How will your club survive in 2010?

[Jason Topp]

I have heard a lot of talk about all sorts of stuff, yet nothing about ditching mandatory cart/caddie programs.  Would this make a difference to folks trying to join a club?  How bout with retaining members? 

Ciao

We ditched the mandatory caddie requirement last year.  75% of our rounds use carts so I am not sure how much of an impact it has had.

One friend determined he saved $4000 by not taking a caddie last year.  I doubt he would have left if the caddie requirement had been kept but he is happy about saving the money.  

[Jim Sweeney]

AS we are a golf only club with tightly controlled expenses, we are doing quite well reletive to other privates in teh Cincinnati area. In fact, due to rising costs at other clubs, we are gaining interest and now have a waiting list of about 25, whcih for us is about a two year resevoir of potential members.

That said, we are a very consersvative club when it comes to spending money. In the past few years we have added a new practice area and some forward teeing grounds, but our current thinking is to not spend what we do not have to. Fortunately, we have not had to cut back in any area, however.

Last year we set a record of nearly 28,000 rounds played.

[Sean_A]

I have heard a lot of talk about all sorts of stuff, yet nothing about ditching mandatory cart/caddie programs.  Would this make a difference to folks trying to join a club?  How bout with retaining members? 

Ciao

Sean,
I believe the cost of mandatory carts/caddies has a large impact on attracting members. I am the chair of the membership committee at my club and I get asked that question on a regular basis. Potential members want an accurate idea of what real cost of their membership will be on an annual basis. The cost of a cart or caddie is not insignificant when you examine yearly use. In my case because I choose to walk that cost would be the equivalent of 4 months dues.

I would love to be able to change this requirement.  The other reality in the US is that carts are a revenue source for most clubs. 

 

Kevin

I never quite understood the positive aspect of carts being a revenue source for a private club.  IMO a club is not about revenue unless we are talking about income from non-members.  The club should be about a place where people want to be.  I would have thought it would be better to provide that service at a cost for those who want it.  Any short fall - just as is the case for any line item - has to be made up with dues.   

Ciao

[Kevin Cahoon]

Sean,

I am not sure reliance on cart revenue is a positive aspect for a club. Carts have evolved from a service to members who can not or will not walk into a revenue line item that aids many clubs from raising dues. I am not sure how to change that except to raise dues to to the appropriate levels where they cover a club's cost. 

[Sean_A]

Sean,

I am not sure reliance on cart revenue is a positive aspect for a club. Carts have evolved from a service to members who can not or will not walk into a revenue line item that aids many clubs from raising dues. I am not sure how to change that except to raise dues to to the appropriate levels where they cover a club's cost. 

Kevin

From where I am sitting its a scam.  Cart "revenue" is the equivalent of stealth tax.

Ciao 

[Roger Wolfe]

Sean,

I am not sure reliance on cart revenue is a positive aspect for a club. Carts have evolved from a service to members who can not or will not walk into a revenue line item that aids many clubs from raising dues. I am not sure how to change that except to raise dues to to the appropriate levels where they cover a club's cost.  

The ideal approach.  Lease as many carts as you need taking into account outings, elderly, infirm, handicapped, tournaments ... roll the cost of the lease/maintenance/electric into the dues.  Cart fee is zero... no restrictions.  If you want to walk nine... then ride nine because you aren't feeling good... so be it.  Why this obsession with "cart revenue?"  The days of treating it as a separate revenue stream should have ended when the "cart concession" started going to the club instead of the pro.  If you accept the fact they are a necessary evil... just treat them as an operating expense.

Then... when the prospective member asks what is monthly will be... you can tell him it will be $xx regardless of how many times you walk, ride or play.  Now isn't THAT the perfect scenario??

[Kevin Cahoon]

Kevin

From where I am sitting its a scam.  Cart "revenue" is the equivalent of stealth tax.

