmarking which demonstrates that, on average, indoor leisure centres with aquatic facilities only just cover their operating costs. That is, they rarely make a significant contribution to the capital costs of constructing centres



43

The Annual Service Cost is a method for identifying full life cycle costs and

expressing them as an average annual cost.16

The Annual Service Cost for the proposed upgraded Bexley facility – for the

base, best and low cases - is detailed in Table 7.

The redevelopment cost estimate is $26.65m. This comprises an asset renewal

component ($5m for replacing the 50m outdoor pool, with seating and shading

and a pro-rata contibution to the new amenities/change facilities) and an asset

upgrade/expansion component ($21.65m for the indoor facility and new car park).

The net operational result is the forecast performance for year three and reflects

full ramping up of operations (following strong marketing and building of the

membership base and swim school over the first two years of operation).

The asset renewal provisions are based on the industry benchmark of around 1%

of capital costs annually over the life of the project and assuming the use of high

quality construction materials and methods (to maximise the economically useful

life of all centre components)17.

Table 7: Annual Service Cost for upgraded Bexley Pool

Item Capital cost ($)

Annual Service cost ($) Notes


Funding source

Asset renewal 5,000,000

S94 13,200,000

Restricted reserves 763,000

Asset sales 4,687,000

Grants 3,000,000

Budget Impact: cash

Net operational result -108,847 -281,391 93,256

Asset renewal 266,400 266,400 266,400

Loan interest N/A N/A N/A No loan element

Demolition N/A N/A N/A

Renewal more likely than demolition

Net cash flow impact 157,553 -14,991 359,656

Budget Impact: non cash

Depreciation18

533,000 533,000 533,000

TOTAL 26,650,000 690,553 518,009 892,656

16

Local Government Victoria, Aug 2006, Local Government Asset Investment Guidelines 17

This amounts to $13.32m over the assumed 50 year life of the project. Actual provisions would be around $60,000 pa for the first 7 years and $300,000 pa thereafter – or an average of $266,400 per annum 18

Depreciation is a non-cash expense that reflects the decrease in value of the asset as a result of wear and tear and age. Based on average pool performance, an economically useful life of around 50 years is assumed. That is, it is assumed that the proposed pool will have an approximate 50 year life and at the end of that period it will have limited value and will have to be demolished. Based on the straight-line depreciation method, the cost is $533,000 per year for the proposed project. This is the amount by which the community‘s pool investment is consumed (and devalues by) each year



44

As illustrated in Table 7, the forecast Annual Service Cost ranges from a low of

$518,000, for the best case scenario, to a potential high of $890,000, for the low

case scenario. For the base-case scenario, the forecast cost is $690,000 per

annum.

The Annual Service Costs – for the existing Bexley Pool and the three proposed

pool scenarios - represent the annual community service obligation (CSO) values

for the respective facilities and scenarios.

Based on these CSO‘s, the varying cost-effectiveness outcomes for the different

scenarios –– in terms of CSO‘s per visit and proportion of costs paid by Council -

are summarised in Table 8.

The CSO‘s per visit range from $0.90 for the proposed pool, best case scenario,

to $3.60 for the existing pool.

Table 8 also illustrates the comparative contributions of Council and users to total

pool costs, at both the existing and proposed centres. For example, at the

existing Bexley Pool, Council pays around 42% of total costs per visit (in the form

of operational subsidies). For the proposed pool (base case), this is forecast to

drop by around $2.30 per visit to only 14%.

Table 8: Cost-Effectiveness comparison – existing and proposed upgraded pools

Indicator Existing Pool Proposed Upgrade


Annual Service Cost 19

$470,000 $690,000 $518,000 $893,000

No. of annual visits 130,000 541,000 590,000 489,000

CSO per visit $3.62 $1.28 $0.88 $1.83

Average fees paid by visitors (including secondary spend)

$5.00 $8.12 $8.20 $8.10

Total cost per visit $8.62 $9.40 $9.08 $9.93

Proportion of costs paid by users

58% 86% 90% 82%

Proportion of costs paid by Council

42% 14% 10% 18%

The Annual Service Costs can be aggregated over the forecast life of the facility

and discounted to net present value (NPV).

The NPV under the base case scenario for the proposed upgraded centre, at an

internal rate of return of 5.00% and an inflation rate of 3% (based on Council

forecast return on investment and inflation rates as detailed in its Long Term

Financial Plan) is a negative $14.05 million which is a proxy measure of the full

life cycle community service obligation value of the project.

