Integrity, Innovation, Inspiration NORTH WALSHAM HIGH SCHOOL DUAL USE SPORTS CENTRE

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NORTH WALSHAM HIGH SCHOOL DUAL USE SPORTS CENTRE
BUSINESS PLAN OPTIONS
FINAL DRAFT REPORT
OCTOBER 2012
Integrity, Innovation, Inspiration
1-2 Frecheville Court off Knowsley Street Bury BL9 0UF
T 0161 764 7040 F 0161 764 7490 E [email protected] www.kkp.co.uk
Quality assurance
Name
Date
Report origination
Tony Riddington
1 October 2012
Quality control
Peter Millward/Cristina Bianco-Lynn
8 October 2012
CONTENTS
Background to the Business Plan Options.................................................................... 4 Pricing Policies................................................................................................................. 5 Dual Use Agreement ........................................................................................................ 6 Option 1: Terminate Agreement Restricting Sports Facilities to School Use Only ... 6 Option 2: School Operates the Sports Centre on Caretaker Basis.............................. 7 Option 3: School Operates Sports Centre on Current Basis Using NNDC Staff ........ 8 Option 4: As Option 3 Plus Enhanced Facilities............................................................ 9 Future Possibilities .......................................................................................................... 9 Appendix: Options Summary
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NORTH WALSHAM HIGH SCHOOL DUAL USE SPORTS CENTRE
BUSINESS PLAN OPTIONS
BACKGROUND TO THE BUSINESS PLAN OPTIONS
Knight Kavanagh and Page (KKP) was approached by North Norfolk District Council
(NNDC) to review the operation of the dual use sports centre attached to the North
Walsham High School (NWHS). The brief was to develop series of options supported by
outline business plans for the local authority to consider with a view to offering the
community use operation of the sports centre to the school.
The baseline budgets for each of the respective options and their projections have been
taken from the current income and expenditure figures provided by NNDC. The sports
centre provided current charges and facility booking data.
Prior to the development of the business plan options, KKP had one meeting with the
school governors and members of the school’s management team. Figures for the
school’s current cleaning, heating, lighting and maintenance costs for the joint use areas
were provided by the school’s Business Manager. These costs form part of the annual
rental figure that the school charges NNDC for community use of the building.
As part of the initial evaluation, the pricing structure for the centre was examined as well
as the detail of original joint use agreement between the County and District Councils.
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NORTH WALSHAM HIGH SCHOOL DUAL USE SPORTS CENTRE
BUSINESS PLAN OPTIONS
PRICING POLICIES
The Voluntary Management Committee (VMC) has control over the pricing structure at
NWSC. This group largely consists of representatives of the various clubs and groups
that use the centre. The VMC was created as part of the dual use agreement and has
been in place since the centre opened in the mid 1980’s. There is external input into the
pricing decisions made by the VMC as NNDC has both member and officer
representatives on this body. However the users representatives are in the majority on
the committee and in the past, price rise suggestions have been held back, reduced or
vetoed. As a consequence the NWSC price structure is adrift of what would be
considered the market rate for such facilities. A brief check on hourly rate of other dual
use centre charges revealed some significant differences.
Hourly Rates
Sports Hall
Small hall
Badminton (court)
NWSC
£17.00
£8.00
£8.00
Chilwell Olympia
Sports Centre, Notts
£37.50
£22.00
£9.50
Meridian Leisure
Centre, Louth, Lincs
£33.00
£22.00
£8.25
Buxton Community
School, Derbys
£32.00
£24.00
£7.00
Malpas Sports
Centre, Cheshire
£40.00
£24.00
£8.60
Amesbury Sports
Centre, Wilts
£31.75
n/a
£9.05
Clearly, economic factors and/or local competition can keep prices down but neither of
these appears to apply in North Walsham. We feel that there is scope for price increases
on hall hire charges.
Hire charges for badminton appear to be in line with elsewhere but the way the centre
operates its own club based sessions results in a shortfall in income when compared to
the hourly rate. The badminton club pays £2.50 per person for their twice-weekly booking
of four courts. For an hourly rate per person in most centres this would be reasonable but
in the NWSC case this is for two hours at peak time rates. Depending on the numbers
attending the session this could result in a loss of potential income to the centre of around
50%.
A detailed examination of other centre club based sessions may reveal a similar picture
but based on these two examples there is considerable scope for increasing the revenue
at NWSC from fees and charges.
