Private Clubs at a Crossroads

[Mike_Young]

Those who are seriously interested in the subject matter should take heed to what SBusch writes.  The guy has been in the trenches for years; he is a pro.

I agree.  SBusch is correct.  When I speak of clubhouses being the problem it is in a little different light than he is describing.  Square footage is the problem.  So many F&B operations dont use a fully allocated cost on their banquet facilities and allocate much of the overhead to dues and then it looks like it is making more money than it actually is compared to the casual grill etc.  Some of these clubhouses have become gigantic due to additions for things that could have been absorbed in the older footprint.  My bet is that in most cases if you divide food sales by square footage and allocate the cost at a sq ft basis then casual wins out every time.  Right now many are grabbing for straws with this stuff and as Steve says,,,ClubCorp focuses on the F&B..always have...gonna be interesting

[Mike_Young]

  Another big factor is that the previous generations maybe had the type of jobs where they stayed in one place with 2-3 job changes.    I see my millennial kids not in a place where they can plunk down the initiation fee, as they have a view that they might have ten jobs in 10 different cities in their lives so no way can they even consider a club now.

Thats right...the first company like Kemper, Troon to get to 1000 clubs will rule...that will allow for mobility within its membership...150-2500 clubs doesn't get it and not anyone is really past that yet...so the smart play is assemble about 10-20 courses in a small company and then sell them...it's coming...

[Kalen Braley]

I'm curious, for those who are well traveled and such, which "Private" model do you find more common world-wide?


The US model or the UK one?

[Mike_Young]

I'm curious, for those who are well traveled and such, which "Private" model do you find more common world-wide?


The US model or the UK one?

UK...the US is more about status...IMHO..the UK is more about sharing the cost of the game

[Padraig Dooley]

One of the concepts worth considering for a golf club in financial trouble could be to reduce the number of holes. 18 to 9 or even 12.
Does anyone know of a club that has done it? Would clubs even consider it? Less maintenance, less cost, less time to play, can even eliminate some of the 'poorer' holes on the course.
 

[Mike_Young]

One of the concepts worth considering for a golf club in financial trouble could be to reduce the number of holes. 18 to 9 or even 12.
Does anyone know of a club that has done it? Would clubs even consider it? Less maintenance, less cost, less time to play, can even eliminate some of the 'poorer' holes on the course.

Padraig,I'm. not real confident in those new rad concepts.  It's just a way for all the associations and consultants to charge.  I saw where one baseball field was not getting as many teams to compete and attendance was down so they removed third base...didn't work out well for them...but it did cut maintenance cost...     same thing goes for golf...  it all abut the edges...that's where we get in trouble around here...

[Craig Moore]

One of the concepts worth considering for a golf club in financial trouble could be to reduce the number of holes. 18 to 9 or even 12.
Does anyone know of a club that has done it? Would clubs even consider it? Less maintenance, less cost, less time to play, can even eliminate some of the 'poorer' holes on the course.

Padraig,I'm. not real confident in those new rad concepts.  It's just a way for all the associations and consultants to charge. I saw where one baseball field was not getting as many teams to compete and attendance was down so they removed third base...didn't work out well for them...but it did cut maintenance cost...     same thing goes for golf... it all abut the edges...that's where we get in trouble around here...

https://www.youtube.com/watch?v=99o-bp0ohBk

[SB]

Mr. Busch -
Do you offer this at the course you own?  What has been the uptake?  How does the cost compare with the lowest cost fully private alternatives in your market? 

I have a par 61 course and we offer a full membership (no green fees, cart fees, and some range privileges) for $129 a month.  It's not very popular.  We also offer a discount card for a one time fee of $99 and then you get about 25% off.  It's much more popular, even though the full membership is a fantastic deal if you play much at all.  We do require a one year commitment, so I think people are hesitant to commit to the unknown, going to Rick's point.  The cheapest private club is about $500 a month (Chris Cupit would know better than I) and has about a $5K initiation fee.

Those who are seriously interested in the subject matter should take heed to what SBusch writes.  The guy has been in the trenches for years; he is a pro.

When I speak of clubhouses being the problem it is in a little different light than he is describing.  Square footage is the problem.  So many F&B operations dont use a fully allocated cost on their banquet facilities and allocate much of the overhead to dues and then it looks like it is making more money than it actually is compared to the casual grill etc.  Some of these clubhouses have become gigantic due to additions for things that could have been absorbed in the older footprint. 

