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Phil Lipper

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Re: What's the cost/value of golf as part of a private club membership?
« Reply #25 on: December 06, 2013, 01:49:00 PM »
I was a social member of NJ club that had a $5,000 initiation and $3,500 dues. Full membership was $38,000, $9,700 dues.

Carl Johnson

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Re: What's the cost/value of golf as part of a private club membership?
« Reply #26 on: December 06, 2013, 03:03:59 PM »
I'm no business person but surely pricing is best determined by what the (potential) market will pay than by what various options cost. The problem is, it's real hard for people like us to guess what somebody might or might not be willing to pay for a social membership that is fundamentally worthless (or nearly so) from our perspective as hard-core golfers.

True, but for some folks it is worth something.  That's why I'm wondering - thought maybe some folks could come up at least with some examples from their clubs - ones that seem to work, and ones that don't.  E.g., Phil just above.
« Last Edit: December 06, 2013, 03:08:05 PM by Carl Johnson »

Carl Johnson

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Re: What's the cost/value of golf as part of a private club membership?
« Reply #27 on: December 06, 2013, 03:07:29 PM »
Just to show what a clueless existence I lead...

I'll admit to being surprised at the notion that any Social Ladder exists which could be climbed by joining a Country Club. I thought it was all about Mercedes and Land Rover SUV's and elite kindergartens nowadays.

I really do think the social status thing most places for most folks is in the past.  If just about anyone  ;) with the money can join a high-end "exclusive" club, joining in and of itself doesn't mean much.

BCowan

Re: What's the cost/value of golf as part of a private club membership?
« Reply #28 on: December 06, 2013, 03:57:45 PM »
Glad i live in Michigan...

Patrick_Mucci

Re: What's the cost/value of golf as part of a private club membership?
« Reply #29 on: December 06, 2013, 07:04:01 PM »
Pat,

I'll post over there as well, but don't you think your last sentence there answers the question about measuring the return on certain golf course projects? Is there a single golf course project that could rationally create a positive return that makes it worth the investment?

Jim,

There are so many factors to consider.

Just look at the contrast in the development of two nearby, modern courses on the East End.

Friars Head and Sebonack.

The acquisition of the land for each project differentiates ROI for the developers.

And, a number of golf course developments are labors of love, not focused on immediate ROI's.


JESII

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Re: What's the cost/value of golf as part of a private club membership?
« Reply #30 on: December 07, 2013, 09:30:07 AM »
Agree 100%...but to dig a little deeper - probably more relevant on the other thread (your's referring to Tom Doak's incremental value question).

Could either Sebonack, Friar's Head or any other built and operating course look at a change to the course and decide there's a potentially positive ROI? Change to something we all agree is great, but there can be no monetary ROI model to rely on.

If that is in fact the case, then the rationale for a project being beneficial or detrimental to the course/club goes back to opinion...and the owners' opinion is all that really matters.

Patrick_Mucci

Re: What's the cost/value of golf as part of a private club membership?
« Reply #31 on: December 07, 2013, 10:17:38 AM »
Jim,

Except that the owner is usually fragmented into 300 unlike minded individuals.

I don't ever remember hearing that any alteration was embarked upon for cost accounting reasons, and especially not based on ROI

Nigel Islam

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Re: What's the cost/value of golf as part of a private club membership?
« Reply #32 on: December 08, 2013, 03:08:56 PM »
I know nothing personally about this club, but Standard Country Club in Louisville is offering a la carte options, including, apparently, "golf only."  Here's an excerpt from a newspaper article: "If members want a stand-alone golf membership for the 18-hole course, that will be an option. If they want tennis facilities only, that’s an option, along with choosing a Standard swimming pool membership – or any combination of the three, along with access – or not – to the clubhouse."

Here's a link to the entire article: http://insiderlouisville.com/news/2013/03/21/sources-standard-country-club-members-closing-clubhouse-discussing-possible-redevelopment/

Here's a link to the rate section on the club's website, which doesn't mention the club house (or tennis alone) being a la carte: http://www.standardcc.net/Membership/Plans-and-Rates.aspx

Anyone know how this plan is working out?

I am not terribly familiar with this club, but I do know Valhalla, Big Spring, and Audabon in Louisville all have better reputations, and all three are certainly interested in acquiring new members. I know that New Albany CC almost went out of business. My suspicion is that Standard is making a wise move to set themselves apart from the competition. It might work, and it might not, but the alternative is to do things the same way as always.

