JOSH DAVIS/BAYSIDE GAZETTE
Ocean Pines Clubs Committee Chairman Gary Miller last Thursday discusses the Matt Ortt Companies contract to management food and beverage operations.

By Josh Davis, Associate Editor

(Jan. 24, 2019) Ocean Pines Clubs Committee Chairman Gary Miller last Thursday said he’d requested and received a copy of the Matt Ortt Companies contract to manage the association yacht and beach clubs, but only about 20 minutes before the committee meeting started.

Miller said he’d gotten a lot of questions about the bonus structure in the contract and information in some local papers speculated “they are going to wind up getting a bonus even through there’s possibly a $100,000 deficit in the overall computations.”

Members of the association budget and finance committee also requested a copy of the contract during budget hearings earlier this month.

According to a copy of the contract obtained by the Gazette in April, the two-year deal began on May 1, 2018 and ends April 30, 2020.

Contract terms state the Ortt Companies “shall manage, control and operate the Facilities, including all food and beverage operations, janitorial services, banquet functions … and special functions,” and “shall have the authority to make all decisions on the day-to-day management and operations of the Facilities.”

Ocean Pines’ fiscal 2019 budget “shall constitute the major control under which [the Ortt Companies] shall operate” and “there shall be no substantial deviations therefrom, excluding such expenses as utilities, taxes, fuel, license fees [and] other expenses not within the control of [the Ortt Companies].”

The association “shall supply and pay the cost of the utilities,” as well as service charges for telephone services and point of sale software and hardware.

The Ortt Companies cannot incur repair or replacement expenses greater than $2,499 without association approval.

Eight monthly payments, from May-December in both 2018 and in 2019, of $12,500 each make up the management fee, which totals $100,000 each year.

The first-year bonus structure entitles the Ortt Companies to both a budget bonus and a profit bonus.

The budget bonus is based on the fiscal 2019 year-end financial statement and entitles the Ortt Companies to “a bonus of fifty percent … of every dollar of net income generated from the Yacht Club that exceeds the Budget for the Yacht Club up to a $50,000 bonus” and “a bonus of fifty percent … of every dollar of net income generated from the Beach Club that exceeds the Beach Club’s budget up to a $50,000 bonus.”

Additionally, there is the potential for a profit bonus “if the combined net income for the facilities results is a net profit of more than $100,000” based on a sliding scale: 10 percent for $1 to $25,000, 20 percent for $25,001 to $50,000, 30 percent for $50,001 to $75,000, 40 percent for $75,001 to $100,000, and 50 percent for upwards of $101,000.

The year-two bonus structure is a little more complicated, essentially offering a doubled bonus if the combined net income of both facilities in fiscal 2020 is greater than the combined net income of fiscal 2019.

According to the contract, “For example, if at the end of year two of this agreement the net combined income of both facilities is $60,000 greater than the net combined income of the facilities for year one, the bonus will be equal to the total bonus paid for year one plus $18,000 (30 percent of $60,000).”

If the net income of both facilities were lower during the second year, the company would receive the total bonus from year one “less fifty cents for every dollar under the [2019] net combined income.”

Ocean Pines also pays the Ortt Companies a 5 percent commission on banquet gross revenues for private banquets and a 2 percent commission for banquet gross revenues for association clubs and organization functions.

As of the most recently available financial reporting, through Nov. 30, beach club net revenues were $1,682 above budget and yacht club net revenues were $363,773 above budget. Net operating at the beach club show a $130,421 profit and net operating at the yacht club show a $129,028 profit.

Clubs committee member Larry Bohanan said the information was “more of a curiosity” for the group, rather than something they needed to study too closely.

“It is curious, because people are saying, ‘everything’s been going great,’” Miller said.

Committee member Cheryl Jacobs added, “That’s what they should just keep saying and shut up about the rest of it.”

“People worry too much about things they shouldn’t be worried about,” Jacobs said.