Finance Officer’s page

May 4, 2020

You may have seen or heard us talk about our “regular monthly expenses” or “burn rate” averaging a little over $5,000 per month. Now that we’re closed for business, some are wondering why our burn rate isn’t a lot lower. The answer lies in the difference between Club Operations and Post Operations.

Most of our normal Club operation expenses are variable. The more beer we sell, the more beer we have to buy. The more nights we have musical entertainment, the more we pay for entertainers. There are some Club expenses that are not so variable, but since closing on March 20, our overall Club expenses (and income) are down dramatically. Club Operations expenses are NOT included in our $5,000 per month burn rate projection.

The monthly burn rate usually makes up the biggest part of our Post Operations expense. That includes operations-related expenses like our $467 monthly insurance bill or our $1,861 monthly APS budget bill. Many of these expenses are mutual in that both the Club and the Post benefit from having items like insurance, electricity, and natural gas. Our insurance bill remains the same until we renew at next year’s rate. Our APS budget bill remains the same unless our annual average usage changes significantly. But the biggest part of our Southwest gas bill is based on monthly usage. For the first three months of this year our gas bills ranged from $297 to $331. But for April usage, our bill is only $111.

Our $5,000 monthly burn rate is paid from our Post Operations account, and consists of all the bills we usually have each month, whether we are open or not. That’s why the number is consistently in the neighborhood of $5,000. For example, our burn rates for January, February, and March were $5,230, $5,356, and $5,474. But our burn rate for April was only $4,906 because a few of our expected monthly bills are based on usage.

So what is included in our burn rate? Here’s what we pay for every month:

Cox internet and phone, POS maintenance, APS, Southwest Gas, StorAmerica offsite storage, Equipment rental / maintenance, DirecTV, Building and Property insurance, Scottsdale water bill, Pandora, Constant Contact, Bookkeeping, Protection One / ADT security system, Hewlett Packard Instant Ink

We also have what we refer to as irregular bills. They may come in quarterly or annually, or on an as needed basis like for repairs. These irregular bills are also not included in our burn rate projection. For example, our irregular expenses for February were $3,829, but for March only $615.

One might also ask why we don’t just shut everything down. For one thing, some of us still come to the Post each week to do our jobs, and we use services such as internet, phone, electricity, and A/C. And based on my experiences of leaving town for many summers, it’s not financially practical to shut down services for only a few months.

Barry MacMurray

Finance Officer