Roger Wolfe

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Re: What's the cost/value of golf as part of a private club membership?
« Reply #33 on: December 09, 2013, 01:43:44 PM »
My favorite topic.  What I have seen time and time again is that the bulk of F&B expenses are hidden in two significant line items.  The first, and most traditional, is General & Admin expense.  Receptionists exist to make reservations.  Assistant GM’s exist to run F&B events.  Clubhouse Managers exist to run F&B events.  In many cases, GM’s exist to run F&B events.  Some clubs allocate these correctly to F&B, but most allocate a large portion to G&A.  The second, and most recent strategy to prop up F&B is to put an “F&B Surcharge” on the financial statements.  This is a $30 - $60 monthly charge that is supposed to make up for a “no tip” policy.  This is NOT the F&B minimum.  It is a separate line item and, in my opinion, simply moves Dues Income over to F&B Income.  I have seen them range from $30 to as high as $60 at certain clubs.  It doesn’t sound like a lot, but if you have 300 members and your F&B Surcharge is $40 per month you are moving $144,000 into F&B per year.  I do agree, however, that charging a monthly surcharge to ALL the members is better than tacking on a % to every dollar spent on F&B.  I don’t agree with anything that penalizes the heavy user at any facility.

Furthermore, to comment on the esteemed Mr. Hutto’s statement, “I also think the fact that social members can pay a guest fee and play up to a couple rounds a month on the golf course is a crucial element.”  I disagree, but only because our social dues are 33% of our regular dues for the small number of social members we have left.   We have 500 golf members and do 22,000 rounds per year (we have a lot of young, working families and a small number of retirees).  This means each member plays an average of 3.67 rounds per month.  I would say 100 of my members play around 10 times per month so that makes the other 400 play 9,600 rounds which is about 2 times per month.  We discontinued social memberships a few years ago but still allow existing golf members to downgrade.  The social dues are 33% of the regular dues but a social member, “may not set foot on the golf course, even as the guest of a golf member.”   We have very few other amenities (no tennis or fitness).  If that rule didn’t exist, I cannot imagine how many of our regular members would downgrade since they already play so infrequently.  On the flip side, the other 4 successful clubs in our city deal with social members as follows:  two only have golf members, two have social members who are allowed to play limited golf, but the social dues are exactly one guest fee lower than their regular dues.  Our “social/no golf” policy is one I have to explain over and over again.  It took me a long time to truly understand it but I attribute a lot of our success, especially during 2009 and 2010 (post recession), to this unique statute.

A large population of social members will also render a club very inflexible when the economy or competition causes F&B revenue to start sliding.  Because you have to cater to social members by keeping your traditional non-revenue generating venues 100% staffed and open (tennis, pool, fitness, dining), you are forced to cut other expenses (golf course maintenance).  Even worse, you are forced to generate higher dues revenue by artificially increasing your dues through lower initiation fees and/or trial memberships.

Our Strategic Plan dictates we focus on offering what you cannot get in the outside world...  great (fast and close) golf, great practice facilities, a great social pool (no swim team).  As long as you can join a fitness center, play tennis at a local park for free and experience any level of dining at any number of places… we will most likely stick to our strategic plan.  So far so good!

BCowan

Re: What's the cost/value of golf as part of a private club membership?
« Reply #34 on: December 09, 2013, 01:56:17 PM »
A large population of social members will also render a club very inflexible when the economy or competition causes F&B revenue to start sliding.  Because you have to cater to social members by keeping your traditional non-revenue generating venues 100% staffed and open (tennis, pool, fitness, dining), you are forced to cut other expenses (golf course maintenance).  Even worse, you are forced to generate higher dues revenue by artificially increasing your dues through lower initiation fees and/or trial memberships.

    A equity club i know of who is doing well and has a strong social membership and due to a nice pool and great location.  They are just open for lunch during the week and dinner on fri and sat.  They did this four years ago and are saving thousands.  They also got rid of their food minimum and more people eat there because of it. They did this by creating an atmosphere where members wanted to go there.  The social membership is affordable as is the golf membership.  Social members have access 3 or 4 rounds a year, and no one is dropping their Active golf memberships.  The course is maintained top notch too.  Of course other clubs in the area don't follow this and loose thousands but to each is own.  