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NORTH WALSHAM HIGH SCHOOL DUAL USE SPORTS CENTRE
BUSINESS PLAN OPTIONS
DUAL USE AGREEMENT
The situation with regard to dual use agreements is complex. Most were set up from the
1960’s onwards when local authorities took an increasingly active role in sports and
leisure provision; quite simply, the sharing of facilities made sense. Schools generally got
a better standard of sports facilities than would otherwise have been the case and the
local community got a sports centre with the savings of a shared capital cost. The school
and sports centre were seen to be providing facilities for the benefit of the community,
one educational and the other recreational. In most counties across the country, except
perhaps Norfolk, both parties shared common costs such as maintenance, heating and
lighting to an agreed formula depending on the areas involved and level of use. This
seems to have been the case in Norfolk but with an additional important element – rental
payable to the school over and above the shared common costs. The impact on the
financial position of NWSC is significant.
Based on the 2011/12 figures provided by the Business Manager at the school, the
shared costs for heating, lighting and cleaning are around £18,500. The total paid over to
the school each year is around £44,000 making the rental element 58% of the total paid
over to the school (£25,500 of £44,000). Were this ‘subsidy’ to be lost it would add a
considerable additional financial burden to a facility that is already heavily subsidised.
OPTION 1: TERMINATE AGREEMENT RESTRICTING SPORTS FACILITIES TO
SCHOOL USE ONLY
Should NNDC give notice then the school would no longer receive the rental figure for the
dual use facilities after the two-year notice period expires. Currently this is around £44k
per annum, this forms part of the school’s base budget. If this amount is ‘cut’ from the
school’s funds NWHS may decide, quite reasonably, restrict the sports facilities to school
use only. The school may be able to make some savings on the heating, lighting and
maintenance costs incurred by not opening the facilities for community use. This would
depend on the school’s building services control mechanisms being configured in a way
that enables zones not in use to be switched off out of school hours.
There are few other options for sports hall and indoor-based sports activities in North
Walsham should the Sports Centre not be open for community use. Most of the clubs and
community groups that currently use the centre would have difficulty finding alternative
local venues. The Victory Swim and Fitness Centre has no facility for activities which
require a sports hall.
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NORTH WALSHAM HIGH SCHOOL DUAL USE SPORTS CENTRE
BUSINESS PLAN OPTIONS
OPTION 2: SCHOOL OPERATES THE SPORTS CENTRE ON CARETAKER BASIS
Many schools open their facilities for community use outside school hours. Often this is
managed through a caretaker system. NWHS has recently increased its caretaker team
to assist in the operation of the newly completed school/community building – The Atrium.
To save on sports centre operational staff, and thus costs, the school could operate the
sports centre on a block-booking basis only. Under such a scheme clubs and groups
would pre-book on a termly basis for their particular activity and the caretaker(s) would
open the building at the appropriate time and close up afterwards. The caretaker would
remain on-site but not supervise the activities. Without a staffed reception when the
centre is open on-site it would not be practical to take casual or ‘walk-up’ bookings. This
would result in an estimated 5% reduction in use and may have implications for health
and safety responsibilities for the school. The school’s Business Manager has indicated
that this would require further investigation.
More importantly, the charging structure for the centre would need to be overhauled. The
voluntary management committee, comprised of various representatives of local sports
groups have not felt able, or the need, to increase hire charges for the facilities. Thus
there have been no price increases at the centre for three years and prior to that any
increases were kept well below inflation. Charges are now significantly adrift of those
levied at similar joint use centres in rural market towns. As a result, it is suggested that
once the school has responsibility for pricing that charges are increased by 50% initially
and then 10% per annum thereafter until parity with benchmarked centres is reached.
Given the resistance such a sharp increase in charges it is estimated that bookings would
decline by 20% in the first year levelling off thereafter and that there would be merit in
outlining the alternative consequence of inevitable financial instability without such an
increase.
With only a caretaker service to operate the centre a bar would not be feasible, nor cost
effective if separately staffed. This would result in a further loss of revenue and reduce
the opportunities for secondary spend from users. There is an opportunity for the
voluntary committee to be involved here.
A caretaker only service would not provide the important developmental aspects to the
service to ensure that new users are targeted, new activities promoted and the centre is
marketed in an effective way. Over time this is likely to result in a decline in centre usage
as it is likely to be viewed as less accommodating of casual/new users and could well
become an invitation only venue/clique.
Under this option it is difficult to see the centre operating in any other way than with a
significant subsidy – the source of which cannot currently be identified.
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NORTH WALSHAM HIGH SCHOOL DUAL USE SPORTS CENTRE
BUSINESS PLAN OPTIONS
OPTION 3: SCHOOL OPERATES SPORTS CENTRE ON CURRENT BASIS USING
NNDC STAFF
Under this option NNDC pays over to the school £162,378 in lieu of notice. This is
equivalent to the council’s two years net budget for the centre and includes the Sports
Hall equipment reserve fund of £15k of which £6.5k has been earmarked for business
support. This draft business plan forms part of that support and will be deducted from the
amount paid to the school. In return the school takes over running the sports centre (as a
community facility) using the present site operational staff and maintains the existing level
of service.
