How will your club survive in 2010?

[Adrian_Stiff]

The problem you have with the All in dues scenario, is that it does not suit everyone. The fairest way really is a smaller dues fee plus a user fee for each component including 'rounds'. In the past as I said in an ealier thread we all roamed less, many members play 30-40% of their golf at other courses. My point is why should someone who pays 25 rounds pay the same as someone who plays 100. What happens in real time is the man that plays 100 times is happy and the man that plays 25 is not. The younger generation are more the 25 players. Our Jan 1st snapshot shows the average member played 21 times. Whatever you do its hard to suit everyone, but the more you include that does not suit the user the lesser chance you have of recruiting new heads.

[Bruce Katona]

This reply is for Pat Mucci (I was busy yesterday and could not get on):
Pat: My answer is not theoretical.

The question posed was : How do make the club survive in 2010?  I know what I typed is the correct answer, for most facilities, from a strictly business perspective, if it was my money and I was running the show and calling the shots.  When you have an equity membership, there are many"owners" who all have an opinion on how to best run the show.  Different ball of wax.  Whe and id times get tougher, many of the equity clubs will look at some of the suggestions/ideas I made and perhaps implement some to get out of the "death spiral" described by another gentleman earlier.

With my former employer, we took over running many unprofitable golf ventures to cut the operating losses thru what I described, stabilized the asset's cash flow and brokered a transaction to sell the asset to a 3rd party for the Owner.  That's what the business model for the company was and what we did, with some degree of success.

This business model will be one to replicate again shortly as the banking and credit industy will be holding and trying to manage golf assets they have no idea what to do with.

[Roger Wolfe]

My point is why should someone who pays 25 rounds pay the same as someone who plays 100.

Your sentence above is what makes "private golf" so unique.  There is SO MUCH OVERHEAD, that cost incurred
by the club is exactly the same if John Doe plays 25 or 100 rounds.  This is only unique to most private clubs
with 20,000 rounds or less.  On a public course John Doe would be taking tee times away from other "fee paying"
guests.  If John Doe always takes a cart... then I guess you can charge him for the electric.  

It is also very unique to the game of golf.  Ideally, one pro shop attendant and one cart attendant can handle
20 golfers or 100 golfers because the tee sheet dictates the traffic.  This is NOT the case in F&B, especially
"meal-oriented"club F&B.  If you do 200 covers I bet 100 of them were from 1130am to 130am and the other
100 were from 6pm to 8pm.  This is another reason why upscale daily fee and public F&B is much easier and more
profitable then a private club.  Your volume is dictated by the tee sheet.  One cook and one bartender can handle
100 people overthe course of 8 hours.

Most of the time, the trouble with an äll in""fee is simply the historical operations of the club.  Heavy users
and riders will love it.  Light users and walkers will hate it.  But each will judge their happiness on what they
had BEFORE the club considered changing their dues structure.

[JMEvensky]

 The fairest way really is a smaller dues fee plus a user fee for each component including 'rounds'.

 My point is why should someone who pays 25 rounds pay the same as someone who plays 100.

Completely disagree.The question originally posed was "how will your CLUB survive".The only fair way to chop up a club's communal expenses is equally.Absent that,you no longer have a club.

Should a member who showers 100 times pay more than one who showers 25?He uses more water,more towels,and hopefully more soap.

Should a member who hits practice ball 100 times pay more than the one who practices 25?He chews up the balls and range more.

This is precisely why clubs are having the trouble they are.Everyone wants a club but they only want to pay for the specific amenities they use.

[JR Potts]

Completely disagree.The question originally posed was "how will your CLUB survive".The only fair way to chop up a club's communal expenses is equally.Absent that,you no longer have a club.

Should a member who showers 100 times pay more than one who showers 25?He uses more water,more towels,and hopefully more soap.

Should a member who hits practice ball 100 times pay more than the one who practices 25?He chews up the balls and range more.

This is precisely why clubs are having the trouble they are.Everyone wants a club but they only want to pay for the specific amenities they use.

Please let me know if you ever open a club.  I'll join.  I think your take on Clubs and their future is right on.

[Adrian_Stiff]

 The fairest way really is a smaller dues fee plus a user fee for each component including 'rounds'.

