A Wellington karate club becomes financially secure – without external funding
29 June 2017
How the Mt Victoria Dojo was made self-sustaining.
Many sports clubs struggle to be financially viable and depend on external funding for survival. Often, that funding subsidises membership fees in the battle to keep numbers up. But with limited funders, this is not a sustainable model in the long-term. When grants dry up, these clubs struggle and often fold.
By thinking outside the square' clubs can become self-sustaining, and gain a secure income directly from their members. Mt Vic Dojo in Wellington is a good case in point.
Since 2001, the membership of the Mt Victoria Dojo has grown from around 50 to over 220. Over the same period, class fees have increased ten-fold and other income streams have been created. As a result, the club is now in a financially secure position, and a thriving asset to the community.
Background and partners
Jill and Chris Gower founded Mt Victoria Dojo in 1999. Initially the club had around 50 members, mostly children. Kids' fees were around $1.25 a class – a level that was not sustainable.
There wasn't even a safety net of external support. Mt Victoria Dojo was not one of the karate codes supported by New Zealand Karate. And because it was not affiliated to a national body recognised by Sport NZ, the club wasn't able to access funding from local gaming trusts.
The crunch point came in 2001. "Our building lease came up for renewal. We'd invested a lot of money in doing up the facilities to comply with Council requirements, so the rent went up significantly," recalls Jill. "We had to work out how to make Mt Victoria Dojo self-sustaining - or risk bankruptcy."
Create a sports hub
"Our first move, with immediate effect, was to create a sports hub [within the building]. We partnered with other codes who share the cost of our facility and advertising," explains Jill.
Each of the partners brought unexpected benefits, including resources that enhanced the facility and web marketing expertise that significantly boosted growth. "We all benefit from the increased foot traffic – it adds to the energy and leads to valuable word of mouth advertising," says Jill.
"We reflected that if we were prepared to invest in the sport as heavily as we had over the years, then our members would be prepared to invest to keep the club operating," says Jill. From 2001-2006, kids' fees went up from $1.25 to $13.50 a class. This was achieved through gradual increases, while fine-tuning the schedule.
"Many of our kids were only coming to one class per week, even though they were paying for two classes. Clearly we had undervalued our product - and overestimated the time they had to give," Jill notes. "So we limited attendance to one class per week at our standard rate. Children who wanted to come to more classes had to pay appropriately."
The change was justified by splitting classes by age so all children received better tuition. This also made the instructors' job easier. In this way, larger class sizes became both manageable and effective.
Use the Web and advertising opportunities
The club website, www.mtvicdojo.org.nz, was created. The site now includes regular news, latest timetables, instructor profiles, and online registration. As well as bringing in new members, the site enhances the club's sense of community. "The lesson we learned was that a website should encourage action. By registering their interest, potential members have made an important leap towards getting off the couch," advises Jill.
A few local schools allowed advertising in their newsletters, and with word of mouth endorsement, the club quickly filled the vacancies they had created. "We kept adding classes. We created new programmes for 4-6 year olds and teenagers. Classes quickly filled to capacity regardless of the fee increases," recalls Jill. Free trial. Mt Vic Dojo has always offered prospective members a two-week free trial. This allows people to see if karate is for them, before making the commitment. "Our retention [after people sign up] is massive," says Jill.
Keep a quality focus
Jill emphasises that the club's growth has been based on quality of product. "We're extremely passionate about what we do and we love sharing that with our members. We have a fabulous team of instructors [the club has 12 Black Belt instructors, four taking regular classes]. Plus I frequently see members modelling the behaviour they've enjoyed, by introducing themselves to new members and offering support and insights."
Offer payment options. The club now accepts lump sum payments, EFTPOS, credit card and automatic payments. As Jill says: "We had to do this because many of our members pay until it hurts!"
Those who can't afford the fees can apply to have them fully or partly subsidised, with decisions made on a case-by-case basis. "It astounds me that sports set their fees to meet the needs of the lowest common denominator when 80% of participants could and should pay ten times as much," Jill notes.
Sell gear and more
The club sells branded t-shirts and training gear to members. As Jill explains, this generates additional income, makes for great advertising, and gives members a fresh way to express their support of the sport.
The club also sells supplements and an instructional DVD. Other income streams include sleepovers, seminars, competitions, gradings, and holiday programmes. Creating high performers. Jill believes their high performers have become a large part of her motivation for creating a sustainable model. "Although our focus has had to be on building a broad and sustainable membership, through the sheer volume of members we are attracting we're producing top New Zealand fighters. This is occurring organically without the need of the club to commit specific funding to a high performance strategy" she says.
Keys to sustainability
"What we are selling is not the kicking and punching. It's the membership to a healthy sport, the friendships, the role models, the mentoring and support, the environment. The lessons and benefits are the same with any sport," explains Jill.
Based on Mt Victoria Dojo's experience, she notes the following as essential to making a club financially sustainable:
- have a strong understanding of your club/sport's value proposition
- know how to sell that proposition to potential members, members and other stakeholders
- be bold when price setting
- be flexible in receiving membership fees
- seek opportunities to sell gear and other merchandise
- use funding to add value to your product or provide for more participants. Don't use funding to subsidise participation.
- get a great CRM package to enable testing, measuring and communicating
- be honest and open-minded in partnering with other organisations, remembering that benefits run deeper than money.
Internationally martial arts are a major industry. In New Zealand martial arts are enjoying a period of popularity – thanks in part to all the Japanese cartoons on television. And Jill believes Mt Victoria Dojo has significant opportunities for further growth.
"We're looking at going even younger, and offering development classes for toddlers. Our facility is ideal and many of our members have younger siblings who come along already."
Classes for pre-school children would enable the building to be better utilised in non-peak daytime hours, whereas from 3pm to 9pm it's already operating at capacity.
Fees will continue to be reviewed. "We know that the international standard for similar clubs is about $120 a month. We're currently at about half that, for adults. I'm a bit driven to see all sports put their fees up," Jill reckons. "If one player in the market radically discounts a product it sends a negative message about that product's value. It makes it very difficult for any outlet to operate in a sustainable way."
She believes a good membership system with a database to manage regular payments, is "a holy grail". Mt Victoria Dojo is looking at out-sourcing payments. This would mean members would have an ongoing direct debit contract [like gym contracts].
Longer term, opening new outlets or helping existing clubs is a real possibility. "That's another way we can grow and create the environment our high performers need to become more successful internationally," concludes Jill.
Contacts and links
To find out more, please email Jill Gower at email@example.com or call her on 027 444 4192