19

The figures for the proposed upgrade are as described in Table 7. For the existing pool, the Annual Service Cost comprises $233,000 annual operational subsidy, $160,000 depreciation (2% of $8m fair value) and $80,000 asset renewal allowance (1% of $8m fair value)



45

1 2 . 4 C O N C L U S I O N S

The overall cost-effectiveness of the project entails a comparison of the life cycle

CSO value ($14.05 million) with the social and community benefits (quantifiable

and non-quantifiable) of the project.

The social benefits of the proposed upgrading to the Rockdale community are

substantial. As detailed in Section 12.2, they include greater diversity of

opportunities, increased participation in aquatic and fitness recreation, improved

health and wellbeing, enhanced access and equity, improved water safety

through more people learning to swim, more opportunities for family outings and

positive economic impacts.

While these benefits are substantial, many are difficult or impossible to quantify in

dollar terms. However, just the community health benefits have the potential to

offset up to half of those costs (in the form of reduced demand for health and

medical services).20 The other benefits, generated via millions of visits over the

life of the facility, are likely to offset the other costs many times over.

20

That is, if the upgraded centre is successful in encouraging 5-10% of the population to achieve the Commonwealth Government recommended weekly physical activity levels



46

ATTACHMENT A: BUSINESS PLAN ASSUMTIONS

INTRODUCTION

A model business plan – with management and other assumptions built into it –

has been developed and is outlined below.

The business plan includes operational revenue and expenditure forecasts for

the concept adopted by Council at its meeting of 6 July 2011.

The forecasts are estimates, based on the experience of similar centres around

Australia21, discussions with three venue management organisations22, best

available knowledge of Rockdale City‘s pool markets, assumptions that the

markets will behave ‗typically‘ and a series of operational assumptions (on

staffing, user fees, opening times etc).

In the event that the markets do not behave ‗typically‘ and/or where, following

centre commissioning, the actual operational practices deviate from the assumed

ones, the realised results may be higher or lower than those forecast.

Expenditure forecasts are reasonably straightforward and can be made with a

reasonable degree of confidence.

There are, however, inherent difficulties in preparing revenue projections – due to

the diverse and somewhat unpredictable nature of the markets for heated indoor

pools and leisure centres and the presence of factors in the market that cannot

be controlled (such as the provision and marketing of other heated pools and

indoor recreation space in the region by other agencies).

Despite the difficulties, demand and revenue forecasts have been made and are

detailed in the following sections.

REVENUE FORECAST ASSUMPTIONS

Visitor numbers – and revenues - will be influenced by many variables (most

importantly by the proposed facility‘s quality of management and staffing, ease of

access, availability of convenient parking, marketing and customer service

initiatives) and by the breadth and strength of competition.

The key revenue assumptions are as follows:

21

As researched and documented since 1991 in Adelaide University‘s Centre for Environmental and Recreation Management (CERM) annual surveys of leisure and aquatic centre operations and performance 22

YMCA (6 June 2011); Bluefit Leisure (29 June 2011); Belgravia Leisure (4 July 2011)



47

Centre management

It is assumed that management will aim to achieve an annual profit or break even

position while providing a wide range of aquatic, fitness and recreational

opportunities for residents of the City and surrounding areas.

The Council and centre management must ensure that the new centre has a

strong focus on:

Providing programs relevant to demonstrated community needs

Customer service

Continually improving the quality of programming

Continually improving the range of programming

Revenue generation

Professional marketing

Staff training and development

Best practice risk management approach

Ongoing market research, and

Benchmarking to assess performance and success against similar

services.

Marketing Assumptions

The main focus of centre management will be to identify, understand and meet

the needs of residents and attract sufficient visitation levels to deliver value for

money, quality programs and an accessible and affordable service.

The core markets for the proposed centre will be:

Recreation and leisure: providing an attractive and welcoming environment

for social interaction and relaxation,

Sport: providing a venue for club and school based competitive swimming

(and other aquatic sport) carnivals and competitions

Education: including learn to swim, water safety, swimming competency

training and certificates, life saving, coaching courses,

Fitness: provision of programs and activities to improve fitness levels of

participants, and

Health: provision of rehabilitation programs and opportunities for people

requiring the benefits of water therapy and movement. This includes people

of all ages with arthritis, asthma, injuries or any other disability that may be

improved by exercise in a warm water environment.