 My point is why should someone who pays 25 rounds pay the same as someone who plays 100.

Completely disagree.The question originally posed was "how will your CLUB survive".The only fair way to chop up a club's communal expenses is equally.Absent that,you no longer have a club.

Should a member who showers 100 times pay more than one who showers 25?He uses more water,more towels,and hopefully more soap.

Should a member who hits practice ball 100 times pay more than the one who practices 25?He chews up the balls and range more.

This is precisely why clubs are having the trouble they are.Everyone wants a club but they only want to pay for the specific amenities they use.

You disagree that fairness is a high user should pay more than a low user? The idea that we all split the run cost by 1/500th regardless of use will die at the majority of clubs. The people that like this play 100 times, the people that play 25 times DONT JOIN. The model for golf needs to accept some form of membership category that is fair to a lighter user. Think laterally what is fair.

[Jud_T]

Guys,

There is a pay-as-you go option....it's called PUBLIC GOLF......

[Roger Wolfe]

JM said,

"This is precisely why clubs are having the trouble they are.Everyone wants a club but they only want to pay for the specific amenities they use."


Right on time again JM... a critical component and why high level clubs take the time and effort to find the right candidates for membership... is that the members of the club take OWNERSHIP of the club.  When you accept ownership... and are proud to be a member of your club... that muni/public way of thinking begins to fade.

[Adrian_Stiff]

Guys,

There is a pay-as-you go option....it's called PUBLIC GOLF......

Exactly...... and thats the way it will go, the number of private clubs will shrink, the PAYG ones will expand. The younger generation of golfers dont want what the Private golf club provides in the same volume.

[Jud_T]

Adrian,

Are you saying that the younger generation doesn't want great greens, 3 hour rounds and no tee times?

[Sean_A]

 The fairest way really is a smaller dues fee plus a user fee for each component including 'rounds'.

 My point is why should someone who pays 25 rounds pay the same as someone who plays 100.

Completely disagree.The question originally posed was "how will your CLUB survive".The only fair way to chop up a club's communal expenses is equally.Absent that,you no longer have a club.

Should a member who showers 100 times pay more than one who showers 25?He uses more water,more towels,and hopefully more soap.

Should a member who hits practice ball 100 times pay more than the one who practices 25?He chews up the balls and range more.

This is precisely why clubs are having the trouble they are.Everyone wants a club but they only want to pay for the specific amenities they use.

From my PoV, it isn't a question of splitting the communal costs equally.  It is more a question of what the communal costs are.  It is completely understandable that the course and house more or less be a fixed cost if there are 300 members or 600 members.  For me the issue is the extras - most especially carts and caddies because this directly effects the pleasure I get from the game.  I can take or leave fancy food, but I like the idea of breakfast and lunch.  Hell, I can either take or leave the idea of a pro.  I don't take lessons so I don't need a pro about, but I understand its traditional so fair enough.  I like a locker, but I could care less about an attendant.  Shit, I could even see management jobs disappearing.  Who needs a director of golf and a head pro and a club manager? There are quite a few non-communal costs that could be shaved or paid for on a use basis.  Many clubs run fatter than most realize.  UK clubs aren't cheaper simply because maintenance is cheaper.  We do with a lot less staff and amenities.  Many clubs run (including the course and house) on the equivalent of less than a dozen people.  If guys want to reduce costs this is where you need to look first.


Ciao  

[Adam Lawrence]

Adrian,

Are you saying that the younger generation doesn't want great greens, 3 hour rounds and no tee times?

Jud - you've hit the nail on the head. People want that, they just aren't prepared to pay what the clubs that currently offer that demand to be a member. The people who find a model that allows that kind of golf without it costing a crazy sum of money will be the ones that clean up.

[Jud_T]

Sounds like we have the makings of a club!

[JMEvensky]

Guys,

There is a pay-as-you go option....it's called PUBLIC GOLF......

Exactly...... and thats the way it will go, the number of private clubs will shrink, the PAYG ones will expand. The younger generation of golfers dont want what the Private golf club provides in the same volume.

Adrian,I'm with you 100% on this one.

