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UMass Club in Boston breaks initial promise to cover costs

  • ELEANOR SWEENEY<br/>A view of a street-level entrance to the Boston tower, at 225 Franklin St. in the financial district, that houses the UMass Club.

    ELEANOR SWEENEY
    A view of a street-level entrance to the Boston tower, at 225 Franklin St. in the financial district, that houses the UMass Club. Purchase photo reprints »

  • The UMass Club located in downtown Boston has been running a deficit since it opened in 2005. The UMass Building Authority, the capital finance and management arm of the university, has spent nearly $4 million to keep the club afloat.

    The UMass Club located in downtown Boston has been running a deficit since it opened in 2005. The UMass Building Authority, the capital finance and management arm of the university, has spent nearly $4 million to keep the club afloat. Purchase photo reprints »

  • UMass Alumni Club Boston MA Licensed to ClubCorp for web and marketing purposes.

    UMass Alumni Club Boston MA Licensed to ClubCorp for web and marketing purposes. Purchase photo reprints »

  • UMass Alumni Club Boston MA<br/>Licensed to ClubCorp for web and marketing purposes.

    UMass Alumni Club Boston MA
    Licensed to ClubCorp for web and marketing purposes. Purchase photo reprints »

  • UMass Alumni Club Boston MA Licensed to ClubCorp for web and marketing purposes.

    UMass Alumni Club Boston MA Licensed to ClubCorp for web and marketing purposes. Purchase photo reprints »

  • The UMass Club sits on the top floor of 225 Franklin St., giving members and guests a breathtaking view of downtown Boston. The club serves breakfast, lunch and dinner on most days. It has a bar as well as meeting and entertaining space. The club hosts 8 to 12 social and business events every month.

    The UMass Club sits on the top floor of 225 Franklin St., giving members and guests a breathtaking view of downtown Boston. The club serves breakfast, lunch and dinner on most days. It has a bar as well as meeting and entertaining space. The club hosts 8 to 12 social and business events every month. Purchase photo reprints »

  • ELEANOR SWEENEY<br/>A view of a street-level entrance to the Boston tower, at 225 Franklin St. in the financial district, that houses the UMass Club.
  • The UMass Club located in downtown Boston has been running a deficit since it opened in 2005. The UMass Building Authority, the capital finance and management arm of the university, has spent nearly $4 million to keep the club afloat.
  • UMass Alumni Club Boston MA Licensed to ClubCorp for web and marketing purposes.
  • UMass Alumni Club Boston MA<br/>Licensed to ClubCorp for web and marketing purposes.
  • UMass Alumni Club Boston MA Licensed to ClubCorp for web and marketing purposes.
  • The UMass Club sits on the top floor of 225 Franklin St., giving members and guests a breathtaking view of downtown Boston. The club serves breakfast, lunch and dinner on most days. It has a bar as well as meeting and entertaining space. The club hosts 8 to 12 social and business events every month.

The club has needed a nearly $4 million bailout to keep it afloat.

The private UMass Club — an 18,000-square-foot space on the 33rd floor of a cement and glass skyscraper — has not covered its operating expenses since opening in August 2005. Instead, the club has operated at a loss, ending each year with a budget gap the UMass Building Authority has had to cover as part of its contract with club management, ClubCorp USA Inc.

This is contrary to how university officials described the club’s financing to the Daily Hampshire Gazette, Associated Press and the Boston Globe before it opened. The club would operate on membership revenues and would not use money from the university or the state, former UMass spokeswoman Jennifer Desai told the Associated Press for a December 2004 article on the club.

“It’s a question of credibility and keeping one’s word,” said state Sen. Stanley Rosenberg regarding disparities in how the club is being funded. “This is a commitment they made and, obviously, didn’t follow.”

The UMass Building Authority, the capital financing and management arm of the UMass five-campus system, is the tenant on the sublease for the club. The authority has spent at least $3,997,000 million to keep the club alive in the wind-swept urban canyons of Boston’s financial district.

The money has gone to finance start-up costs, some renovations and support operating expenses, according to annual UMass Financial Reports, fiscal years 2007-2011.

Now, the university may consider using anticipated club revenues to repay some, or all, of this money to the authority.

“It is projected that the UMass Club will operate on a break-even basis in 2012 and will generate a surplus next year,” Robert Connolly, spokesman for the UMass president’s office wrote in an email to the Gazette.

The building authority does not have its own media relations staff and referred all questions to Connolly. “This performance is in accordance with the club’s original business plan and is impressive given the national and regional economic challenges of recent years.”