48

The success of each ‗market‘ will be dependant on offering appropriate and

innovative programs, the pricing structure, marketing and promotion strategies,

and, most importantly, the skills and attitudes of staff.

Entry Fees

The proposed fees are based on the current ‗market rates‘ for indoor aquatic and

leisure centres in the region (Annette Kellerman Aquatic Centre and the Hurstville

Leisure Centre).

Opening Hours

The forecasts are based on typical operating hours for indoor aquatic/leisure

centres (of 95 to 100 hours per week – or around 6.00am-9.00pm week days and

7.00am-6.00pm weekends).

Visitation levels

One of the Centre for Environmental and Recreation Management‘s (CERM) key

indicators - catchment multiple - provides a basis for predicting the use of new

centres.

‘Catchment multiple’ is a measure of ‗the number of visits a year divided by the

estimated population size within 5 kilometres of the centre‘.

The CERM research has demonstrated that ‗outdoor wet centres‘ (such as

Council‘s existing pool) and ‗indoor wet/dry centres with outdoor pools‘ (such as

the proposed facility) have average catchment multiples of 1.723 and 5.2,

respectively.

CERM‘s average ‗catchment multiple‘ for ‗indoor wet/dry centres with outdoor

pools‘ suggests that the upgraded facility can generate around 500,000 or more

visits per annum (catchment population of 96,000 x 5.2) if it performed at the

average level.

However, another CERM indicator, visits per metre2 of building/water space,

suggests that 500,000 visits per annum may be difficult to achieve.

23 Bexley Pool‘s existing catchment multiple of 1.4 is less than national average utilisation

(of 1.7) for this type of pool – probably reflecting the availability of several alternative

facilities in the sub-region and perhaps the ‗hidden away‘ location of the pool (as discussed

in Section 4.2, above).



49

The ‗visits per metre2’ indicator suggests a more modest result – with the

proposed concept generating around 370,000 visits (5,100 m2 x 72 visits per m2),

if they perform at the average level.24

It is probable, however that the proposed facility will attract visits well above the

average ‗visits per metre2’ for ‗indoor wet/dry centres with outdoor pools‘. This is

because of the well-above-average catchment population for the Bexley facility –

nearly 90,000 compared with the average of 60,000 in the CERM study. It is

reasonable to assume, on this basis, that visits per metre2’ could be in the range

of 25-50% higher than average.

Additionally, the levels of use of similar facilities in the sub-region (such as

Hurstville Leisure Centre and the new Annette Kellerman Aquatic Centre) are

well-above the national average visitation levels, so it is reasonable to assume

that this will be the case for the proposed Bexley facility (so long as it is marketed

effectively).

Based on the average national performance of the type of facility proposed for

Bexley (as documented in the CERM benchmarks) and the experience of other

centres in the sub-region, it is concluded that the reasonable baseline visitation

forecasts for the proposed facility is 520,000.

Sensitivity Analysis

The estimated visitation levels of 520,000 represents the ‗baseline‘ scenario for

the purposes of the business plan analysis.

However, due to the inherent uncertainties in forecasting visits to new aquatic

and leisure centres, we have also identified ‗best case‘ and ‗low case‘ scenarios

in terms of projected visitor levels.

Best Case

It may be possible for the proposed centre to perform at above-average levels in

its first year of operation.

It will have an excellent range of fitness, program and leisure facilities (with more

leisure water and a larger gym/wellness space than the Annette Kellerman

Centre) and it will have the attraction of ‗newness‘ compared to other competing

facilities in the region (such as Roselands Aquatic Centre and Hurstville Leisure

Centre).

24 The average visits per m

2 multiple for ‗indoor wet/dry centres with outdoor pools‘ is 72 but

is higher (in the high 70‘s) for facilities around 5,000m2 or more.



50

It is noted that many well designed and managed indoor aquatic centres perform

well above the average levels. The Great Lakes Leisure Centre25, for example,

has a catchment population of 19,200 and generated 205,000 visits in 2004-05 –

a catchment multiple of nearly 11.

For climatic and competing pool reasons, the proposed Bexley Pool is very

unlikely to emulate the Great Lakes results. However the proposed pool could

attract visits at above-average levels but this would require excellent

management and a vigorous and very successful marketing campaign.