I agree that this generation has neither the time for nor interest in golf to support many clubs.Most younger families will probably seek out a "Chinese menu" approach for activities.

I don't think I'd want to be "long" private clubs going forward.

[Mark Chaplin]

Adrian - you make a good point about pay for use but it is a model for proprietary clubs as opposed to private member owned clubs. I think we accept you pay when you earn but cannot necessarily play but reap the reward when you retire and don't earn but can play.

I still think paying $40-100 a round for a caddie adds an excessive amount to your membership for something you don't always want/need. I think the Evans Scholarship is great but paying $40/50 for a 16 year old who has no knowledge of the game to hump my bag around the course is excessive and unnecessary - this happened to me at a private US top 30 course and the caddie lost my head cover and never mentioned it.

50 rounds a year can cost you $2500 a year to look after your neighbours kid!

[Roger Wolfe]

Many clubs run fatter than most realize.  

Sean... you have no idea how FAT some clubs are in the US.  Its offensive and sad to watch a club go down the drain when they have a GM, an Asst GM, a Clubhouse Mgr, a Sales & Marketing Director, a Human Resources Director, a Controller, a Purchasing/Inventory Manager... the list goes on.  

Shocking and a big reason why so many US clubs are in trouble.

[Adrian_Stiff]

Adrian,

Are you saying that the younger generation doesn't want great greens, 3 hour rounds and no tee times?

Ofcourse not. I am talking the numbers game. There will be people that want exactly what your US club provides at the moment, but people travel much more these days, go on golf trips so they play less at their own club, some will play 40 games per year but only half on their own pitch... golf suddenly has become twice as expensive. We are looking at difficult times, people cut their cloth and sometimes the straw breaks the camels back. A lot of big earners in life are from areas like finance and real estate, those people will find it hard to justify the price. Things will get worse not better and many clubs could be faced with a 25% drop in membership over the next three years, that means a big hike in dues or a cut in service or adapting to a new model or throw the towell.
Your US private golf club scenario defies gravity to me, we are a fraction of your price in the UK and we are getting big dropouts. It seems to me that to belong to the US club means your golf costs are about tripled. If your younger generation are like ours we seem to like expereincing lots of new courses rather than play the same one.

[Will MacEwen]

When I lived in the city, my wife and I belonged to a nice, established Tennis Club.  It was near downtown, close to some nice residential neighbourhoods.  We used it quite a bit.  Dues were about $250 per month.  We were in our early 30s at the time.

I was always amazed at how many older people I met who were members and basically never used the club.  Still, they paid their dues every month and stayed on the rolls.  I think they were probably legacy members who didn't run the numbers on a value/per use basis.  I have no doubt that the club loves members who don't strain the resources.

I don't think there will be so many people of my generation and younger (late 30s now) who are willing to pay dues if the dollars don't make sense.  For golf and other activities, the public options have improved significantly.  There are fewer and fewer people who see some value in belonging - even for those who can well afford it.  

[Adrian_Stiff]

Adrian - you make a good point about pay for use but it is a model for proprietary clubs as opposed to private member owned clubs. I think we accept you pay when you earn but cannot necessarily play but reap the reward when you retire and don't earn but can play.

I still think paying $40-100 a round for a caddie adds an excessive amount to your membership for something you don't always want/need. I think the Evans Scholarship is great but paying $40/50 for a 16 year old who has no knowledge of the game to hump my bag around the course is excessive and unnecessary - this happened to me at a private US top 30 course and the caddie lost my head cover and never mentioned it.

50 rounds a year can cost you $2500 a year to look after your neighbours kid!

Mark I do understand that. I understand how the split dues work and in many respects its no different than in the UK with our annua fees. My point is more that.... some people (the higher users) see it as fine, its the lower users that will leave and the big reason will be cost, they dont get their value. Lots of UK clubs offer this model... Full membership(gold) $1000 per year  5 day (no weekend) $800  Silver $400 per year then $20 per round.... The Silver allows somebody the right to belong and be part of "the club" but it offers reasonable value..

[C. Squier]

As a 29 yr old member of 3 clubs, I am definitely willing to pay up for quality golf and I'm quite comfortable justifying the expense.  However, I think my generation gets a little too beaten up in the conversation.