Clubhouse inefficiency is a big problem.  Lots of hallways and sitting rooms, etc.  I recently looked at a club talked about here that had the following dining areas:  Formal dining room, main dining room, men's grill, women's grill, bar, another bar, casual dining area off bar #2 (this where members actually ate), patio outside bar #2, main patio dining, and pool area.  That's 8 member dining areas that have to be serviced, not including the banquet area, which actually did make money.  And one kitchen with long walks to each area.  What a disaster.  But the members loved it.  And then they wondered why they couldn't make their mortgage payment.

Tom D said it best, of course its supply and demand.   But the answer to "why" is likely different in different regions or countries?


At our US east coast club, we would like to have 320 full members and we are maybe 10% currently short of that, so for revenue we added classes......social, pool and tennis only, preview, Junior, etc.    Its a slippery slope as more bodies are around but maybe we STILL have less revenue than the optimal (read: old, baby boomer) model.
Maybe its as simple as the boomers drove the 90's (I'm a boomer who joined at age 40) and now Genx  is a smaller generation of 40 year olds, and the Millenials, a larger generation aren't quite old enough yet?    I think that's a big factor.   Another big factor is that the previous generations maybe had the type of jobs where they stayed in one place with 2-3 job changes.    I see my millennial kids not in a place where they can plunk down the initiation fee, as they have a view that they might have ten jobs in 10 different cities in their lives so no way can they even consider a club now. 

Job movement/uncertainty is a huge deal.  I think initiation fees for anything other than old line top tier clubs are permanently going to be lower.  It does encourage people to switch clubs, though.  As an operator you have to stay on your toes.


Thirtysomething's have never joined clubs in any numbers.  Income is too low and uncertain, changing jobs, moving homes, makes it tough to join a club.  Even with discounts. Once you get married, you're stressed about money until .... you're not. 

[Sean_A]

In my experience the big problem with US public courses offering a yearly ticket is that there is no club involved....its just golf.  It is easy to see why folks wouldn't find that overly attractive.  Very few comps were offered,  there was very little in the way of the tee being reserved for ticket holders, there were no throw ups or matches.  Most of the public courses in the UK offer a membership to a club with the usual club benefits, mainly ways to play golf and socialize with club members.  One of the very best ways to meet folks in clubs is to play comps.  Of course, the US isn't big on comps so the concept falls apart at the get go.


How many proper golfers are club members in the US?  Is the issue of private clubs struggling really an issue or simply a market correcting itself? 

Ciao

[Jeff Schley]

In my experience the big problem with US public courses offering a yearly ticket is that there is no club involved....its just golf.  It is easy to see why folks wouldn't find that overly attractive.  Very few comps were offered,  there was very little in the way of the tee being reserved for ticket holders, there were no throw ups or matches.  Most of the public courses in the UK offer a membership to a club with the usual club benefits, mainly ways to play golf and socialize with club members.  One of the very best ways to meet folks in clubs is to play comps.  Of course, the US isn't big on comps so the concept falls apart at the get go.


How many proper golfers are club members in the US?  Is the issue of private clubs struggling really an issue or simply a market correcting itself? 

Ciao

Sean this is somewhat correct.  The public courses that offer a season pass for golf also have a "men's club" or a "women's club" which hold weekly competition during the week usually which basically only retired people can play in.  Thus it isn't really a club, but something for people who are retired can get together and play.

I would estimate about 60% of club members are active golfers at clubs I am a member, initiation fees (nonrefundable) are a ways to lock people in but certainly are not near where they had been in pre recession. Other than the Long Island clubs and the elites in California I'd guess the initiation fees are at least in half to probably 25% of what they were at their peak. Dues however need to be paid and have increased as you would expect for inflation.

[SB]

How many proper golfers are club members in the US?  Is the issue of private clubs struggling really an issue or simply a market correcting itself? 

Ciao

I think it's the latter.  There some other issues going on such as deferred maintenance, inefficient clubhouses, poor management, stagnant incomes, etc.  But essentially some markets have too many courses.  Some places had a 30% increase in the number of courses with no increase in population.  That math doesn't work.  The problem in some places is that nobody wants their local course to close so the market hasn't been able to correct.  But it is slowly correcting.

[Joe Melchiors]

Tom D said it best, of course its supply and demand.   But the answer to "why" is likely different in different regions or countries?


At our US east coast club, we would like to have 320 full members and we are maybe 10% currently short of that, so for revenue we added classes......social, pool and tennis only, preview, Junior, etc.    Its a slippery slope as more bodies are around but maybe we STILL have less revenue than the optimal (read: old, baby boomer) model.
Maybe its as simple as the boomers drove the 90's (I'm a boomer who joined at age 40) and now Genx  is a smaller generation of 40 year olds, and the Millenials, a larger generation aren't quite old enough yet?    I think that's a big factor.   Another big factor is that the previous generations maybe had the type of jobs where they stayed in one place with 2-3 job changes.    I see my millennial kids not in a place where they can plunk down the initiation fee, as they have a view that they might have ten jobs in 10 different cities in their lives so no way can they even consider a club now. 