The assumed visit levels for the best case scenario are 10% higher than the

baseline forecasts – or around 570,000 visits.

Low Case

The proposed centre may, conversely, attract lower than average visits. There

could be several reasons for this – including a failure to attract visitors who

currently use other facilities (indoor and outdoor pools and/or gyms in the City or

surrounding LGA‘s) and the failure of marketing to offset the relatively poor

‗visibility‘ of the pool site.

The assumed catchment multiple for the low case scenario is 10% lower than

the baseline forecasts – 470,000 visits.

Catchment Population Growth

In the life of the project, the catchment population is expected to increase

significantly (to 113,800 by 2036 – an increase of 17,500 or 18% from 2006)26.

This should underpin a steady and substantial increase in annual visitations over

the life of the facility.

More than half of the forecast growth – 10,000 persons or 1% per annum - is expected to occur in the 10 years between 2006-2016.

EXPENDITURE FORECAST ASSUMPTIONS

The expenditure forecasts are based on recent budgets for similar centres (as

documented in the CERM benchmarks), discussions with the operators of the

Hurstville and Annette Kellerman Centres, typical staffing and facility

management policies and relevant assumptions (on opening hours etc).

25

The Centre comprises a 25m x 8 lane pool, a leisure/program pool, gym and indoor sports courts 26

NSW Department of Planning, New South Wales Statistical Local Area Population Projections 2006– 2036, April 2010 Release



51

Forecast staffing levels are in accordance with current approaches, industry best

practice and public safety guidelines (Department of Local Government Water

Safety Practice Note 15 and Fitness Australia Code of Practice).

Staff wage and salary on-costs have been calculated in accordance with current

market rates and typical Council‘s on-cost practices.



52

ATTACHMENT B: BUSINESS PLAN PRO FORMA

FORECAST SENARIOS

The operating forecasts have been prepared according to the three visitation

scenarios – ‗baseline‘, ‗best‘ and ‗low‘. They are based on the assumptions

detailed above and the market segment breakdowns summarised in Table 1.

Table 1 – Forecast market segments x size

Market segment Forecast Visits

(%)

Adult general entry 14

Child general entry 8

Learn to Swim 16

Schools 9

Squad 3

Casual wellness/fitness 1

Centre membership 49

Total 100

The market segment break down is based on typical user patterns at the type of

facility proposed for Bexley (with particular consideration given to current visitor

patterns at the Annette Kellerman and Hurstville Centres).

The assumed adult-child 60:40 distribution of visitation is a little different from the

65:35 currently being experienced at the Annette Kellerman Centre but is based

on the larger proposed (child-attractive) leisure pool at Bexley.

The forecasts comprise the operating projections for the facility once fully

commissioned. No allowance has been made for:

capital costs (with these to be covered by government grants,

community funds and/or Council funds),

post-construction budget for any anomalies which may occur, and

facility pre-commissioning expenses.

Forecasts have been provided for the first three years of operation. The year 2

and 3 forecasts assume a continuation of current CPI movements of (around

3.5% per annum), expenditure increases in line with CPI movements and



53

revenue improvements resulting from a combination of CPI based fee increases

and modest (2% per annum) business growth27.

Achieving the projected outcomes – particularly for the ‗best‘ and ‗baseline‘ case

scenarios - will require skilled management, including:

effective marketing and provision of programs to meet the needs of the

whole community,

promotion of access for all,

attracting some of the fitness market from the large number of private

fitness centres in the sub-region,

attracting some of the wellness and aquatic markets from the existing

centres in surrounding LGA‘s,

appropriately balanced pricing policies (which tap the commercial

potential of the proposed venue whilst also recognising its role in

meeting a wide range of social capital and community development

objectives), and

high quality programs and facilities at a competitive price.

All operating costs, other than asset renewal and asset depreciation costs

have been included in the estimates.

OPERATIONAL FORECASTS

The detailed financial calculations for the proposed concept are included at

Attachment C and summarised below. All operating costs (including allowances

for asset depreciation) have been included in the estimates.

The market segment breakdowns for this option are summarised in Table 2.

Table 2 – Proposed Concept – Forecast market segments x visits per annum

Market segment Forecast

Visits

(%)

Baseline

Scenario

(No.)

Best case

Scenario

(No.)

Low case

Scenario

(No.)