1.  Initiation fees to my knowledge have outpaced inflation
2.  Employers no longer foot the initiation fees / dues because of the tax law changes
3.  Monthly dues have also increased over the decades due to increased amenities, ones that didn't exist in the past

Moral of the story, it was decidedly cheaper to join a club as a 30 yr old 30 years ago than it is today for a 30 yr old.  I am fortunate that my local club has a great associate program, else I wouldn't have been able to afford the club's initiation fee....maybe ever.  Members fall into 2 categories.  Ones that look at us as member who got in cheap and "haven't paid their dues" (pun intended) and other who see us as future regular members who will all continue to support the club when an aging membership fades away.  Luckily it seems that the later is more prevalent at my club (or just more vocal).  Obviously I'm biased, but I'd be wary of a club that has no plan on how to get anyone under 35-40 to join.  I have also been told by the club president that associate members are doing their part with guest play / lessons / pro shop buying.  

What I don't think has been discussed are non-local / National memberships.  My other 2 clubs are National memberships, both great courses.  To me, an affordable National membership is a no-brainer for a club.  It's virtually free revenue, the member is seldom around and when they are they usually have guests in tow, stay in lodges/cabins and eat exclusively at the club when visiting....their per visit revenue MUST be greater than a local member.  Their guests look like Wang buying everything up in the pro shop too.  Drop the ridiculously high National member initiation fees to something reasonable (unless you're a 100% destination club with few locals) that people can justify.  The annual dues to me are no different than justifying vacation expenses....high initiation is a sticking point.  I do realize the ability for lesser known clubs to attract non-local members is less than more prominent clubs, but the supply/demand curve has to meet somewhere.  

[JMEvensky]

2.  Employers no longer foot the initiation fees / dues because of the tax law changes
  

With 20/20 hindsight,this should have been all the warning needed.I think a lot of clubs realized that the end of corporate-pay was a big problem,not enough foresaw the extent.

[Roger Wolfe]

With 20/20 hindsight,this should have been all the warning needed.I think a lot of clubs realized that the end of corporate-pay was a big problem,not enough foresaw the extent.

I think the 1987 tax law killed the country club dues deduction or severely limited it. 

We really felt the impact of losing the corporate money in the upscale daily fee market
after 9/11.  The big corporate outings basically dried up.

[Mike Sweeney]

My favorite places tend to be New England frugal with golf only, no dinner models. Since that includes Yale (college), Newport (private) and Cape Arundel (semi-private), I can live with that!

This has been a great thread, and I am coming to the realization that I must be cheap! Yet another reason to keep Mr Moore around so I can look like a big spender twice a year when we play together!

[Tim Nugent]

One has to also examine the structure of the club.  Old clubs were equity clubs  - where the members owned a piece of it.  The initiation fee was essentially to Buy that stake.  The money was used to Pay for the buy-out of "retiring" members.  Since the property tended to go up in value over time, the club usually recieved a portion of the windfall generated by the new initiation fee.

Newer clubs can be non-equity - where the initiation fee just goes to offset ongoing expenses/dues.  It is no longer an investment.
Some courses return a portion of it if you leave - as long as there is someone to take your place.

Unfortunatley, if initiation fees are used to subsidize dues, the ave. memeber isn't aware of it (or if they are - to what extent).  If you belong to a club that does this, I suggest that it is made evident on the monthly statement (ie state the real dues amount and then give a credit for subsidy).  This would also work good for other forms of income (outtings, weedings, private events, etc) to show what the value of these is to each member.

Dues should also be shown to be allocated to each dept. on the invoice.  That way, members would see the real costs associates with the various ammenities.  For example, if the F&B is costing an additioinal $100/mo on top of the monthly minimum,  members would quickly see the "real" cost.

Otherwise, it ends up like health care - no one really knows what it costs .

PS -  I felt privledged to play Muirfield on a Tues - even if we weren't welcome in the dining room (and had to go off #10).  I think many clubs in the US could benefit from such policies..

[Mark Chaplin]

Adrian - I agree with what you say but do not know one private members club - no VAT, owned by the members - in the UK that follows this model.