Private Clubs Closing

[Rick Sides]

I read an article this week that said in the next 5 years it's projected about 20% of private clubs will be closed.  Do you really think the economy is this bad?  It seems to me that there is always a lot of golf wherever I go.

[corey miller]

Clearly the political climate for private clubs is very bad

[Jerry Kluger]

Today's Washington Post reported on two new courses in the DC area that were private or limited access and are now going to be public.  The Presidential was a $60K per year private club for corporate members that shut down after only 9 holes were built. It is now public at $39 for nine holes and they expect the rest of the course to be finished next year.  Creighton Farms was to be part of a Ritz Carlton development but they couldn't sell the houses so it is now public.  A few years ago a Johnny Miller course shut down which was going to be private once all the homes were sold - multi million dollar homes are now sitting on some overgrown grass which used to be a golf course.

I belong to a member owned club and there is no doubt that it is a struggle today.  Even in the DC area people are losing their jobs and the first thing to go is golf.  Look at the golf club manufacturers who are giving away 3 and 5 woods or shoes when you buy a driver - things are tough.

[Mike Sweeney]

I read an article this week that said in the next 5 years it's projected about 20% of private clubs will be closed.  Do you really think the economy is this bad?  It seems to me that there is always a lot of golf wherever I go.

Seems a little high. Maybe 800 (20%) will convert to some public/private status and/or close. Not sure if that will be due to economy or lifestyle changes of families. But that is why they have markets and buyers and sellers.

http://www.nytimes.com/2009/03/18/sports/golf/18golf.html

“In the last 10 years, we’ve only seen 39 private courses close in America, but we’ve seen 400 open their doors a little, or a lot,” said Joe Beditz, the president and chief executive of the National Golf Foundation, a trade association. “For a golfer, there couldn’t be a better time. But the private club isn’t going away. In 10 years, there will be about 4,000 private clubs and about 12,000 other golf facilities, just like we have now.”

[ChipRoyce]

Do you really think the economy is this bad?  It seems to me that there is always a lot of golf wherever I go.

Hard to say for sure, but there's some key demographic trends that are hard to argue here:
1) Dual income families, no matter how affluent, are spending less and less time at the country club, much less can afford to have Dad away for 5 hours per round
2) Many private club (and even public club) capital structure and cash flows can handle significant drops in revenue & membership declines
3) NGF says we have an excess of course capacity

I'm not sure Private clubs can be singled out as the only ones to suffer here, but pretty clear that either:
A) Its easier to get a tee time and a round of golf should cost less than it did
B) Should be easier and cheaper to join (and or get access) to some good or great courses if you have the discretionary funds
C) Some courses will go out of existence... hoping that more of these will be of the "Joe Lee" variety than those of Doak, Brauer, C&C, etc....

[Carl Nichols]

Jerry:
Is Creighton Farms definitely public?  I hadn't heard that.  Or perhaps it's just easier to play, although still technically private?

[Steve_ Shaffer]

Creighton Farms was sold. I don't think it's public:

http://www.golfdigest.com/magazine/blogs/deedsandweeds/2009/04/ritz-carlton-sells-virginias-c.html

[Joel_Stewart]

"Thinning the heard" is a phrase that some in the golf management business are using.  There is an over supply of courses and not enough players.

[Jerry Kluger]

Carl:  The Washington Post article certainly made it seem that it is now available for public play since Ritz Carlton dropped the project. I guess we will just have to call for a tee time and see what happens.

[Bradley Anderson]

Stop it already with this bad news. Lets get some optimism going here. Has everyone forgotten that we are AMERICANS ?

[Will Smith]

The Presidential was not the first private course in Loudoun to undergo a makeover. Creighton Farms, an 18-hole course near Aldie, is under new management after the luxury hotel chain Ritz-Carlton attracted only about a fifth of the desired membership.- from today's WP

I read this to mean that they are trying something different, not that it is necessarily now public.

[Steve_ Shaffer]

Where in the article does it say Creighton is public?

http://loudounextra.washingtonpost.com/news/2009/may/19/va-golf-club-built-cater-affluent-opens-all/

[Scott Furlong]

FYI.  I know for a fact that Creighton Farms is not public.  

[Jim Nugent]

http://www.nytimes.com/2009/03/18/sports/golf/18golf.html

“In the last 10 years, we’ve only seen 39 private courses close in America, but we’ve seen 400 open their doors a little, or a lot,” said Joe Beditz, the president and chief executive of the National Golf Foundation, a trade association. “For a golfer, there couldn’t be a better time. But the private club isn’t going away. In 10 years, there will be about 4,000 private clubs and about 12,000 other golf facilities, just like we have now.”

The National Golf Foundation.  There's an unbiased source.

My guess is there will be far less than those 16,000 courses in the U.S.  But then I expect the economy to get worse for some time, not better. 

[Mike Sweeney]

The National Golf Foundation.  There's an unbiased source.