As with Option 2 the centre’s pricing structure would need to be addressed. Having
operational staff on site while the centre is open would allow the introduction of an
admission charge per head. This would be over and above the court hire charges and
would be a way of raising revenue from all users, especially the larger groups who use
the court space more intensively ie gymnastics, martial arts and trampolining. Having
discussed this approach informally with the Acting Chair of the Management Committee,
it is believed that this would be much more acceptable to the present users than the 50%
increase in court hire charges outlined in Option 2 and less likely to result in a significant
decline in usage. Subsequent years would see a rise in court hire fees to improve the
income stream.
Bar operation would continue but with increased prices, closer to those of other licensed
premises in town.
Line management would be through the school’s management team – either the
Business Manager or an alternative management arrangement put in place by the school
for The Atrium.
Within the operational hours for the sports centre there is an allowance of approximately
15% of the Senior Leisure Centre Assistant’s time to undertake the important
development work required to maintain and expand the centre’s user base.
There are a number of opportunities that exist within the centre’s programme that offer
potential for growth. Currently the schools make very little use of the 4 – 6pm slot for after
school activities. In most leisure centres this is a difficult session to fill but there may be
scope for the centre to promote activities for young people in this currently ‘dead’ time as
after school clubs. Similarly, there is little use of the sports hall on a Saturday morning
apart from late morning roller-skating on alternate weeks. More could be made of this –
junior badminton or short tennis sessions for example. There are also the opportunities
presented by the school holidays. Historically the sports centre has not had much
success in this area but there may be scope for a fresh look at this, perhaps by tapping
into the existing networks within the school to provide activities that meet a latent
demand. All of the above are potential areas for growth but as they are yet unproven no
allowance for them has been made in the financial projections.
Given the suggested changes to pricing structures and the opportunities for development
work by the operational staff, the projections indicate a significant improvement in the
income to expenditure ratio such that by 2017 the centre covers its direct operating costs.
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NORTH WALSHAM HIGH SCHOOL DUAL USE SPORTS CENTRE
BUSINESS PLAN OPTIONS
OPTION 4: AS OPTION 3 PLUS ENHANCED FACILITIES
There would be scope within the site and without extending the staffing structure to
increase the income generation potential of the centre by the addition of a floodlit Multi
Use Games Area (MUGA). This clearly would be subject to planning and other
considerations but this could have a significant impact on the income generation of the
centre as well as meeting the known local demand for a small artificial pitch for football
training and 5-a-side competition.
The school could reinvest a proportion of the lump sum from NNDC in such provision but
at the same time, NNDC would need to approve a £20k capital contribution to its
development.
The council has also offered officer time to assist the school in making grant applications
to funding bodies such as Sport England to make up the estimated £100k that would be
needed for the MUGA. Supervision would be by the school’s existing operational staff.
Allowing sufficient time to seek the balance of funding, planning and construction,
however, means that it is unlikely that the MUGA could be fully operational until 2014.
Projections, for this option, show the centre breaking even on direct operations by the end
of 2014 and a small but increasing surplus thereafter.
FUTURE POSSIBILITIES
Management Arrangements
The school has not yet decided on the management operation for The Atrium but given its
proximity to the sports centre on the school site there may be opportunities for shared
management of the two facilities with a consequent saving of common overheads such as
a booking system. However without the detail of the future management arrangements for
The Atrium, this is impossible to factor into the projections at present.
NNDC grant offer
Recognising that this may have a negative impact on the school’s financial position
NNDC may be prepared, subject to discussions, to offer a transitional grant arrangement
to the school to smooth the operational transfer of the sports centre to the school. In
terms of the two bodies’ financial position, this could mean for example, an ongoing grant
of £17k from NNDC giving the council a net saving of £60k whilst from 2014 giving the
school a reduced negative position of around £25k.
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NORTH WALSHAM HIGH SCHOOL DUAL USE SPORTS CENTRE
BUSINESS PLAN OPTIONS
Charitable Status
There may be scope to consider running the sports centre as a charitable trust. Current
benefits to this include the possibility of claiming tax relief on donations as well as grants
being available from other charities e.g. community foundations and other bodies
supporting charities and the voluntary sector. NNDC has a set up fund specifically to
assist community groups who wish to benefit from charitable status and funds may be
available from this source to explore this option in more detail.
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