331: Joe Trauger NCA Update Feb 2024

Speaker 1: 0:00

I'm very excited about it because I think it helps us define exactly who's in the private club industry, what sort of benefits accrue to local communities, state governments and ultimately nationally, because there are clearly economic impacts that these clubs have. And all of the data that we've seen really kind of focuses more exclusively on golf, which many of our clubs do have golf as part of their amenities, but not every club has golf as part of their amenity package. About 80, 85% of our NCAA members have golf, but if you take just golf, it's not capturing the wider world of clubs, which would include city clubs, yacht clubs, athletic and hunt clubs, military clubs. That's data that we need to have so we can show the depth and breadth of the club economy. Hey everyone.

Speaker 2: 1:00

Welcome back to Private Club Radio, your industry source for news updates, trends, media communications, marketing, management, leadership, food and beverage governance you name it, we got it Any and all the things private and country club related. I'm your host, denny Corby. Thank you for being here If you have not done so already. We put out a tremendous amount of content. Make sure you follow, get alerted when our new episodes come out, or can head on over to privateclubradiocom right on top. Sign up for our newsletter. We send you a weekly email just letting you know all the different episodes that we put out, all the different content, keeping you updated and informed. Speaking of updated and informed, in this episode I bring on once again our friend, joe Trauger, president and CEO of the NCA, and this episode and reason why I bring them on is some of these topics, some of these things when it comes to politics, capitol Hill, the government man, I am dumb, I don't get a lot of stuff. I do a couple of things really well and I try to stay to that lane. So for that reason, that's why we have the NCA and we have Joe Trauger coming on. So this episode really highlights we talk about the comprehensive economic impact study being done on clubs right now and it highlights the fact that clubs pay property taxes and obviously create a tremendous amount of jobs and what impact that has on our local communities, because it's huge, it's massive. We also talk about some other regulatory issues still, talking about the independent contractor rule, and the overtime still is still going on there. Ladies and gentlemen, welcome back to another episode. I'm private club radio giving us the update live from DC with their buddy, jt, not Justin Timberlake, joe Trauger. Mr Trauger, always a pleasure to have you on what is going on in the NCA world.

Speaker 1: 3:14

Well, there's a lot of stuff going on actually. So, in addition to you know sort of the day-to-day stuff that we do in government relations and dealing with Congress and all the regulatory agencies, we're in the midst of planning, putting the final touches on our National Club conference, which will be happening down in PGA Omni Resort Down in Frisco, texas. That's shaping up nicely and we have some good speakers that we've lined up so far and we're still have a few in the hopper that we're trying to get into the Rota. But, yeah, it's going to be a very unique conference, given just some of the location, issues or opportunities I should say, and so, yeah, we're excited about it. We have a couple of speakers that we've announced so far. We have Jim Butler from Club Benchmarking. He's going to walk through a jointly commissioned study on private clubs that NCA and CMA and Club Benchmarking all embarked on together and it's, I think, going to be probably the most comprehensive economic impact study on private clubs that's been done. It'll include everything from you know how many clubs there are, which is a kind of an unknown question right now and you know how many employees are employed by clubs, you know how many members are members of clubs, all of the sort of regular data that you would expect to have at the ready, and also not only just sort of those demographic things, but also the economic impact that those clubs have in their communities, whether it's direct or indirect or induced economic activity that occurs because the club happens to be in the neighborhood. Another component that I'm really excited about that I think a lot of folks don't understand is the fact that you know, private clubs do pay property taxes. You know, and it's something that you know, just having a club in the neighborhood can increase the value of real estate around that area. So local governments are actually reaping benefits of these clubs being in their neighborhoods. And we want to quantify that a little bit more, because I do think that there's some misunderstandings about what taxes clubs pay and how much they pay and all of that kind of stuff that you know. We can kind of push back a little bit and say, well, wait a minute. You know, just by virtue of this club being there, your real estate values in that neighborhood are, you know, 20, 30%, whatever the number is, higher than they otherwise normally would be. So you know, all of those things I think accrue to the benefit that clubs provide their neighborhoods and their local economy, so I'm excited about that.

Speaker 2: 6:04

We also have Cameron Dawson, who is real quick to go back how long have? How long have, how long has that been in the works for? Because that's definitely not like a like, a like a three month thing.