Ciao  

Sean,

I agree, as are the fees I get charged for food minimums, locker room, range and club storage. That being said, I accept these as my true cost for belonging to a club which I enjoy tremendously. I can afford them, but as they continue to rise they are a hinderance in both retaining members and attracting new ones.

 

[Sean_A]

Kevin

The F&B minimum is a bit different imo.  IF there is gonna be food it makes senwe to have it available at least breakfast & lunch.  That means it must be paid for.  Plus, a club isn't much if folks aren' hangin about sometimes.

Roger

Not quite.  I don't want to pay for cart use.  I believe that should be a separate item paid for as and when by choice.  Why, because for many it is a critical issue of pleasure and affordability.

Ciao

[Sean Leary]

My club in Seattle decided to offer 1 year memberships for dues only for 10 people....In the announcement, they noted that clubs like Stone Eagle and the Plantation are offering similar "deals"....At one point, memberships were relatively close to six figures....

[Roger Wolfe]

Kevin

From where I am sitting its a scam.  Cart "revenue" is the equivalent of stealth tax.

Ciao  

Sean,

I agree, as are the fees I get charged for food minimums, locker room, range and club storage. That being said, I accept these as my true cost for belonging to a club which I enjoy tremendously. I can afford them, but as they continue to rise they are a hinderance in both retaining members and attracting new ones.

I couldn't agree with you more Kevin.  As a GM/controller my goal is to make each year as predictable as possible and the less I have to depend on cart revenue and guest fees the greater chance I have of getting my net income to zero.  With that in mind, there is nothing that hurts a club more than finding ways to upcharge the members who use the facilities the most.  Food service charges... high cart fees... high guest fees... range fees.  Their should be a "cost of being a member" and the more static that is... the better.

Hidden charges are another pet peeve.  Our dues are all inclusive except for a small food minimum.  We have a club near us that advertises their dues as $465.  Add a $50 capital fee, $30 dining service fee, $200 quarterly food minimum and a $300 per year range fee and your monthly "cash out of pocket" just became $640.. 37% higher than the "published dues."  Why a club would choose to penalize its most supportive members is beyond me.

An important point, however, is to guage just how many members of your club are "light users."  If 25% of your membership averages 12 rounds per year... perhaps some level of "pay as you go" is appropriate so you don't drive those people out with a dues structure that includes the traditional "pay as you go" charges.  If the regular membership lost the subsidizing dues revenue of light users who leave the club... the resulting dues structure might be to high... thus beginning the "death spiral" mentioned by Mr. Mucci in an earlier post.

As I have often quoted Winston Churchill to various owners and boards... "...[finding the right mix] is a riddle wrapped in a mystery inside an enigma."

[JMEvensky]

Kevin

From where I am sitting its a scam.  Cart "revenue" is the equivalent of stealth tax.

Ciao  

Sean,

I agree, as are the fees I get charged for food minimums, locker room, range and club storage. That being said, I accept these as my true cost for belonging to a club which I enjoy tremendously. I can afford them, but as they continue to rise they are a hinderance in both retaining members and attracting new ones.

I couldn't agree with you more Kevin.  As a GM/controller my goal is to make each year as predictable as possible and the less I have to depend on cart revenue and guest fees the greater chance I have of getting my net income to zero.  With that in mind, there is nothing that hurts a club more than finding ways to upcharge the members who use the facilities the most.  Food service charges... high cart fees... high guest fees... range fees.  Their should be a "cost of being a member" and the more static that is... the better.

Hidden charges are another pet peeve.  Our dues are all inclusive except for a small food minimum.  We have a club near us that advertises their dues as $465.  Add a $50 capital fee, $30 dining service fee, $200 quarterly food minimum and a $300 per year range fee and your monthly "cash out of pocket" just became $640.. 37% higher than the "published dues."  Why a club would choose to penalize its most supportive members is beyond me.

An important point, however, is to guage just how many members of your club are "light users."  If 25% of your membership averages 12 rounds per year... perhaps some level of "pay as you go" is appropriate so you don't drive those people out with a dues structure that includes the traditional "pay as you go" charges.  If the regular membership lost the subsidizing dues revenue of light users who leave the club... the resulting dues structure might be to high... thus beginning the "death spiral" mentioned by Mr. Mucci in an earlier post.