Roger Wolfe

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Re: What's the cost/value of golf as part of a private club membership?
« Reply #35 on: December 09, 2013, 02:05:39 PM »
   A equity club i know of who is doing well and has a strong social membership and due to a nice pool and great location.  They are just open for lunch during the week and dinner on fri and sat.  They did this four years ago and are saving thousands.  They also got rid of their food minimum and more people eat there because of it. They did this by creating an atmosphere where members wanted to go there.  The social membership is affordable as is the golf membership.  Social members have access 3 or 4 rounds a year, and no one is dropping their Active golf memberships.  The course is maintained top notch too.  Of course other clubs in the area don't follow this and loose thousands but to each is own.  

Not sure if you are agreeing with me or disagreeing with me.  Regardless, it sounds like you just described my club... without the social members of course.  Please describe their non-golf amenities, social dues vs regular dues, initiation fee.  3/4 times a year is much different than "a couple of times per month."  Sounds like a great place!

JMEvensky

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Re: What's the cost/value of golf as part of a private club membership?
« Reply #36 on: December 09, 2013, 02:14:59 PM »
Roger,I don't think I've ever heard a GM admit that F/B expenses get hidden in the G/A ledger. You may lose your membership in the GM club. ;D

Roger Wolfe

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Re: What's the cost/value of golf as part of a private club membership?
« Reply #37 on: December 09, 2013, 02:19:32 PM »
Roger,I don't think I've ever heard a GM admit that F/B expenses get hidden in the G/A ledger. You may lose your membership in the GM club. ;D

They don't get lost in MY ledger!  I am the black sheep of my CMAA chapter... as is my club in our city.  I admire them all, however.  Their jobs are much, much more complicated than mine.

Patrick_Mucci

Re: What's the cost/value of golf as part of a private club membership?
« Reply #38 on: December 09, 2013, 02:57:32 PM »
Roger is where the rubber meets the road and is as astute as anyone in terms of club management and accounting.

Shifting/diverting line item expenses has become common place for a variety of reasons, none of them rarely any good.

Years ago, a Green Budget was being attacked at the Board level, primarily because it was the largest of the budgets and an easy target.
Further scrutiny revealed that other departments had shifted/diverted line item expenses over to the Green budget to make their departments look more efficient.

Now who would do such a thing ?

The Tennis Chair was a tennis player.
The Pool Chair used the pool with his kids and grandkids.
The House Chair had F&B budget problems and swelling Admin expenses.

Ergo, let's dump it on the Green Budget, no one will notice and no one will care.

I noticed and I cared and when I addressed the Board I asked the Admission's Chair if new members were joining because of the Chicken Salad, tennis, Pool or the golf course.

When he answered, "the golf course", the line items were quickly reassigned

Brent Hutto

Re: What's the cost/value of golf as part of a private club membership?
« Reply #39 on: December 09, 2013, 03:12:31 PM »
Roger,

Our course has 27 holes and still probably does fewer rounds per year than your club does with 18 holes. We also have just over half as many full golf members. And I must add our total number of social membership is in the high two digits. I'd imagine the ratio is about 1/3 as many social as full member or maybe even less.

To the limited extent I understand the dynamics, allowing social members to "set foot on the course" does not at all inconvenience the full members in terms of tee sheet crowding or anything like that. But there is of course the risk of potential full members cheaping out, so to speak by choosing the much lower social-membership dues plus a couple guest fees a month for occasional play.

I think for a club like ours who really can't afford to shrink AT ALL and remain long-term viable it's just a risk we have to take. One thing that's probably different here than in Charlotte is that any full member (or potential full member) looking to lower their costs has a large number of options for playing golf on pretty decent, often formerly private, courses for not much money at all. So quite a few folks not willing to keep spending $4,000/year on dues can cut that number in half or better by either downgrading to social or dropping membership all together and just playing nearby alternative courses.

Now our course is much nicer than any of those, doubly so if you want to walk, and I think we're a very friendly and welcoming club to belong to if you're into the social scene. But there are a lot of people on that borderline financially in which several thousand dollar's a year in fixed cost to their household makes a difference. Frankly, I'll be facing that come retirement in a few years and I'm not sure what I'll do. For now it's not a big deal in our dual income, no kids household. Long-term looking at it as an ongoing expense for two retirees? Hard to speculate at this point.