Tough times

The UMass Club launched operations a few years before the Great Recession hit — an environment that was not friendly to private clubs.

“In the last five years, I’ve seen more clubs close than open,” said Bill Hiser, president of the Association of College and University Clubs and house manager of the Ohio State Faculty Club.

While national figures on the number of university clubs are unavailable, of the association’s 75 to 80 member clubs, four or five closed within the last several years, Hiser said.

“I would say that since 2008 or 2009 that clubs are experiencing a downturn mostly because, as you can imagine, with many universities their budgets have been tightening,” he said.

The UMass Club sits on the top floor of 225 Franklin St., giving members and guests a breathtaking view of Boston. The decor uses polished wood and neutral tones. The club serves breakfast, lunch and dinner on most days. It has a bar, a business center and seven function rooms for social and business entertaining.

Members can attend the club’s eight to 12 monthly social, business and networking events, the club’s website says. Among them have been networking roundtables, Red Sox night, wine tastings and a distinguished speaker series, according to the club’s recruitment material. Today, the club is hosting a tailgating party at Gillette Stadium for the UMass Minutemen vs. Bowling Green State University football game.

The club was established for alumni and friends of the university to help with fundraising, to provide meeting and event space for members, business leaders, government officials and the university and to foster an alumni community.

Initiation fees range from $200 to $700 and monthly dues are anywhere from $33 to $110 depending on membership level. When the club opened it had about 315 members and a goal of recruiting 1,500 members, according to recruitment material.

The UMass Club has more than 1,000 members, 440 of which are UMass Amherst graduates, Connolly said.

Lease agreement

The UMass Building Authority negotiated a 10-year contract with UMass Management, LLC, a wholly owned subsidiary of ClubCorp USA in August 2005. ClubCorp is a private club management firm that handles the day-to-day operations of more than 150 golf and country clubs and business, sports and alumni clubs across the U.S.

A ClubCorp representative was not available for an interview.

According to annual UMass financial reports, the contract stipulates that the building authority is responsible for approving the budgets and operating plans of the club and for covering any shortfall in the operating budget. The contract calls for a minimum annual management fee of $200,000 or 4 percent of the operating revenue, whichever is greater. ClubCorp receives a percentage of the club’s initiation fees as well as 25 percent of operating profits.

The contract can be terminated if the university closes the club for at least 18 months. If the building authority did close the club, it would still be on the hook for the lease, UMass financial reports state.

Since 2005, the building authority has given the club various amounts, anywhere from $200,000 to $800,000 a year, to sustain operations.

Rosenberg said the club anticipates turning a profit in 2013 because a new manger was hired, one who can provide more “aggressive and dynamic leadership.” A new member relations director for the UMass Club was hired in May 2011.

Connolly, the president’s spokesman, said no state or tuition dollars were used to sustain operations at the club. He declined to provide an explanation of where the money came from.

On Oct. 12, the Gazette filed a public records request to determine where the building authority got the money to keep the club running.

It is unclear how much money, if any, the authority has had to spend to cover costs at the club during last fiscal year (July 1, 2011, through June 30, 2012). The Gazette filed a records request for this information as well.

“We generate revenue from many other sources and thus it would be non-state dollars that have been directed to the club during its start-up years,” Connolly said. “Primarily, the UMass Club has needed these funds to make its rental payment to the university.”

Connolly added that the UMass Club has generated more than $100,000 for scholarships for UMass students.

Rosenberg said while he thinks the club is valuable to the university’s mission, officials should have made clear to the public that there have been budget shortfalls and explain how these gaps were being covered with building authority funds.

“The university needs to have assets necessary to develop and provide fundraising and endowment enhancement and bring in other sources of revenue. Entities like the club are a valuable asset in doing that,” he said. “The marketing and stature it provides is worth some investment by the institution until (the UMass Club) can sustain itself.

But the Amherst senator questioned an apparent lack of accountability.

“If you make a plan, you can’t have that plan change and not tell anybody,” he said.

Repayment possible

The building authority may recoup some of the $4 million it laid out to keep the club up and running.

After being approached with questions about the club’s finances, Rosenberg spoke with UMass President Robert Caret about the club. The senator noted that the bulk of the club’s deficits occurred under the administration of the previous president, Jack Wilson.

Rosenberg said the president is willing to bring a discussion of repaying the money, using anticipated club revenues, before the necessary boards — likely the UMass Board of Trustees and the building authority’s board.

“As the club gets on its feet, they can talk about a plan to ... pay it back,” Rosenberg said. “There is no shortage of ways to spend this money for the benefit of the students.”

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