As I have often quoted Winston Churchill to various owners and boards... "...[finding the right mix] is a riddle wrapped in a mystery inside an enigma."

Roger Wolfe,I absolutely agree with your points about not soaking the high-use member and rolling cart leases into the dues.However,how can you reconcile a "pay as you go" plan for some members?

Wouldn't you have a country club/community center hybrid with all the attendant class wars?

[Roger Wolfe]

[/quote]

Roger Wolfe,I absolutely agree with your points about not soaking the high-use member and rolling cart leases into the dues.However,how can you reconcile a "pay as you go" plan for some members?

Wouldn't you have a country club/community center hybrid with all the attendant class wars?
[/quote]

"Pay as you go" is better phrased as "the more you use the facility the more you pay."  Service charges on food, for example, often run in the 20% range.  The more you eat... the more you pay in service charge.  Folks who cannot walk... but play two or three times per week are penalized an additional $15 - $25 per round.  There is a basic dues amount for all members... but there are usage fees on top of that.

Like I said before... I like the "all in" price.

[JMEvensky]

Roger Wolfe,I absolutely agree with your points about not soaking the high-use member and rolling cart leases into the dues.However,how can you reconcile a "pay as you go" plan for some members?

Wouldn't you have a country club/community center hybrid with all the attendant class wars?
[/quote]

"Pay as you go" is better phrased as "the more you use the facility the more you pay."  Service charges on food, for example, often run in the 20% range.  The more you eat... the more you pay in service charge.  Folks who cannot walk... but play two or three times per week are penalized an additional $15 - $25 per round.  There is a basic dues amount for all members... but there are usage fees on top of that.

Like I said before... I like the "all in" price.
[/quote]

I understand what you're saying.I just think that,ultimately,a club has to realize that either every member must equally share the pain or you cease to be a club.IMO,it's the different membership classifications which are frequently at the crux of Mucci's death spiral.Once you get away from the Three Musketeers motto,the slope starts getting very slippery.

If you have the secret to getting a club to buy into the "all in" price,I'd like to know it.We sure couldn't figure it out.

[Roger Wolfe]

If you have the secret to getting a club to buy into the "all in" price,I'd like to know it.We sure couldn't figure it out.

I apologize if this remedial to some… but I have used it several times to illustrate the “death spiral” scenario.

This is dumbed down (no F&B)…

Club needs $3,000,000 to break even.  $350,000 come from “usage fees:”
Cart fees are $220,000
Range fees generate $100,000
Spousal/dependent fees generate $30,000
500 members pay $2,650,000 in dues so $5,300 per year… $442 per month.
Everyone is pretty happy.

A rogue GM takes over and convinces the board to roll the cart fees and range fees into the dues and make all memberships “family” thus eliminating spousal and dependent fees.  The board and the annual meeting attendees... usually heavy users of the club... carry the GM out of the annual meeting on their shoulders and the board gives him a $50,000 bonus.

500 members now pay $3,000,000 so $6,000 per year… $500 per month.  All is well.

In September of 2008, Lehman Brothers tanks and begins the great depression of 08-09.
Suddenly, out of the 500 members, 50 members whose families do not play, who do not
subscribe to the range and only play 12 times per year (definition of a light user) decide
that the dues increase of $58 is just too much so they resign from the club.

Now 450 members have to pay $3,000,000 so $6,667 per year… $556 per month.
This additional $56 (on top of the original $58) forces 50 MORE to resign.

Now 400 members have to pay $3,000,000 so $7,500 per year… $625 per month.

You are only losing members who do not play very much so your volume, wear and tear and expenses
remain the same.  If anything, you would have to recover MORE revenue through the dues since you
are losing some F&B and guest revenue as well.

