[BCowan]

Duncan,

   If we had golf clubs charging $1800 a year in the US, millennials would be lining up in droves to join.  More importantly you wouldn't be losing 45-55 year old's as members.    

[Paul Gray]

Ben,

I thought that was the sort of price you were now looking out???

[Ulrich Mayring]

Not sure about the situation in the US, but here in Germany there's another reason why younger people are often not too eager to join a golf club. When you start out in your profession, after school and/or college, you simply have no way to be sure that you will remain with this company in this city for more than a couple of years.

In fact, most young professionals nowadays are expected to be mobile and relocate to other parts of the country, sometimes even when staying with the same company. But for sure when looking for a new professional challenge. However, most clubs aren't too eager to accept new members for 2-3 years and then let them go again.

Initiation fees are the most popular way to ensure that once you join, you stay. But there are other methods, such as unfavorable terms of resignation and social pressure, which all conspire to make it clear that you better know you're in it for the long haul.

Ulrich

[Brent Hutto]

So are we talking "golf" or "private golf clubs with substantial initiation fees"?

It's funny how many different things the current downturn threatens depending on who you're talking to. Talk to a golf equipment manufacturer or retailers and the decline of "golf" is all about people not buying as many new high-$$$ golf clubs. Talk to people who own or (want to) build golf courses and it's all about there being too many courses out there to support building more. Talk to members of private clubs and its the feared death of "golf" in the form of clubs that costs tens of thousands of dollars to join and thousands more each year in dues. 

[Bill_McBride]

Duncan,

   If we had golf clubs charging $1800 a year in the US, millennials would be lining up in droves to join.  More importantly you wouldn't be losing 45-55 year old's as members.    

But how would we pay for maintenance of our overwatered and over fertilized courses, our oversized clubhouses with huge ballrooms for occasional use, swimming pools and tennis courts and fleets of electric carts?

[Matthew Rose]

At 37, I play less now than I ever have in my life. Of course, I'm not entirely happy about this. I'm averaging roughly 8-10 rounds a year.

I have two young children to raise, a mortgage, two cars, utility bills, medical bills from their births that I'm still paying off, and countless other things. I have never been a member of a club. I simply don't have the time or the money to play frequently. I won't spend more than $50 on a round unless it's at someplace where the green fee is usually double or triple that.

I'm playing the same set of irons I've had since 1993. I've bought a handful of clubs over that time, always used, usually on ebay. I buy a new pair of golf shoes probably once every 5-7 years and never spend more than $50-60... usually I get something on clearance in the winter.

I've said every year for the past five that I'm going to play more this year and I'm going to finally get some new clubs. And at the end of said year, it never happens. Something always gets in the way, like being laid off, losing insurance benefits, missing extended periods of work through illness while working hourly... having to take my kids out of daycare because I can no longer afford it, etc, etc, etc...

My kids are learning the game anyway.... the oldest one is about to turn 5, and he's very much into learning. He already has a good putting touch, but he's not ready to hit a full shot yet.

If nothing else, golf may become an escape for them when they are struggling to make ends meet, much like I am now.

[Cliff Hamm]

I will add one further reason.  Millennials are the first generation where females have been active in sports.  This has resulted in sports participation with their boyfriend /spouse.   They kayak, play kick ball, bike, volleyball, run, etc. in conjunction with their partners.  This does not leave much time for golf.

[Bill_McBride]

"Millennials" would appear to refer to a generation now aged between 15 and 35. Should it really come as a surprise that not many of these people are playing golf?

Most avid golfers I know did not play a lot of golf at this age either. Even those like myself who got a taste for the game as a kid do not generally play much golf through their young adult years; there are just so many factors conspiring against mass participation for this cohort.

Getting a career established, chasing women, serious socialising, etc etc consume all the time available at this age. Golf is a colossal commitment in terms of both time and money; a commitment most young men are just not able or willing to make.

And then the kids come along...