Speaker 1: 6:18

It's been in the works for a while I would say probably six, eight months and we are, like I said, jointly commissioning it with CMA and club benchmarking, and we're using Iowa State, their academic resources there, and also University of Florida to help with some of the real estate issues. So, yeah, it's a joint effort and we have some, I think, good resources that are that are available to us to help get that done. So we're hoping to have that completed, like I said before, before our conference, so we'll be able to unveil that which, like I said, I'm very excited about it because I think it helps us define exactly, you know who's in the private club industry, what sort of benefits accrue to local communities, state, state governments and ultimately, nationally, because there are clearly economic impacts that these clubs have. And all of the data that we've seen really, really kind of focuses more exclusively on golf, which many of our clubs do have golf as part of their amenities, but not every club has golf as part of their amenity package and about 80, 85% of our NCA members have golf. But if you take just golf, it's not capturing the wider world of clubs, which would include city clubs, yacht clubs, athletic and hunt clubs.

Speaker 2: 7:56

Military clubs.

Speaker 1: 7:58

That's data that we need to have so we can show the depth and breadth of the club economy.

Speaker 2: 8:06

So yeah, it's going to be.

Speaker 1: 8:08

I think, a very interesting study and something that's been needed for, I think, some time. So we're glad that we're off the ground and hopefully we'll land that plane shortly.

Speaker 2: 8:21

Yeah, that's awesome. And then you said Cameron Dawson's coming.

Speaker 1: 8:26

Yeah. So Cameron Dawson is going to be speaking to the group on Tuesday, the 30th, and for those of you who may not know Cameron Dawson, she is the Chief Investment Officer with a company called New Edge Wealth kind of a wealth management firm. She's appeared on CNBC, fox Business, bloomberg Business as a commentator and she's, I think, has some unique insights into what the markets look like, what the economy looks like on a macro level, and looking forward to hearing what she has to say about that, and we have a number of others that we're looking at as well and have on the schedule. So one session we'll be talking pretty in depth about healthcare, kind of what's happening in the small group market, which is what the market that clubs generally play in, unless they're the larger type of clubs, and there has been some activity regulatorily and we want to make sure that we're staying on top of it, and so we have a gentleman by the name of Joel White who's a former colleague of mine in the house up on the hill in Congress and he's the head of an organization called the Council for Affordable Health Coverage, and he'll be offering his insights of 25 years or so working on healthcare issues here in the Washington area, both as a committee staff and as a personal staffer.

Speaker 2: 9:58

So really smart guy Looking at the club site here and or the National Club Conference website and I'm looking at quite the resume he has there.

Speaker 1: 10:09

Yeah, yeah, like I said, he's a colleague of mine and always felt like he's one of the smartest guys in the room and done some work with him in the past, both on the hill and off, and I think he'll be offered some really good insights for attendees of the conference with respect to the health, healthcare market and what's happening there. So you know, we're all about trying to, you know, present interesting speakers but also, you know, provide those nuggets of information that could be useful in the future as general managers and board members go back to their clubs and look to the year ahead. So, yeah, it's exciting. I'm. You know we've got some other events. I think we talked about the last time Middle B Innovation Kitchen, which is in Plano, texas. So we'll be arranging that for everybody to go down and see that 40,000 square feet of just, you know, the most innovative kitchen apparatus and equipment and that kind of thing that really drives at the higher end market and making that as much as efficient as it possibly can be. So that's a unique opportunity just because of the venue that we're going to be at. But we certainly wanted to grab that and we're happy that it's going to be part of our agenda for the conference and it's something that's going to be. We've arranged it so that there's no cost for attendees to participate in that. That's awesome. Yeah, that's great. We're happy to be able to do that. So, yeah, there's lots of exciting stuff going on with NCA, kind of putting the final touches on that, and I was just down at the PGA show in Orlando a couple of weeks ago and it was great to see some of our corporate partners and our vendors, associate members, down there, good to catch up with them in person. And I extended my stay down there and went and visited, I think, six or seven different clubs.

Speaker 2: 12:18

Nice.

Speaker 1: 12:20

And it was great to get out to the field and see some members and talk with a couple of non-members as well. And you know, it's really amazing the amount of work and investment that clubs are going into this year. And certainly saw that as part of my mini tour of the coast of Florida, east coast of Florida, nice, yeah, and we're gearing up for CMA's World Conference in Las Vegas early March and, yeah, so we're looking forward to getting out and seeing folks.

Speaker 2: 12:58

What's been going on Capitol Hill?