Job movement/uncertainty is a huge deal.  I think initiation fees for anything other than old line top tier clubs are permanently going to be lower.  It does encourage people to switch clubs, though.  As an operator you have to stay on your toes.


Thirtysomething's have never joined clubs in any numbers.  Income is too low and uncertain, changing jobs, moving homes, makes it tough to join a club.  Even with discounts. Once you get married, you're stressed about money until .... you're not.

I think the mobility thing is a big deal and the medium level initiation clubs need to figure it out.  I didn't join a club for a long time because the initiations were either non-refundable or there was a good chance I would have to wait months/years to get back most/all of a deposit if I moved.  For many of us, moving next month/year is always a possibility. 


I would not have had a problem joining if all/most clubs understood this and had an agreement that if you moved you could take the deposit with you if you joined another club.  You could keep people from jumping around by restricting it to a certain distance away...  The current model seems to unnecessarily restrict what is already a smaller than ideal number of potential members.


-Joe

[Kalen Braley]

For those who have belonged to both a UK and US model club, what would you say are the top 3 pros and cons of each and which model did you prefer?


I'm looking at this thru the lens of ongoing sustainability and it seems the UK model is far better suited for long terms survival, but that's just a guess.

[SB]

Forgot to say thanks for the compliment, Lou!  You're no slouch yourself!

[David Restrepo]

To address moving and forfeiting initiation fees.


I do not know the finer details, but the top tier clubs in Australia that have formal reciprocity allow for your membership to be transferred for x amount of years. This might be the same for mid-tier clubs as well.


Often times, people move from Melbourne to Sydney (and vice versa) and have been able to transfer their membership (RM to RS is a common one). Another example - friend was a member at Lake Karrinyup in WA. When he moved to Melbourne, he was able to get a provisional membership at Kingston Heath.

[Ian Mackenzie]

Ian,


Do you see any of this tied to the political philosophy and control of an urban area?  Do clubs in blue cities face a different environment those in red to purplish areas?


My theory has been that disposable income and affordability in the populations that play golf are keys.  The intersection of economics and politics (as the art against the art of economics) might be worth exploring.

Lou -


Not sure of the correlation.
Illinois is a blue state and Chicago is a blue town.


However, the "collar counties" (as they are called) where most of the private courses are, plus northern Cook county (where Chicago is), have a VERY purple/red hue to them. I would guess that at most private clubs the membership is majority republican - mostly for two reasons: lower taxes and less regulations.


The model is broken and many clubs will "bleed out" over the next 20 years.


As I have said in another thread, you know something is wrong when a "Doak 6" private club in Chicago costs $900/mo. and a "Doak 10" in Scotland costs $700 PER YEAR!!!!


But, cost basis of the land, real estate taxes and labor costs undermine the US model right from the Excel model spread sheet idea.

Also those Chicago clubs aren't open year round, there are a good 3-4 months where you can't golf there in the winter, thus your effective dues are 1/3 higher.

It is the maintenance costs that I feel are so far out of line with UK clubs as I'd like to see their income statement and what their expenses are for maintenance, both in labor and materials.  Some of it is climate and what is needed in certain climates, another part is the expectation of conditioning of US courses and meeting a XYZ standard.

Average maintenance budgets for top tier private clubs in chicago are between $1M and $1.6M on "annual sales" of between $5M and $7M.

[Ian Mackenzie]

Another "false positive" data point for private clubs is the "junior member" programs they have all created to establish a "more robust pipeline" into being a full member.


If you are between 25- and 35, a "Special Junior or Junior Membership" is simply a great deal.
All private clubs in Chicago have them and they have heavily recruited single and newly married millenials.


(Give me some leeway here...)


They pay maybe 5% of the normal full freight downstroke.
They pay maybe 35-40% of the regular monthly dues.
They have FULL playing and guest privileges.
They do not need to decide to "convert" to full member until they are 35 and now maybe even 40.


Their risk is minimal and their "option value" is attractive.
However, clubs will learn that the "conversion rate" to full membership is less than forecasted for all reasons cited in this thread.


It amazes me that hardly any clubs discuss being sized correctly for the existing economic realities - like a business would.
Instead, it's always about how they can grow to meet rising costs.


Costs are going up, demographics are not in-line with growth, and the game is...well, it is what it is.

