To say joining the Freyja Club was changing my life would be one of the bigger understatements in history. Three weeks ago, I had no idea that it even existed, and then after a mysterious invitation appeared on my Air France flight to Paris, I joined this 90-year-old club and entered a world of hedonic eroticism that was rocking my world.
At 48, I'd forged a successful business career in the field of business acquisitions and development and it had provided me with not only excellent compensation, but had opened the world and put me in direct contact with some of the movers and shakers in business and government.
I had never lacked female companionship, and while I didn't consider myself a "ladies' man," women seemed to enjoy my company, and a few had invited me to share their bodies as well. I had begun an affair with a lady named Karen, who like me, traveled extensively which we get-togethers difficult. We both understood the fact that life on the road often made the desire for companionship and connection almost impossible to ignore and our relationship had survived so far because we both acknowledged that reality.
I had just come from a three-hour meeting with my company's CEO, CFO, and General Counsel about the results of my recent trip to Paris with a stopover in New York on my way home. Several business issues remained, and it appeared that I might be making another trip to Europe shortly to hammer them out.
It was already after hours in France, so a phone call would have to wait for the next morning. As I sat at my desk, wondering what I should do next, my thoughts wandered to thinking about the Freyja Club, but I wasn't thinking about what woman might enter my life and satisfy my considerable sexual desires but I was processing what I'd learned about its operation.
For most of my adult life, I'd analyzed business operations and in that regard, the Freyja Club was stimulating my interest. How had it been able to survive for almost ninety years? How was it able to finance itself? And, infuriatingly, how had it been able to secure total anonymity for so long? I found some of the pieces of this puzzle in Paris. New York and recently in Washington. But much of what I wanted to know still lay in undiscovered territory.
As I had done a thousand times in my business career, I took out a piece of paper and started to write.
I had visited three of the twenty clubs so far. Still not a big sample, but enough that I could begin to make some rough estimates. In the clubs themselves, I counted about fifteen wait staff, so there had to be about that number behind the scenes, cooks, cleaners, supervisors, etc. So, that's thirty. But the rule of thumb is you need 50% more employees than that to account for vacations, sickness, etc. That totals forty-five. I knew there was an administrative function, but I didn't think it would be more than ten people, so a nice round number of employees got me to around 60.
I didn't have any information about the hotel, but Danielle had told me that guests paid the going rate and it didn't have an independent bar or restaurant, so I assumed the hotel was self-sustaining, so I could ignore it for the time being.
Jenna and Paula alluded that the pay was outrageous, and had indicated that it might be as much as three times the going rate for the same job elsewhere, plus I learned they had their medical care paid for, and the women received a health inspection every other week. That wasn't a surprise given the nature of their jobs. So, I assumed noncash benefits including provisions for pensions should equal about 25% of the payroll cost. I knew the average salary for the kinds of jobs in the club was probably in the $40,000 to $50,000 range. If I took the higher number the payroll cost of a club was;
$50,000 x 3 x 1.25 x 60 = $11.3 million per club.
I estimated non-payroll costs like utilities, taxes, maintenance and repairs, food and drink, etc. to be in the $3 to $4 million range. So, the annual cost of one club was, in nice round numbers...
$15 million.
$15 million x 20 clubs = $300 million to run the clubs.
Danielle had told me that every potential member and staff was vetted with background checks. I had a lot of experience paying for these, so I knew they cost upwards of $25,000 apiece. Danielle told me that the club initiates around 200 new members every year, but I knew they had to run background checks on roughly ten times that number to cull out the 200 who accepted. If my estimate of club personnel was correct, there were 1,200 employees worldwide and I bet there wasn't as high as a 25% turnover, but I used that number anyway. That meant that they had to hire 300 new people every year. Again, I assumed 10 times the number of checks for each hire. I doubted that staff checks were as intensive as for members, but they would have to be at least $5,000 each. If all of that was in the ballpark, that meant the Freyja Club was paying about $65 million for background checks per year.
Finally, I knew there was a small senior staff that wasn't associated with any individual club. How much did they cost? I had no idea, but just for grins, I threw in another $50 million to capture that and anything else I hadn't thought of. So adding payroll, operating costs, and overhead I concluded that on an annual basis, the Freyja Club organization had to cover about...
$415 million.
I knew from Danielle that there was a fixed membership of 12,000 and each paid $24,000 per year membership. That added up to $288 million. She'd also said that 200 new members joined every year (although I was suspicious that the number had to be higher, given the reality that hedonic sexual pleasure has a finite shelf life). If each paid a $100,000 initiation fee, that was another $20 million. That brought the revenue total to $308 million. A shortfall of over $100 million. How did the Freyja Clubs make up the difference?
Obviously, from the initial initiation fees from all 12,000 members. In total, they'd paid $1.2 billion, and that was only the current 12,000 people. I was betting that the Freyja Trust (which I was calling it in my mind) had to be at least twice that amount. If so, and they had it invested giving, say a 7% return. how much income would they generate on $2.4 billion? I didn't even need a calculator to come up with the answer. $168 million. Take away 20% for taxes and you still had $135 million.
My rough guess then was the club generated $443 million in revenue to cover $415 million in costs. The $28 million difference was a fudge factor for anything I hadn't yet considered or discovered. It seemed to me that the Freyja Club was on very sound financial footing. In fact, given that I'd used the high estimate for everything up to that point, it was probable that the Trust contribution was significantly less than what I had assumed.
Over the years, I had been amazed that how often my scratches on the backs of envelopes had turned out to be uncannily close to actual results when we'd finally gotten financial statements. Satisfied that, at least in my mind, I'd answered the question of financial viability, my thoughts turned to the secrecy issue.
After giving it some consideration, I concluded that the way the club maintained secrecy was different for members than it was for staff. The $1 million penalty contained in the Non-disclosure agreement was a deterrent for anyone with assets, but for some people, $1 million would be a drop in the bucket. For staff, I suspected that most wouldn't have enough in the way of hard assets, and you can't take what someone doesn't have. For them, I thought the prospect of losing more than generous compensation and benefits was the primary deterrent, but no organization is immune from disgruntled employees. How the Freyja Club would handle them was still a mystery.
In the final analysis, I concluded that the real key to keeping the club anonymous was in the upfront vetting process. If you only admit or hire people that value the need for secrecy in the first place, and have the personal integrity to maintain it, chances are they'll honor their pledge even after they're gone. I wanted to find out more, but according to Danielle, the place I needed to go for those answers was at the site of the original club... London.
Who knew, maybe my tentative return trip to Europe might be manipulated to make a stop in the U.K. a possibility. We'd see.