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I have received some updated info concerning winch expenses.
The winch loan is completely paid off. We have a side letter on our insurance for roughly $400/yr.
That gives the winch a break even of 57 member flights or just 9 day member flights. If the winch is not flown at all for an entire year, the cost for 50 members would be the price of 1 premium beer per year, about $9.
Is that too great of a financial burden?Glider winches are made in California by Roman. The cost of a 2 drum winch with 450hp mounted on a truck would be over $110,000.
I would remind our BOD that the goal of SSI is too put smiles on the faces of our members. Not to earn the highest profit.
LarryJohn, thanks for the additional input. I also have a management degree. I disagree with your cost analysis assumptions.
Applying your assumptions to the Pawnee gives it a break even rate of 2850 tows/year. That rate will never occur. Are you suggesting we sell it also ?When comparing assets that are already acquired, the financing should not be used for the decision making. Besides, the winch loan is almost paid off.
When financing is discounted, the break even for the Pawnee is 700 tows per year. The winch break even is very close to zero. Both are manageable at our club.The problem of paying for the overhaul and share buyback Have already been solved with the loan proposed by the Board. At the last board meeting, I proposed a different option for financing. It was not passed along to all.
It is: Have An interest only loan of $100k At 5% interest. By carrying that financing, the club would continue it’s current growth rate and allow a dues reduction of $300 per member.
Larry KasePart of the explanation for lower flight numbers for the lower numbers last year was due to flooding and a pandemic. Even the last year the winch paid a profit over expenses for the year. It has been profitable for the last 3 years. That money helped to pay the expenses of Aerotows.
Aerotows lost money in 2 of the last 3 years.
Winch flights cost the club about one tenth of a typical aerotow.
Winch day member flights are more than 90% profit.
In the last 3 years the winch has had more use than any of our single place gliders. Does that mean the BOD wants to sell them also?The winch has proven itself as safer than aerotows . We have had 2 near fatalities in our aerotow ops.
I have flown with hundreds of members. I have found that the student pilots that we have turned loose on the winch have better traffic pattern skills than our veterans flying their high performance ships.
With our current push on safety, maybe we should require all members to go through the winch training.
Larry KaseFor about 50 years the BOD has made the financial decisions of SSI. It has dealt with many expenses such as a lawsuit, overhauls, glider and tow plane purchases. These expenses were much larger than the one being discussed. During the lawsuit, we had to come up with over $200,000. All of these BODs used good financial management to pay the bills without a special assessment. Our dues and flight fees were always reasonable.
Our club is very successful. We have assets of over $400,000 and that number is increasing month by month.
This situation reminds me of a rich uncle that wants you to help pay for his new Porsche because he prefers not to take out a car loan.
Special assessments are a gamble. It can actually lose money. For every new member that decides not to join, we lose $1000. The higher cost per member may actually be a loser for the club.
For the last year, I have had a continuing offer to the BOD to loan SSI $10,000 if our cash balance got too low. The emails of the previous week have shown a strong support of the club. I have no worry that the club can’t get the money for an overhaul when needed. The interest for a loan of the same amount comes to $20/member/year.
Using a loan for the overhaul = no assessment, no dues increase, no members quit, new members join. Our current prices allow paying of all expenses over several years.
Let’s be smart.
Larry KaseIt is club policy to notify the Maintenance chairman of maintenance issues. The forum is not the proper place for this discussion.
Larry Kase
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Chili contest will start at noon. Polish up your crockpot. Flying if weather cooperates.
LarrySent from my iPhone