Speaker 1: 13:02

What has been going on in Capitol Hill. Well, you know, there's a there's an old lyric from a Doors song that I have kind of used to explain what's happening in politics from time to time, and it's from a song called Roadhouse and there's a lyric in there that Jim Morrison says the future's uncertain and the end is always near. And that's kind of the way I feel about Capitol Hill right now. Everything is up in the air, everything is uncertain, but the end is always there. And the end could be any number of things. It could be the deadline for, you know, making sure that we don't have a government shutdown that comes up on March 1st for the first tranche of appropriations bills that haven't been passed. And then there's March 8th for the other part of the federal government that hasn't had their appropriations bills passed. You know there's some tax legislation that they're trying to get through that could have some impact on people filing their taxes right now if they do some of it retroactively. You have other deadlines that you know looking ahead, we have a reauthorization of the Federal Aviation Act, which you know we're all interested in and want to make sure that our air traffic system is safe. That's been extended, so that needs to be dealt with in relatively short order. You have the farm bill that's also been extended and you know, all of these things are just sort of hanging out there and no real clear picture of how it's going to turn out Now if you don't mind, just because I not that I'm playing dumb, I am dumb.

Speaker 2: 14:52

How do some of those relate to our, our clubs? So the Aviation Act how does that mean anything? Well, yeah, Aviation Act.

Speaker 1: 15:05

there's nothing in it necessarily that directly impacts a private club, unless they happen to operate a private club. They can operate an air strip or something like that. Then it could potentially direct them, but generally it's a paid attention. It's generally, you know, more of a general concern. Obviously, you know club members use, you know, airlines and planes a decent amount, probably more so than general populace. So any of those things that can, you know, create barriers to getting to where you need to be potentially is something that we should all be concerned about.

Speaker 2: 15:49

So that was one thing I was like I was just making sure I wasn't missing anything. I was trying to connect the dot there.

Speaker 1: 15:52

I was like, okay, so good, I want to make sure, sure, no, and I think it's also, you know, I raise those things as really, those are the key things that Congress needs to get done. So, you know it's, if you look at the most basic functions of Congress and what it needs to do, those are sort of the minimum bars, you know funding the government and reauthorizing, you know, giving the authority for agencies to do the things that we need to do to keep our system going. So I rattled those things off just as a sort of here's what the minimum bar is for Congress and they're having difficulty meeting it. So, yeah, it's an interesting time. You know we have I mentioned the appropriations bills. So we've had continuing resolution three times. This was all supposed to be done prior to October 1 of last year and here we are March, you know, six months later, and we still don't have final appropriations bills and we're also gearing up. So I mentioned March 1 and 8 as the deadlines for government funding for the current year we're in. The president will be proposing his 2025 budget in March 12. So next year, we haven't finished what's going on this year six months into the year. So everything's just kind of bottled up. And yes, it's. You know it's bottled up, you know, based upon unrelated type of issues. And you know, of course, we've had the speaker battles in the house and we've had a few retirements, so the majority that Republicans have is even slimmer than it used to be. We have some special elections that are happening right now I think four of them for the house to finish out their you know their numbers to get back up to 435. So, yeah, I mean it's just a crazy time. And now, you know, you throw on top of all of that you have, you know, 2024, we're in an election year. It's an odd, odd I mean even numbered year, and it's a presidential year and it's we're also unique in the situation that we are in right now, given we have an incumbent president and a former president who are basically, at this point, I think it's fair to say locks for the nomination. So it's creating this weird dynamic that you just wonder. You know somebody who used to work on the hill like I can't imagine going up there and going to work every day, because he's just like we're not doing anything, we're not getting anything done, and then it's a full moon, and then the stars are aligned and the planets are in the same orientation, and then your amistest rock, that's going to start glowing.

Speaker 2: 18:56

and that's when it's all going to.

Speaker 1: 18:57

Exactly, exactly, and it's the perfect storm.

Speaker 2: 19:00

This is, this is the perfect storm.

Speaker 1: 19:02

Right. And then you have situations like that happened just this week where you know there was intense negotiations to create some sort of package on the border, which I think is great now that everybody's sort of acknowledging that it's a problem. I think for a long time we it sort of was a Republican Republican viewed it as a problem and Democrats were like that's no big deal. So you know, there was intense negotiations over trying to put together a border package for four months Senator Langford from Oklahoma, senator Sinema from Arizona and Chris Murphy from Connecticut, I think and that just sort of imploded. I mean, once the details of it got out there, it just completely imploded. And so that's. It's creating a situation where even when you have a bipartisan proposal, the politics of which have just gotten so toxic that even a bipartisan approach is not working. And I started our conversation off with a quote from Jim Morris and I'll sort of paraphrase something that the comedian Lewis Black used to say. He said you know the only thing, the only thing worse than a Democrat or a Republican is when these guys work together, and I think that's kind of unfortunately what happened with this bipartisan border package. It just fell on its own weight and imploded. It's unfortunate, but yeah, you know, everything's sort of getting wrapped up in this presidential race and being nationalized as an issue, and that makes compromise very, very difficult.