The role of the father in most young families today is unrecognisable from that of only thirty years ago. He is (quite rightly) expected to play a much greater part in parenting his kids than in the past. Disappearing to the golf club for half a day on Saturday and Sunday is just not realistic any more for most young fathers. Neither is justifying £1000+ a year in membership fees plus the same again in equipment and consumables at a time when finances are inevitably stretched.

Those young fathers who do manage to negotiate a weekly dose of sporting activity away from their family are generally playing something else in their twenties and thirties. Here in  the UK that means either football (soccer) or rugby. The time to recruit these guys into golf is when their footballing career is nearing an end and they want or need to replace it with something new.

Of course there are exceptions, but in very general terms golf is an activity for middle-aged men.

When the Millennials enter middle-age I see no reason why a sufficient proportion of them will not be bitten by the golf bug. All the game has to do is wait for the twenty and thirty-somethings to grow up and then grab them!

Duncan, we have some younger members at my club but I'm sure the average age of the members is north of 60.  We were out there Friday night for dinner and the average age looked to be closer to 70!

I went through what you describe above and didn't play much from 1971-1983 while my kids were growing.  Somehow I was allowed to join a nice club when the oldest was 12 and the youngest 7.  It worked out well for 12-year old David, he spent a few entire summers at the club learning to play.  The 12 years off pretty much ruined my own game!   

[BCowan]

Not sure about the situation in the US, but here in Germany there's another reason why younger people are often not too eager to join a golf club. When you start out in your profession, after school and/or college, you simply have no way to be sure that you will remain with this company in this city for more than a couple of years.

In fact, most young professionals nowadays are expected to be mobile and relocate to other parts of the country, sometimes even when staying with the same company. But for sure when looking for a new professional challenge. However, most clubs aren't too eager to accept new members for 2-3 years and then let them go again.

Initiation fees are the most popular way to ensure that once you join, you stay. But there are other methods, such as unfavorable terms of resignation and social pressure, which all conspire to make it clear that you better know you're in it for the long haul.

Ulrich

   This is an excellent point.  I have a friend who is a Dr doing his residency and doesn't know how long he will be in the area he is in.  He wants to join a club but doesn't want to invest in one that has an initiation fee.  I think Pace of Play drives people away and may have them playing less public golf.  One reason to join a private club is the pace of play is much much better. 

[BHoover]

I'm all in favor of adopting the UK club model here in the USA. But one thing that I can't figure out is how a club would be able to handle th influx of new members that would be needed to make that model work? If the focus is more members, and lower overall dues, it means that tee times would be at a premium because there'd be more golfers using the course, which is an absolute necessity for the UK model to be feasible.  At a 36 hole club, it's likely not a problem. But what about an 18 hole club? Is it even possible?

[Duncan Cheslett]

I'm all in favor of adopting the UK club model here in the USA. But one thing that I can't figure out is how a club would be able to handle th influx of new members that would be needed to make that model work? If the focus is more members, and lower overall dues, it means that tee times would be at a premium because there'd be more golfers using the course, which is an absolute necessity for the UK model to be feasible.  At a 36 hole club, it's likely not a problem. But what about an 18 hole club? Is it even possible?

I've no personal experience of playing golf in the US but from what I understand it would indeed be difficult to make the UK club model work there.

Here in the UK a typical local members' club with a decent enough but not architecturally significant course will have maybe 300-500 members each paying around £800 - £1000 per year.  Most clubs were established before 1930 and own their property outright with little or no debt. The climate in the UK makes expensive irrigation systems largely unnecessary and most clubs of the kind I refer to manage perfectly well with five or less maintenance crew (greens staff).

Golf clubs here revolve solely around golf; tennis courts, swimming pools etc are unheard of, and while there may be a small annual bar levy to aid cash-flow and to encourage car-park golfers to stay for a drink after their round, dining minimums are unknown.  In fact, most clubs have long washed their hands of all catering services and franchise out this 'opportunity' to a self-employed steward.