Phil Lipper

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Re: What's the cost/value of golf as part of a private club membership?
« Reply #40 on: December 09, 2013, 03:33:54 PM »
There is a club in NJ with a top 100 golf course, a strong membership, a significant waiting list that created a social membership as another source of income. The bulk of the "social members" did it to access the golf course mid week, the social membership limited you to 12 rounds per year.
I was a social membe of a club as a place to eat lunch but mostly to have a different golf course to play mid week. I was suppose to be limited to 6 or 8 rounds a year, but I dont think the starter actually ever kept track of anything.

Roger Wolfe

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Re: What's the cost/value of golf as part of a private club membership?
« Reply #41 on: December 09, 2013, 04:29:07 PM »
The underlying theme to all of what we discuss on GCA is always, from a club revenue perspective, “do we need to do it?”  Every club has to do what it has to do to A) break even operationally and B) fund capital expenditures.   Often I get asked the following questions and my answer is always the same, “Because we’ve fortunately never had to do that and can still accomplish A and B!”

Why do you charge interest on financed initiation fees?
Why are your initiation fees non-refundable?
Why do you charge an initiation fee?
Why don’t you allow social members?

The flip side is that there are some negative things we unfortunately have to answer, “Because I have to to accomplish A and B.”

Have a food minimum.
Take eight Monday outings per year.
Restrict walking on Saturday mornings during peak season.
Have tee times.

It all depends on your club’s mission and Strategic Plan.  If you want to be full service… you do what it takes to be full service.  If you are content being a golf club with a swimming pool and a modest F&B program… so be it.  No one is right… no one is wrong.  Only when you face troubling times (economic or competition) can you TRULY find out what your club is and hopefully you will be nimble enough to adapt accordingly.  There are several clubs in the Carolinas who declared bankruptcy or were bought by a third party because of their unwillingness to adapt.  This sounds negative… but for many it was a positive and the right thing to do.

It is critical not to fool yourself through creative accounting and expense allocation.  If you want to be a dining destination… make sure you understand just what portion of your dues goes to support a dining destination.  The same with tennis, fitness and, of course, golf.

Michael Wharton-Palmer

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Re: What's the cost/value of golf as part of a private club membership?
« Reply #42 on: December 09, 2013, 04:34:56 PM »
Really shouldnt the question be worth to whom?
Are we talking about the pure finamcial worth or the worth to the individual.
To me as a golfer with very little interest in the rest of the goings on at agolf club, the value of the golf would be about 90%.
I like to eat at the club sometimes, but if it didnt offer any food, that wouldnt change the value of the club to me at all. I would be still prepared to pay the same dues as I do now.
To me it all all about the golf, the course the practice facilities and the no need  of tee times!!!!

SL_Solow

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Re: What's the cost/value of golf as part of a private club membership?
« Reply #43 on: December 09, 2013, 05:10:30 PM »
I consult from time to time with clubs on issues such as this.  I generally analyze these issues from the Club's point of view.  So I start by asking the club, what are its objectives and what is the purpose of the program in question.  This is particularly important with respect to the issue of social memberships.  If the purpose of a social membership is to serve as a holding tank for those who want to join when the club is full, the club is in an enviable position in these economic times.  The only question there is whether the facility has room to comfortably accomodate the social membership and whether there is a track record that indicates the social members will eventually migrate to full membership.  If there is a little profit in the deal, so much the better.

If the idea is to generate profit to help support the club, lower dues etc, there must be a realistic approach.  First, I always ask the club how many hamburgers, steaks etc would they serve if there wasn't a golf course?  The same goes for liquor.  Unlike the beginning days when many clubs were truly isolated and had little competition, most clubs in major metropolitan areas are surrounded by eating and drinking establishments of all different levels of service, none of which charge dues.  Members have a lot of choices.  That is why many clubs have instituted minimums for f&b.


Second, the club must look at its margins on f&b.  Many clubs barely break even.   If the problem is lack of volume and "overstaffing", adding members may help.  If it is food cost and pricing, you may compound a problem.