Adult general entry 14 72,800 79,800 65,800

Child general entry 8 41,600 45,600 37,600

Learn to Swim 16 83,200 91,200 75,200

Schools 9 46,800 51,300 42,300

Squad 3 15,600 17,100 14,100

Casual

fitness/wellness 1 5,200 5,700 4,700

Centre

memberships 49 254,800 279,300 230,300

Total 520,000 570,000 470,000

27

With a forecast population growth in the area of around 1% per annum for the next 5 or so years, this should be not difficult to achieve



54

Baseline Scenario

Table 3 summarises the projected revenue and expenditure for the ‗baseline‘


Table 3 – Proposed Concept – ‘Baseline' Forecasts



Aquatics General entry 540,275 567,289 595,653

LTS 1,088,350 1,142,768 1,199,906

Squad 89,000 93,450 98,123

Casual Aqua 14,400 15,120 15,876

Schools 238,000 249,900 262,395

41,000 43,050 45,203

Total aquatics 2,011,025 2,111,576 2,217,155

Other




TOTAL INCOME 3,987,505 4,186,880 4,396,224




Facilities 650,000 673,400 697,642

Programs 210,000 217,560 225,392


NET RESULT -7,085 48,485 108,847






subsidy of around 0.2c per centre visit (compared to the pre-YMCA subsidy of

$1.25 per visit). This is forecast to become a 23c/visit surplus by the third year of

operation.

Best Case Scenario

Table 4 summarises the projected revenue and expenditure for the ‗best case‘




55

Table 4 – Proposed Concept – ‘Best Case' Forecasts



Aquatics


LTS 1,197,185 1,257,044 1,319,896

Squad 97,900 102,795 107,935

Casual Aqua 15,840 16,632 17,464

Schools 261,800 274,890 288,635

45,100 47,355 49,723

Total aquatics 2,212,128 2,322,734 2,438,871

Other




TOTAL INCOME 4,386,256 4,605,568 4,835,847




Facilities 663,000 686,868 711,595

Programs 231,000 239,316 247,931


NET RESULT 142,826 209,376 281,391






surplus of around 30c per centre visit – and this is forecast to increase to 59c/visit

by year 3.

Low Case Scenario

Table 5 summarises the projected revenue and expenditure for the ‗low case‘


Table 5 – Proposed Concept – ‘Low Case' Forecasts



Aquatics




56


LTS 979,515 1,028,491 1,079,915

Squad 80,100 84,105 88,310

Casual Aqua 12,960 13,608 14,288

Schools 214,200 224,910 236,156

36,900 38,745 40,682

Total aquatics 1,809,923 1,900,419 1,995,440

Other




TOTAL INCOME 3,588,755 3,768,192 3,956,602




Facilities 637,000 659,932 683,690

Programs 189,000 195,804 202,853


NET RESULT -184,536 -140,937 -93,256




population growth.


subsidy of around 39c per centre visit (which is still a significant per capita

improvement on the current operation).



57

ATTACHMENT C: BUSINESS PLAN FORECASTS IN DETAIL

INCOME AND EXPENDITURE ASSUMPTIONS & ANALYSIS

Revenue Forecast

Facility componen

ts Program

Classes

/week

No. weeks

No. per clas

s Unit

sales Fee

Average

discount

Achieved rate Income Assumptions

CENTRE (GYM and/or POOLS)

700m2 gym

Memberships 1,584,000 Average 2,200 members month x net yield $60

School holiday programs 600 40.00 35.00 21,000

40 days x 15 children per day x $40

Sub-Total 1,605,000

GYMNASIUM

700m2 gym

Casual gym 2,600 18.00 20% 14.40 38,000

Average 50 casuals per week

Casual aerobics/pump /circuit/ Pilates/pump etc 1,600 18.00 20% 14.40 23,000

Average 30 casuals per week

Sub-Total 61,000

AQUATICS

50m outdoor pool 25m x 8 lane indoor pool Leisure Pool 20 X 15m program pool Spa

General admissions

Adults 61,000 6.50 15% 5.53 337,025 53% of estimated 115,000 admissions in year one

Children 42,000 4.50 15% 3.83 160,650 37% of estimated 115,000 admissions in year one

Pensioners 8,000 4.50 15% 3.83 30,600 7% of estimated 115,000 admissions in year one

Spectator 4,000 3.00 3.00 12,000 3% of estimated 115,000 admissions in year one

Learn to Swim

School terms

Tiny tots 50 40 4 8,000 14.00 7% 13 104,000 Average fee with 5% discount based on reduced fees for 2nd and 3rd child in family)