Initiation fees have disappeared for 90% of clubs - only the 'elite' clubs in any area are able to attract new members willing to pay them. This does not necessarily mean the places with the best courses!

The low-cost model works because clubs keep their costs low. This means almost no 'service'. This entails parking your own car, taking your own clubs out of the trunk, and cleaning your own shoes. Would Americans accept this?  

Sadly, the 'UK Club Model' is now not working too well for a lot of UK clubs. Consolidation and casualties are probably inevitable. When visitor green fees become cheaper than the weekly cost of being a member a club will have problems in attracting and retaining members. This is now the case at probably the majority of UK golf clubs.

Believe it or not, the average UK golfer considers annual club fees of £1000 ($1700) to be expensive.

[Brent Hutto]

The niche that you guys are describing is filled in my home town by semi-private courses, some of which run with staffing and budget akin to the way Duncan describes the majority of UK clubs. They take walk-up daily fee play but also offer subscriptions for anywhere from $70/month to maybe twice that much depending on the quality and location of the course.

One difference is, with debt from initial acquisition still typically in place and being an a warm climate it's not practical to provide good course conditions on a very, very tight budget. So most of them make a club like Duncan's look like Augusta National by comparison, in terms of turf and greens conditions and general upkeep.

Now I know I live in a cheap, smaller metro area. But there's one semi-private that runs about $800/year and another at $1,000/year as well as several others in that price range for which I don't happen to know exact membership fees. The downside is most such places require the use of golf carts (which is where they of course actually generate their revenue from "members" who are required to pay $15-$20 for a cart each time they play).

But the cheapest of the bunch is under $800/year and you can walk all you like, any time, for no additional charge. If you're a cart rider, the same place offers a $1,500 yearly subscription ($1,100 for 60 and older) which covers as many rounds of golf as you like with riding cart. Again no additional charges.

What's interesting about that course is that as Duncan describes, it was built years ago on land that the owner had previously used for farming. So they've never had debt and even at their rock bottom low prices they manage to turn a profit when every other club in town in losing money.

[Sean_A]

But the cheapest of the bunch is under $800/year and you can walk all you like, any time, for no additional charge. What's interesting about that course is that as Duncan describes, it was built years ago on land that the owner had previously used for farming. So they've never had debt

This is essentially the UK model assuming unaccompanied vistors are allowed to play and that it is very common for members to own the course. 

Brian, the system works because members accept they cannot have access to the course at all times.  Its a tradeoff, dues are kept lower, but the course is more crowded with members (not uncommon for there to be 800-1000 members) and visitors. Each club decides when viistors can play and that varies quite a bit.  Generally speaking, the more high profile the club, the more restrictive they can be with visitor times.  So for instance it was traditionally for there to be no visitors on weekends.  These days, that is becoming less the case as clubs seek additional visitor money to make up for the shortfall of members. Even some big name clubs allow visitors on weekends, usually for a premium fee. 

As I understand it, many US clubs have a threshold of outside income to remain a tax free entity.  To go the UK model route would take a decision on the part of the club/owner to become a business and pay taxes. Its a big leap into the unknown and I suspect most Mercans don't want to take it.  Having an empty course is part of the appeal of a club membership.

Ciao   

[BCowan]

S,

   Is a UK club mostly single memberships?  Where a guy who's wife doesn't play pays close to half of what a guy who's wife does play.

Sean, many US clubs do have outings on Monday that help lower the dues.  What percentage can be taken in by outside play to remain non-profit I don't know. 

[Jud_T]

Another major hurdle besides the tax exempt issue-  in the UK, folks know how to play in 4 hours.  Full tee sheets on this side of the pond means 5 hours.  I can get that at any public course.

[Sean_A]

B

Since there are a ton less women members of clubs I think most members are single category.  Many clubs do offer Husband/Wife and Family deals though.  