Third, you have to be realistic about your facility.  A club with a large clubhouse, multiple dining rooms and several bars may be able to take in social members without disrupting the full members' enjoyment of their club.  But a club with a modest facility may end up overcrowding  its drinking and dining venues, particularly when the club is in highest demand.  Alienating your full members to get a few extra dollars is not a good idea.

This goes beyond the personal preference of any of us.  As noted previously, I believe that the golf course is the most important asset at most clubs; without  it the other facilities would not exist.  But that said, each club has its own culture and set of economic and social issues. A realistic look by those in control is necessary in order to make appropriate decisions on matters of this type.  It is useful to check preconceived notions at the door and to drill down for data which may differ from club to club.

Jud_T

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Re: What's the cost/value of golf as part of a private club membership?
« Reply #44 on: December 09, 2013, 05:14:50 PM »
.

 It is useful to check preconceived notions at the door and to drill down for data which may differ from club to club.

What a buzzkill.....  ;)
Golf is a game. We play it. Somewhere along the way we took the fun out of it and charged a premium to be punished.- - Ron Sirak

Patrick_Mucci

Re: What's the cost/value of golf as part of a private club membership?
« Reply #45 on: December 09, 2013, 05:50:40 PM »
Shel,

Although most clubs would like to run at a profit, breaking even is great news.

I've never seen a club run their F&B at a profit.
Everyone I know of losses money.
And, sometimes, the more meals you serve, the more money you lose.

Unfortunately, you can't run your club's dining facility like a restaurant.
You can't turn members away, you can't make them wait an hour and you can't refuse to take their reservation because they've cancelled on previous occassions.

It's a difficult issue and every club tries to handle it according to their unique culture.

Roger Wolfe

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Re: What's the cost/value of golf as part of a private club membership?
« Reply #46 on: December 09, 2013, 06:03:47 PM »
Shel,

Although most clubs would like to run at a profit, breaking even is great news.

I've never seen a club run their F&B at a profit.
Everyone I know of losses money.
And, sometimes, the more meals you serve, the more money you lose.

Unfortunately, you can't run your club's dining facility like a restaurant.
You can't turn members away, you can't make them wait an hour and you can't refuse to take their reservation because they've cancelled on previous occassions.

It's a difficult issue and every club tries to handle it according to their unique culture.

We always use the widget example... if it costs you more to make a widget than you can sell it for... you make as few widgets as possible!

Roger Wolfe

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Re: What's the cost/value of golf as part of a private club membership?
« Reply #47 on: December 09, 2013, 06:05:42 PM »
Third, you have to be realistic about your facility.  A club with a large clubhouse, multiple dining rooms and several bars may be able to take in social members without disrupting the full members' enjoyment of their club.  But a club with a modest facility may end up overcrowding  its drinking and dining venues, particularly when the club is in highest demand.  

The pool dictated our cancellation of the social membership.  As our average age became younger and younger, the pool got fuller and fuller.  Finally we took a hard look and decided we needed to free up pool space for full members.  It was an easy decision.


SL_Solow

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Re: What's the cost/value of golf as part of a private club membership?
« Reply #48 on: December 09, 2013, 06:19:55 PM »
Pat and Roger,  I couldn't agree more.  roger's pool example is not uncommon.  Pat, absent tremendous liquor volume, you are directly on point.  My suggestion was that increasing social memberships to stimulate f&b, absent significant dues, is likely to backfire if the motivation is economic.  I think we agree

michael j fay

Re: What's the cost/value of golf as part of a private club membership?
« Reply #49 on: December 09, 2013, 07:17:44 PM »
Roger:

You are one of the very few truly realistic GM's I have ever met. Carolina Golf is a very fine facility with a golf course that has improved 100% in the past ten years. The decision making process is usually what you say it is. If it is best for those paying the bill, it must favor them.

I know a number and very much like many of the GM's I have met. They are usually not in the position to make the decisions that you are able to make. After all, they have not shepherded a Club from near insolvency to a very strong cost/value Club with a strong balance sheet. Members are the ones that are most ignorant of the operations, plus and minus, of any Club. Unfortunately, those who rise to power often get carried away with the "I can do it" attitude when it comes to secondary and tertiary functions of the Club (F&B and other sports). Well, simply they cannot do it without skimping on the main asset, the Golf Course.

More sensible decision making and sound financial positioning is the only way in which the average Club has any chance of surviving.

By the way Roger, you guys still make a very good Turkey Club!

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