Speaker 2: 20:52

Are there any things bringing it back to clubs a little bit? Are there any things hanging that's clubs should be looking at like? So like looking at like the micro. Now you know what should be, you know what's going on there, what's being looked at, what should be, what should clubs be concerned about?

Speaker 1: 21:09

Yeah, so the things that we're looking at for that are more specific of concern to clubs are more in the regulatory space, because it doesn't matter how dysfunctional Congress gets. the regulatory agencies always seem to be continuing out. You know to churn out both good and bad ideas, so we have seen that machine continue to work. We had, you know, the recent finalization of the independent contractor rule, which could affect clubs in terms of how they contract with caddies and instructors and that type of environment. That is going to be subject to litigation. So, like I said, it was just finalized, I think a week before last, and I haven't checked recently, but it's possible that there's already litigation that's been filed against it. It's something that we anticipate would happen. So that throws that up in the air. We have a proposed rule on increasing threshold for minimum threshold for overtime. So if you have an employee that you know is meets the duties test of a manager and meets the minimum threshold for salary, they would be exempt from overtime. So that proposal's out there. It would increase the minimum overtime threshold from $35,568 to somewhere around $60,000. And obviously that has a huge impact, or potential impact, on the bottom line for clubs in terms of their wages. And you know it's particularly important for clubs, given the fact that anywhere from 40 to 50% of the entire budget for a club can be attributed to wages, whether it's salaries or hourly workers. So that's something that we definitely are keeping in an eye on. We did file comments opposing the increase. That much I think it could make a compelling argument that the threshold should be increased. I just don't think it should be increased by 100%, nearly. So you know and there's some other sort of legal issues that we raised within our comments that you know previous administrations have tried to increase this threshold by a factor of even less than that, and it was ruled, it was obviated by the courts because it effectively made obsolete some of the other tests that you have to go through. I mentioned the duties test in order to determine whether or not you're eligible for overtime. So that's something that's definitely going to affect the bottom line. Again, I do think that if they come out with a rule that's, you know, 55, $60,000 would be the new threshold, I think they probably will see some litigation against that. And you know we'll see how that plays out, but I think there's some firm legal ground to stand on that. An increase that highs is really counter to the National Fair Labor Standards Act.

Speaker 2: 24:23

What do you think the sweet spot is?

Speaker 1: 24:27

I think if they were to increase it somewhere, you know between you know we didn't suggest this in our comments, but if they were to increase it somewhere to the 40 to 43 range, I think that would probably be both appropriate and something that would likely stand up under judicial scrutiny. But you know, that's just a guess.

Speaker 2: 24:49

Last time we talked, wasn't there something with like water bills or something with like water water regulatory issues.

Speaker 1: 24:56

Yeah, we talked about. So there's a regulation that's been batted around for the better part of a decade called the Waters of the United States, and it really is the simplest way to understand it is. It's a federal regulation that defines who has jurisdiction over body of water and essentially what the EPA has done is they've tried to expand that definition so that the EPA has jurisdiction over as much water, whether it's, you know, swamps or wetlands, or you know navigable waters such as canals, and you know waterways, rivers, lakes, that kind of stuff and they've tried to create it in a way that's as broad as possible. So the EPA has as much jurisdiction as possible. And that was subject to litigation. There was an important Supreme Court ruling in the case Sackett versus the EPA that really put a crimp on what the EPA was trying to do and saying that the significant nexus test that the EPA had been using which again sort of simplifying it is if you could make an argument that there's a nexus between a particular waterway and a wetland, then the EPA would have jurisdiction over it and you'd have to go through all sorts of federal rules in order to do any improvements and that kind of stuff or changes to that area. The Supreme Court said that the EPA was going beyond its authority and so they've had to go back and relook at their definition of a federal waterway. And they did that in September, and you know it's continuing to play out. But, like I said, this has been going on for the better part of a decade. I think this is the third iteration of a federal water. You know, jurisdiction rule in eight years, and so in every one of them this has been subject to litigation, and this one is no exception. So, yeah, there's a lot going on.

Speaker 2: 27:09

Hope you all enjoyed that episode. I love getting the updates and chatting with Joe and cannot wait for the National Club Association Conference. It is going to be so much fun. I'm going to be there. It actually is going to be tremendous. I cannot wait to go. If you have not done so already, I still believe early bird special early. I said it again, the early bird rate still may apply. If not, it's still worth every single penny to go. Hope to see you there and I hope you enjoy the episode. And if you did, you know what I'm going to ask you to do Share it with somebody else. If you see it online, give it a little reshare. You think a friend might enjoy it. Share it with them. Sharing is caring. I'm your host, danny Corby. Until next time, catch you on the flippity flip.