Jud

The more crowded courses get the less likely golf will be played in 4 hours.  I know clubs talk about 4 hours, but I ahve beed to 2ball clubs which which can barely hold that bar in 4somes when the course is crowded.  Of course, much of the time about talk revolves around course difficulty and condition of the rough.  Harsh rough can easily add 45 minutes to a game.

Ciao

[Brent Hutto]

The norm in my area is for all private memberships to be family memberships. Some of the semi-privates I was describing are based on individual memberships (with an optional higher subscription fee for family deals) but the private member owned clubs tend to charge me (as the sole golfer in my family) the same dues as a family in which husband, wife and a couple kids all play.

But honestly, given the high cost of dues to start with I doubt they could get away with asking an extra hundred bucks a month for families.

[Duncan Cheslett]

At Reddish Vale children and grandchildren of members get to play free anyway. My wife has just started playing, and to upgrade my membership to family membership was £150 for the year.

[Dan Herrmann]

Duncan - to show how dumb many USA clubs are...

I was married in late 1997 at my own golf club.  About six months prior, I go to up my membership to a family so my fiance, Laura, could play.   They told me "no" - that only married people could join as a family.  I reminded them I was getting married THERE in six months, but they didn't care.  I resigned (proudly) not too long after.

Stupid rules like that are driving people away.

[Mike Hendren]

Many of the posts assume that golf is consumed rather than played.  That's consistent with Mike Keiser coining the term "retail golfer."  Consumers value products based upon two factors:  cost and the benefit.  In that event golf is simply a losing proposition in today's world.  I don't believe it can be fixed.  So what - golf is not required for an abundant life.

We in the treehouse see it differently since we love the game - stated otherwise it's priceless.   We learned the game in an era where consumerism had not yet hit full stride.  

We're very fortunate.  

Mike  

[John Kirk]

(Appropriated from Wendy, one of The Motley Fool's most valuable economic contributors.  Part of her weekly analysis.)

A new study shows that real median household net worth declined by 30% over the past 10 years.

http://web.stanford.edu/group/scspi/_media/working_papers/pf...

http://www.nytimes.com/2014/07/27/business/the-typical-house...


The Typical Household, Now Worth a Third Less

By ANNA BERNASEK, New York Times, JULY 26, 2014

...

For households at the median level of net worth, much of the damage has occurred since the start of the last recession in 2007. Until then, net worth had been rising for the typical household, although at a slower pace than for households in higher wealth brackets. But much of the gain for many typical households came from the rising value of their homes. Exclude that housing wealth and the picture is worse: Median net worth began to decline even earlier.

“The housing bubble basically hid a trend of declining financial wealth at the median that began in 2001...” [end quote]

The 2014 spring real estate season was a disappointment as new homes (an important source of construction employment) barely moved.

The "Millenial" generation, young workers under age 35 in their prime household-forming years, has been particularly hard-hit. Unemployment in the age 20 to 24 cohort is 10%.

http://research.stlouisfed.org/fred2/series/LNS14000036

My thoughts:

It's pretty clear that the golf business, both the number of courses and the sales of golf equipment, will continue to decline.  The most desirable private golf clubs will continue to do well.  The rest is unclear, but I'd guess that good golf courses with low greens fees and low maintenance budgets will do OK, while all other golf courses will be insolvent.  Golf will experience increasing political unpopularity.  I expect 30-50% of all golf courses to be out of business within 25 years.  Sorry. 

[Stephen Davis]

(Appropriated from Wendy, one of The Motley Fool's most valuable economic contributors.  Part of her weekly analysis.)

A new study shows that real median household net worth declined by 30% over the past 10 years.

http://web.stanford.edu/group/scspi/_media/working_papers/pf...

http://www.nytimes.com/2014/07/27/business/the-typical-house...


The Typical Household, Now Worth a Third Less

By ANNA BERNASEK, New York Times, JULY 26, 2014

...