Behold the “Death Spiral”

Is it better to continue to tax the regular user with cart fees and range fees in order to protect the dues
structure and hopefully keep the light users we depend on soooo much from leaving the club?   There are
two answers that depend on the economic environment the club is currently in…

1. In a boom economy when the club has a waiting list and you can replace the 50 who leave when the
dues hit $500 per month… it sounds like a great plan, doesn’t it?

2. In a bad economy when the club has no waiting list and cannot replace the 50 who leave… should you
take every possible step to keep your dues as low as possible?

As far as I know, noone has come up with the definite "formula for success."

[JMEvensky]

Roger,I agree with you.I'm asking if you know the secret to convincing a Board and/or membership to do it.

Kidding aside,here's where your idea and my distaste for different classifications collide.Your scenario is absolutely correct UNTIL you have to make allowances for the Social/Intermediate/Special Deal Offered Last Thursday guys.Each is going to claim his ox is getting gored unfairly.

Sometimes I think the smartest thing would be to scrap all existing club revenue streams and start over with your "all in" idea.Just tell the membership that this is the best thing for the club and either accept it or go elsewhere.

[Kevin Cahoon]

Roger,

Thanks for the scenario. Your position gives you an different view on club issues. The more I look at this thread, I realize that understanding utilization is a key component to make smart decisions.

Unfortunately, I have come to realization that many members at my club demand a certain level of service but are unwilling or unable to pay for that level of service.

[JMEvensky]

Unfortunately, I have come to realization that many members at my club demand a certain level of service but are unwilling or unable to pay for that level of service.

We all belong to this same club.

[Kevin Cahoon]

Sometimes I think the smartest thing would be to scrap all existing club revenue streams and start over with your "all in" idea.Just tell the membership that this is the best thing for the club and either accept it or go elsewhere.

The thought of an all in price would be music to my ears, short items like guest fees, food, and pro shop purchases. Potential members would know just what the club will cost, current members could plan for their expenses. This gets back to Sean's idea that dues need to cover your costs.

[JMEvensky]

Sometimes I think the smartest thing would be to scrap all existing club revenue streams and start over with your "all in" idea.Just tell the membership that this is the best thing for the club and either accept it or go elsewhere.

The thought of an all in price would be music to my ears, short items like guest fees, food, and pro shop purchases. Potential members would know just what the club will cost, current members could plan for their expenses. This gets back to Sean's idea that dues need to cover your costs.

Agree and disagree--assuming member owned.

If you start with the assumption that there can be no operating shortfall (dues must cover costs) ,then you run the risk of having an operating "profit".Nobody is capable of budgeting that exactly.So,to be safe,you end up "overcharging" for some things.A dollar here for a cheeseburger,dollar there for a cart rental...

Personally,I'd rather pay as little as prudent during the year and have an assessment to make up the shortfall.I'd rather hold my money during the year instead of the club holding it for me.Kind of like 15 April--you don't want the IRS to owe you.That just means you paid too much during the year.

That said,very few members understand this.Fewer yet understand that the dues line subsidizes everything--if done correctly.

[Kari Haug]

I see the following type of questions all too often:  "Where will we find new members?"  "How will we get golfers to join our club?" 
Every time I see this question asked I feel exasperated because new golfers are not found, they are developed.

Could it be that the decline in memberships at private clubs and golfers on the tee sheet at public courses is the direct result of junior programs that have gone by the wayside with the decline of private clubs?  When I was young (just a few years ago   ) there were more private clubs where junior programs were in demand by families that were members.   Without these programs, there is a void of golfers stepping onto the tee...and then we are crying WHY? and WHERE ARE THEY?  They aren't there because we have neglected our junior programs, mother/daughter tournaments, father/son tournaments and so on. 

The golf industry could learn a bit from old Philip Morris --- start them young and they are hooked for life.  Just to be clear - I don't advocate smoking, but I do like the idea of a whole new generation of golfers!
   

[JMEvensky]

The golf industry could learn a bit from old Philip Morris --- start them young and they are hooked for life.  Just to be clear - I don't advocate smoking, but I do like the idea of a whole new generation of golfers!
   