My guess is there will be far less than those 16,000 courses in the U.S.  But then I expect the economy to get worse for some time, not better. 

The economy only determines how many times and where golfers play. Golfers golf, IMO. The problem with the NGF seems to be that they still look at golf as a "white guy" sport. Even during the 1930's, the US population grew.

http://online.wsj.com/article/SB124226940508918259.html

The U.S. is still well on its way to becoming a "majority minority" nation, or when whites of European ancestry comprise less than half of the population. The Census has estimated this switch will happen around 2042, but among children and teenagers much sooner. Four states, including California, Texas, New Mexico and Hawaii, already are majority minority. Wednesday's release showed that 47% of U.S. children under five were minorities, a quarter of them Hispanic.

If you want to grow the game, a bunch of white guys (the majority) on a golf architecture site is not the place for answers.

Maybe the NGF and we need to be a little more accepting of cargo pants on the course:

[Sean_A]

The National Golf Foundation.  There's an unbiased source.

My guess is there will be far less than those 16,000 courses in the U.S.  But then I expect the economy to get worse for some time, not better. 

The economy only determines how many times and where golfers play. Golfers golf, IMO. The problem with the NGF seems to be that they still look at golf as a "white guy" sport. Even during the 1930's, the US population grew.

http://online.wsj.com/article/SB124226940508918259.html

The U.S. is still well on its way to becoming a "majority minority" nation, or when whites of European ancestry comprise less than half of the population. The Census has estimated this switch will happen around 2042, but among children and teenagers much sooner. Four states, including California, Texas, New Mexico and Hawaii, already are majority minority. Wednesday's release showed that 47% of U.S. children under five were minorities, a quarter of them Hispanic.

If you want to grow the game, a bunch of white guys (the majority) on a golf architecture site is not the place for answers.

Maybe the NGF and we need to be a little more accepting of cargo pants on the course:

I ask, unless you are in the business, why is growing the game such a high priority?

Ciao

[Mike Sweeney]

I ask, unless you are in the business, why is growing the game such a high priority?

Ciao

It's not for me. I am just testing Rich's new Philly friend Benjamin Rush theory of "Disputation and contradiction are not only are the life of conversation, but are steel to the flint of genius". 

Sláinte

[Mike_Young]

Tell me this....why does the NGF exist?  Let's see....1 course a day for how many years?  rememeber that?  I really don't know of one thing they have done that is tangible.  Same for stuff like NGCOA.....entrepreneur owners do not need a group to tell them how to compete or grow golf....and they ceertainly aren't going to tell....
As was asked earlier....why does golf need to grow?  Good question.....I don't know.
Remember when people used to buy stocks for dividends instead of growth.....(before the MBA)
Remember when companies used to do one thing such as say Nike or North Face?  And then growth comes along and they acquire.....
Same stuff has happened to golf....well written business plan sent to Wall St....200 million to purchase golf course available...and I know there were many in the business sitting back trying to figure WHY?
If the majority of our automobiles were not affordable or justifiable then what would happen....the auto companies would change models or the people would quit buying them....same with golf
We need to just watch this thing...let the free enterprise system work....and it will adjust....because the system works when left alone....

[John Keenan]

Growth or at the least new players are needed since if no one came into the game as players left it or died it would go away. Is this growth or sustainability not clear to me.

Growth for the sake of growth really only helps the equipment manufacturers and course owners.

[Rick Sides]

Come to think of it, it seems like a lot of public golf courses are pretty crowded lately.  I guess some people are afraid to put down a big chunk of change that some private clubs are asking for initiation fees.  I know that some wealthy folks might not mind paying a large initiation fee, but even people that are pretty well off that I talk to will not fork over $50,000 or more that some clubs are asking for.

[Gary Slatter]

"Thinning the heard" is a phrase that some in the golf management business are using.  There is an over supply of courses and not enough players.

It will be nice to thin a few of the Golf Management Companies from their trough too!  One more level removed to lower the cost of golf.

[Kalen Braley]

I'm not seeing why this trend should be internalized or taken personally.  Its just simple economics at the end of the day with supply and demand.  At the current price, in many markets there just isn't enough demand to meet the supply.  So clubs/courses either lower the fees or go out of business...simple as that.

Then throw in other factors such as when belts needs to be tightened, things like paying the mortgage, and putting food on the table will always take precedent over golf....so the demand decreases that much less.

[Bill_McBride]

One thing you have to remember is that you can't just stop paying dues at a private club and come back when the economy improves.  Usually that will require another joining fee, so many will hang on as long as possible while economizing to protect their position.

[Bruce Leland]

Link to another Washington Post article (not so flattering btw) on CC's opening their doors in order to survive.

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/20/AR2009052003790.html?wprss=rss_print

[Dunlop_White]

In case you didn't see this -- John Paul Newport just wrote a great article in the Wall Street Jourmal on what clubs are doing today in order to survive.

http://online.wsj.com/article_email/SB124182691791402525-lMyQjAxMDI5NDAxOTgwMjk2Wj.html

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