State of the Club

Second, our club has prepared, and will keep preparing, for any economic slowdown so that we can continue to offer members high quality service and a well-maintained fleet of boats.

These two basic facts should help carry us forward through the winter.

Over the past few years, our club has been cautious and conservative. We have salted away resources, invested in infrastructure and reduced debt. We did not do this because we are clairvoyant or smart. Quite the opposite. Our club has been built on adversity. The inaugural season was 1987 which ended with another famous market crash. Just as we recovered, there was the corporate downsizing of the early 1990s. During the third year of our club, financial issues caught up with us and we "ran aground on a reef in the harbor." It took several years of scrimping and hard work to finally get our club to North Cove in 1994.

From there, we began growing and operating with small surpluses which were put aside in a rainy day fund. That day came in the unexpected thunder of 9/11. Through grace, fortitude and an amazing resiliency among members, our club successfully navigated this substantial dislocation and series of challenges.

More recently, our club has benefited from a great and growing group of members as well as record participation in our sailing school. At each milestone along the way, we acted conservatively and have reduced debt such as the Clubhouse Bonds which were paid back to members last winter.

One thing we learn from history is that the greatest challenges are usually unexpected. But having said this, I am confident that on May 1, 2009, sailing will begin again in New York Harbor.

So what type of season should we expect next summer?

First, we must be conscious that this economic crisis has caught many members in its wake. Members worked at some of the companies which have been in the headlines. Most companies will contract. Members with stock portfolios or other assets have seen their values diminish. There is very little silver lining in the current situation, mostly a great amount of pain and suffering. To all those members significantly affected, our thoughts and prayers reach out to you in the hope they provide comfort, companionship and above all, courage.

Second, after sixth years of strong growth, we should now expect our club to contract like almost every other organization. From a high of 800 members this past summer, it is realistic to expect a drop of up to 25%. Such a drop will be sad as we lose important friends and sailing buddies, some of whom may move out of the city.

Drops in membership when unexpected or sudden can create challenge. But anticipated reduction with proper planning can sometimes be a good thing. Our club should benefit form a "breather" after so many years of growth. New members will have time to mature into seasoned members with greater perspective and abilities to assist the growth of sailing in the harbor.

Our club was also bumping up against maximum capacity in the racing programs with 25 teams on Wednesday and 21 on Tuesday. Removing this pressure will allow our club time to strategize and build plans for long term success during the next growth cycle.

With a drop in membership and other sailing activities, we can still have a prudent fiscal model. We just need to scale back expenses to match revenue. We will do this by curtailing expansion and not buying more vessels next year. We have enough for the time being. We will also tighten our belts and be watch how each dollar is spent.

Even with this new budget, there are many reasons to smile and be optimistic about next summer.

First, we plan to launch the same number of J/24s, even though use is expected to drop. This should result in greater boat availability. This past season, we acquired 4 more J/24s bringing our fleet to 32. Twenty-eight will again be launched which will allow 4 to go through a top to bottom refurbishment next summer.

Second, we plan to build out the interior space of the Honorable William Wall, our floating clubhouse. Once insulated and furnished, it will serve as a winter clubhouse next year at North Cove. Our club bar will be able to operate year round. In addition to the interior, we plan upgrades to the top deck including varnished cap rails and higher quality furniture. All of these improvements will be done with an emphasis on green and sustainability. For the cap rails, rather than teak which is cut from a rain forest, we plan to use locally grown and harvested oak. And we are also installing solar panels and wind generators in expectation of the clubhouse going totally green and not having to run a generator! This is such an exciting project that I will communicate it to you in more detail over the next few months.

Third, we participated in the acquisition of a second launch this past summer which is the sister ship to "Admiral's Launch." We did this in conjunction with Project City Kids and the new launch will restart the "free rides for kids" program created by Lil Toot, our first club launch. The new launch will be called "Big Toot" and painted red. The new launch will assist our club by providing back up for clubhouse operations and a second launch on very busy evenings.