I agree with everything you wrote,but especially this part.I smoke Marlboros.

[Patrick_Mucci]

Kari Haug,

You're right, the best source for new members WAS derivitives.

Unfortunately, as clubs expanded their physical plants and services over the last few decades, a lot of younger members couldn't afford the annual dues once they transitioned from Junior members to Regular or Associate members.

Those derivitives were familiar with the history and traditions of the club.
They were familiar with operations, dress codes, and the general culture of the club.
They understood the club and were properly positioned to continue the club's culture.
Unfortunately, too many of those "prime/preferred" candidates for membership could no longer afford the club because of the escalating costs that drove up dues, initiations, minimums, bag storage, locker fees, etc. etc..
Hence, the dropped out leaving a huge void.

Previously, derivitives represented a substantial portion of the membership.

Today, their percentage is greatly diminished.

They are no longer the life blood of the club, and that's too bad

[Jeff Goldman]

Mike S,
I think Ravisloe's problem was simply oversupply. There are a few clubs in south chicago having issues because of location as there isn't a big local member base (though aside from Beverly they are the easiest to get to from Chicago). Most (aside from Oly) have dropped initiation fees, attracting "rent a members" and price competition that may rob a club of identity (though all have yearly costs that are the same or even a little higher than ours). Most folks from Chicago go to us, Medinah, Butler or North, leaving mostly locals for the other clubs, and there aren't enough willing to spend the money necessary to support clubs. The last few years Rav would only serve dinner weekends if it had enough reservations earlier in the week, and that didn't save it. Many members went to nearby Idlewild, also a historically Jewis club, and so far it's doing good.

[Jeff Goldman]

The issue of fees vs putting everything in dues is fairly complex.It boils down to sunk costs vs user fees, and the balance between them can affect member satisfaction and a unch of things. Bundling all into dues encourages member usage (since they already paid for it, marginal use is costless), which is not necessarily a good thing.Think of the amount of play that might result if guest fees were zero. The crowds might require regulation of guests a lot of the time, which might lead to dissatisfaction of members who entertain. Having a range fee might discourage some use, preserving the range for those it is most important to. Charging less than market for F/B could lead to more activity in restaurants, larger losses and, ironically, higher dues.Even locker fees can be useful in lowering costs for junior members by not requiring them to have one, while leaving dues alone. I think again deciding the correct mix requires careful analysis of the factors, not ideological prejudice one way or the other.

[Sean_A]

The issue of fees vs putting everything in dues is fairly complex.It boils down to sunk costs vs user fees, and the balance between them can affect member satisfaction and a unch of things. Bundling all into dues encourages member usage (since they already paid for it, marginal use is costless), which is not necessarily a good thing.Think of the amount of play that might result if guest fees were zero. The crowds might require regulation of guests a lot of the time, which might lead to dissatisfaction of members who entertain. Having a range fee might discourage some use, preserving the range for those it is most important to. Charging less than market for F/B could lead to more activity in restaurants, larger losses and, ironically, higher dues.Even locker fees can be useful in lowering costs for junior members by not requiring them to have one, while leaving dues alone. I think again deciding the correct mix requires careful analysis of the factors, not ideological prejudice one way or the other.

Jeff

I largely agree with you except when it comes to the course and how it is played.  The course is the mainstay of the club and I think it is important for members to be able to play how they choose.  If folks want all the trimmings of caddies, fine, let them pay the true cost of this service.  That means each bag also has to have the costs of the services provided for caddies including the caddie master.  Same goes for carts.  The cost of the carts including everything which is needed to keep carts should be factored into the price of taking a cart each and everytime. That said, for carts at least, I don't see why a user can't pay a one off user fee for the year and be done with it.  Yes, this is strictly a "ideological" way of looking at it, but its so important to so many golfers how they play their golf that I don't see a problem with this.  I know it would be a deal breaker for me because I am not gonna be dictated to when it comes to spending my leisure funds. 

Ciao