For households at the median level of net worth, much of the damage has occurred since the start of the last recession in 2007. Until then, net worth had been rising for the typical household, although at a slower pace than for households in higher wealth brackets. But much of the gain for many typical households came from the rising value of their homes. Exclude that housing wealth and the picture is worse: Median net worth began to decline even earlier.

“The housing bubble basically hid a trend of declining financial wealth at the median that began in 2001...” [end quote]

The 2014 spring real estate season was a disappointment as new homes (an important source of construction employment) barely moved.

The "Millenial" generation, young workers under age 35 in their prime household-forming years, has been particularly hard-hit. Unemployment in the age 20 to 24 cohort is 10%.

http://research.stlouisfed.org/fred2/series/LNS14000036

My thoughts:

It's pretty clear that the golf business, both the number of courses and the sales of golf equipment, will continue to decline.  The most desirable private golf clubs will continue to do well.  The rest is unclear, but I'd guess that good golf courses with low greens fees and low maintenance budgets will do OK, while all other golf courses will be insolvent.  Golf will experience increasing political unpopularity.  I expect 30-50% of all golf courses to be out of business within 25 years.  Sorry. 

Unfortunately, I don't think you are too off the mark here John.

[Andrew Buck]

I'm all in favor of adopting the UK club model here in the USA. But one thing that I can't figure out is how a club would be able to handle th influx of new members that would be needed to make that model work? If the focus is more members, and lower overall dues, it means that tee times would be at a premium because there'd be more golfers using the course, which is an absolute necessity for the UK model to be feasible.  At a 36 hole club, it's likely not a problem. But what about an 18 hole club? Is it even possible?

Here in the UK a typical local members' club with a decent enough but not architecturally significant course will have maybe 300-500 members each paying around £800 - £1000 per year.  Most clubs were established before 1930 and own their property outright with little or no debt. The climate in the UK makes expensive irrigation systems largely unnecessary and most clubs of the kind I refer to manage perfectly well with five or less maintenance crew (greens staff).


The low-cost model works because clubs keep their costs low. This means almost no 'service'. This entails parking your own car, taking your own clubs out of the trunk, and cleaning your own shoes. Would Americans accept this?  

I actually know a lot of clubs like this in rural America.  I think there are actually a few clubs like this in the Chicago suburbs that are completely no frills.  I do wonder if some of the struggling clubs in urban areas closed off large portions of their clubhouses/etc. they may fair much better. 

The pool can be a tricky thing.  If done right, it doesn't have to cost much to operate either, and can help attract members.  Our pool, with lifeguards for the 3 summer months and simple snack service costs under $25k a year to operate.  It can be a slippery slope for sure, but for a group that would like a club to play regularly that is nice, while not elite, I suspect you could almost offer separate pool memberships to the community (I know of a couple clubs where this works).

[Andrew Buck]

Now I know I live in a cheap, smaller metro area. But there's one semi-private that runs about $800/year and another at $1,000/year as well as several others in that price range for which I don't happen to know exact membership fees. The downside is most such places require the use of golf carts (which is where they of course actually generate their revenue from "members" who are required to pay $15-$20 for a cart each time they play).

I carry a 2nd membership at a semi-private that costs $750 a year ($500 under 35) that has greens that roll very consistent and at 11 for the entire season (May - October), and bent grass fairways that I haven't had more than one or two bad lies in over the last 3 years.  The maintenance budget is right about $300k a year.

Now, some of the out of play areas aren't maintained to quite the same standard, but tees/fairways and greens are in really good shape. 

[Jeff Shelman]

To add on to John's post, there is this WSJ story about college debt:

http://blogs.wsj.com/numbers/congatulations-to-class-of-2014-the-most-indebted-ever-1368/

It claims average debt for the class of 2014 is $33,000. Student debt has spiked dramatically over the past 10-15 years and it seems unlikely that is going to change. Obviously there are many students who graduate with much more modest debt totals, but there are lots who rack up debt in the $50K range.

Combine massive debt to go along with a decline in net worth and it isn't totally shocking that golf is cut out of the budget by many.

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