Fourth, one of our members facilitated the donation of a 42' cruising boat to Project City Kids last summer. This Sparkman & Stephens designed boat was at the docks and is currently named "Anita Kay." You may have seen her during the fall. We are working this winter to restore and improve her and she will be relaunched under the name of "Generosity" next spring. For Project City Kids, she will do week long leadership training sails for teenagers between New York and Newport. And next summer, she will also be available to club members to sail on week long cruises between Newport, Block Island, Martha's Vineyard and Nantucket. Just like the Caribbean Regatta, you will be able to book a berth or a cabin and sail with a captain. Your charter fees will help support the boat for Project City Kids. "Generosity" will create great new sailing opportunities for our members.

Fifth, we plan to continue building on the success of our 12 Meter program. This past summer, "America II" and many of the club Syndicate Members traveled to Newport to race in the Olin Stephens' 100th Birthday Regatta. It was an incredible experience. Next summer, we plan to send America II on the 12 Meter tour, participating in the 4 major regattas, including the World Championships in September. And the 5th and final 12 Meter event of the year will be in New York Harbor hosted by our club. Many 12 Meters are expected to participate in New York Classic Week, the first 12 Meter regatta ever in our harbor!

There are also sailing trips planned during this winter. Signs ups have already begun for De Caribbean Regatta in January. Our club has been invited to participate in the first weekend of Yacht Club de Monaco's Primo Cup. If enough members are interested, we will send both racing and social teams to Monaco in February. But if economic conditions cause people to hold back this winter, we might postpone this trip to next winter.

Next summer, we plan to continue the junior sailing program known as "Operation Optimist" and we hope to expand the Laser and Sunfish dinghy programs.

So there are many reasons to be excited an optimistic about the 2009 sailing season! Just look at all the great pictures and memories submitted by members for the annual photo contest http://myc.org/Photo_Contest/entries_2008.htm.

On the dues side, we have managed to keep dues stable over the past 4 years, with only one increase of $100. All the while, we were able to add more and more services and opportunities for our members. This remarkable run was made possible by expansion. The revenue derived from new members covered the growth as well as the increase in operating costs for items like fuel and boat equipment.

Going forward, we must be realistic about growth and instead plan for a short-term reduction. Budget-wise, this means we will need to have a modest dues increase and have settled on the figure of $150 which is $37.50 per quarter. This should not be onerous for club members but it will provided needed stability to the club so we can safely navigate this time of uncertainty. This increase will be reflected in the January billing cycle and will be paid by all members, current as well as new.

As a thank you to our current members for being part of the club, we will open up our greatest asset to you - our flagship, the 12 Meter "America II." Sailing on her in the harbor is one of the greatest experiences you will have.

As you may know, the acquisition of this America's Cup yacht was made possible by a generous and visionary group of members known as our 12 Meter Syndicate. There are 17 Syndicate Members and many were part of the race in Newport last summer. Going forward, these Syndicate Members will have the opportunity to race in the regattas as well as special sailing privileges in the harbor.

But up until now, only a handful of members have experienced sailing on our 12 Meter in the harbor. This is the greatest experience we offer. We wish to change this and starting in May, every current member who joined the previous season (i.e. this opportunity will not available to new members) will have an opportunity to sail on the 12 Meter once each year. "America II" is expected to return from Newport by May and then will start sailing. Members will be able to sign up on the website for their incredible America's Cup experience. Member sails will take place on weekday evenings, weekends and occasional weekdays. By the end of next season, I would like all members to have experienced this thrill and understand when I look at our Moet sails and say, "Wow!"

Next summer, we will also host the 3rd Dennis Conner International Yacht Club Challenge. Details have been posted on our website and the first teams are already registering. We would like to build an invitation committee of members who are connected with foreign countries. If you have connections overseas and would be willing to coordinate the invitation for a specific country, please let me know so I can give you the information needed to get started.

As you can see from all of this, we have challenges like everyone around the world today. However, we also have great opportunity. I hope that sailing in the harbor has been a tonic for you. I also hope that meeting other members and making the club part of your social home in the city has been enjoyable and rewarding.

When I walked on the club docks this summer and spoke with members, I have seen a great increase in spirit, skill and sailing expertise. We really have developed into an excellent organization and together, we have changed the face of the harbor. We are a primary leader of the recreational renaissance and we are making this city a better place.

Thank you very much for being part of the club and contributing to the success.

Best wishes to you this holiday season and I hope to see you at the Annual Dinner if not before!

- Michael W. Fortenbaugh, Commodore