Pre-school 50 40 4 8,000 14.00 7% 13 104,000

School aged 308 40 5 61,600 14.00 7% 13 800,800

School holidays 13

Pre-school 15 10 4 600 14.00 7% 13 7,800

School aged 95 10 5 4,750 14.00 7% 13 61,750

Private LTS 500 20.00 20 10,000

Squad

Squad program (sharks to seniors) 89,000

Average 125 squad members month x net yield $65month x 11 months

Aqua-fitness

Casual Aquarobics 1,000 18.00 20% 14.40 14,400

Includes gentle, moderate aquafit and rehabilitation classes

School programs

Carnivals 28,000 4.00 112,000 School & Zone

Intensive LTS (10 days) 14,000 7.00 7.00 98,000

8 schools/term x 3 terms x average 60 students x 10 visits x $70/student



58

Facility componen

ts Program

Classes

/week

No. weeks

No. per clas

s Unit

sales Fee

Average

discount

Achieved rate Income Assumptions

School sport 5,000 5.50 5.50 28,000

Average 8 schools x 3 terms x 8 weeks x average 30 students x $5.50/student

Other

Sauna/spa 10,000 3 3 30,000 15% of adult aquatic entries ($5 exclusive of entry fee)

Lane hire 125 15 15 2,000 3 hours/week x average $15/hour

Birthday parties 600 15 15 9,000 60 parties x 10 children x $15 child

Total Aquatic 2,011,025

ANCILLARY FACILITIES Trading Income

Café 170,000 Average $0.60 per visit secondary spend

Merchandising 120,000

Telephone/lockers 1,000

Total trading income 291,000

Creche 20,000

21 children day x 5 days x 48 weeks x average $4

TOTAL INCOME

3,987,505 $7.90 per visit based on 520,000 visits

Expenditure Analysis

Expenditure Item $ Assumptions

Management/Staffing

Permanent F/T 718,740 Detailed in staff schedule (below)

Casuals 1,284,000 Detailed in staff schedule (below)

Program Instructors 651,250 Training and uniforms

Management Fee/Contract administration 100,000

2,753,990

Administration

Office expenses 100,000 Telephone, post, printing, stationery, office equipment, corporate costs, training

Advertising/promotion 100,000

200,000

Trading

Café and merchandise COS 180,000

Telephone/locker COS 600

180,600

Facilities



59

Energy 260,000 Electricity and gas

Chemicals 30,000

Water rates 40,000

Repairs, maintenance, cleaning 230,000

Buildings insurance 40,000

Security 20,000

Minor equipment 30,000

650,000

Programs

Cardio fitness equipment – lease 160,000

Program materials/equipment 45,000

Maintenance - equipment 5,000

210,000

Total 3,994,590

Staff Schedule

Staff Position EFT Salary Hrs/week Hr/rate Weeks/ annum Expend ($)

Permanent staff

Centre Manager 1 85,000 85,000

Aquatic Co-ordinator 1 60,000 60,000

Health Club Co-ordinator 1 55,000 55,000

Head Coach/ Aquatic Education 1 50,000 50,000

Customer Service (Memberships) 2 55,000 110,000

LTS Co-ordinator 1 45,000 45,000

Cafe Supervisor 1 42,000 42,000

Duty Managers 2 42,000 84,000

Staff on-costs (42%)28

187,740

Total F/T Staff 718,740

Casual staff

Reception/Café attendants 280 22 52 320,320

Lifeguards (Year round) 300 22 52 343,200

Lifeguards (summer season) 200 22 26 114,400

Gym supervision 140 26 52 189,280

Creche assistants 50 24 50 60,000

Casual staff on-costs (25%)29

256,800

28

Permanent employees – typical allowance for on-costs and administration/payroll levies 29

Casual employees – typical allowance for on-costs and administration/payroll levies



60

Staff Position EFT Salary Hrs/week Hr/rate Weeks/ annum Expend ($)

Total Casual Staff 1,284,000

Program Staff

Term Learn to swim 250 30 40 300,000

Holiday Learn to swim 80 30 10 24,000

Squad 25 30 50 37,500

Aqua/Aerobics/Group Fitness 58 55 50 159,500

Casual staff on-costs (25%) 130,250

Total program staff 651,250

Total 2,653,990

Date post:	29-May-2018
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