[John Kavanaugh]

35 - 40 is just when travel teams kick in. Someone in your generation needs to stand up and stop the madness.

[JESII]

Travel teams kill the Country Club!


Agree 100%

[Tim Gavrich]

I think we're in the midst of a fundamental philosophical change with regard to the viability of private club membership from the perspective of the consumer.


My sense is that in the past, the adage was "If you are worrying about how much your membership costs, you can't afford it." Which  I take to mean that a club membership was a luxury and the mere possession of it carried some acceptable intangible value - social status, a built-in sense of community, etc. - on top of the tangibles, like one's enjoyment of the course and other amenities.


The tangibles are the same, but I think the current pool of potential club members assigns less value to the intangibles, meaning that it is more important that the membership make some straight-up financial sense than it used to be. The quote above no longer applies.


We may agree or disagree about the particular reasons for this, but I would look at the sense-of-community aspect as a big part of the reason why clubs are not as strong as they were. To wit:


- My generation (b. 1989, so I'm a Millennial) and the ones adjacent seem to feel more able to join a meaningful community "for free" than previous ones. I think the flow of information (social media is a huge part of this) is the main driver.


- I think younger people now have more diverse social groups than they used to, and while clubs have increasingly diverse memberships (some have come along more slowly than others), there's still an entrenched image of the club as...well, I think you can insert the adjectives here. This image has not been combated in any meaningful way in recent years. (This is a problem all across golf, by the way, and it will persist until some pretty significant changes to the main golf institutions happen, IMO.)


- No matter how welcoming a private club is to guests, I think people are more conscious/wary than ever of power dynamics in any setting. I feel an inherent discomfort when I'm hanging out in a place where I know most of the people around me are paying good money for the privilege. A contemporary group of friends would rather hang out in a setting where they all "belong" equally.


Clubs are going to have to learn quickly who they are, and devote all their energy to being their most authentic selves. It seems like Sweetens Cove, which focuses pretty much 100% on the golf course, and lets that be The Thing, is a pretty good "golf club" model going forward, even though SC specifically, because of location, is more of a destination than a club. Great course, no other frills, lowest possible cost for the best product that serves the audience efficiently.


I'm not sure what the modern "country club" needs to do/look like to be relevant and successful like it was in the heyday while somehow being significantly more affordable. There may be no going back.

[Bernie Bell]

Tim –
I think it’s more apt to say that if you’re just computing cost per round, the math is rarely going to favor the private US club.  Yes, the difference is intangible, and the intangibles vary from club to club, muckety-muck club at one end, and then all the way down.  But (most) comments on this site lean strongly to the value in camaraderie, not status or exclusion.  And the ability to walk.
I think it is a millennial misconception that you are already linked in meaningful communities for free.  A golf affinity group on social media is different from a divot-filling night, Tuesday night league or Ryder Cup style tournament at a club.  Or a pro who will drive you out to the 3d tee if you roll up solo and he knows 2 of your buds are out there.  (Or belonging to a place of worship, bowling league or Moose Lodge.)
When it comes to paying for just what you use, and “no frills,” etc., the US courses that are held out as models are usually remote and inaccessible without significant disposable income.  In most major metros, I think there are perfectly serviceable – if not “architecturally significant” – private clubs where annual dues are less than or comparable to a trip to Bandon.  Has the Instagram effect has contributed to millennial decisions to forego one for the other? 
I hear a millennial desire for “pure golf,” “no frills” and “golf as it was meant to be."  And yet the millennial influencers on golf social media are cross-marketing $250 ostrich skin yardage book covers, $1100 walking bags and $100 polos that “capture an aristocratic bohemian aesthetic with colors and fabric naturally aged by the ocean.”  Something about that seems off to me. But I'm coming up hard on 60.

[Tim Gavrich]

Tim –
I think it’s more apt to say that if you’re just computing cost per round, the math is rarely going to favor the private US club.  Yes, the difference is intangible, and the intangibles vary from club to club, muckety-muck club at one end, and then all the way down.  But (most) comments on this site lean strongly to the value in camaraderie, not status or exclusion.  And the ability to walk.
I think it is a millennial misconception that you are already linked in meaningful communities for free.  A golf affinity group on social media is different from a divot-filling night, Tuesday night league or Ryder Cup style tournament at a club.  Or a pro who will drive you out to the 3d tee if you roll up solo and he knows 2 of your buds are out there.  (Or belonging to a place of worship, bowling league or Moose Lodge.)
When it comes to paying for just what you use, and “no frills,” etc., the US courses that are held out as models are usually remote and inaccessible without significant disposable income.  In most major metros, I think there are perfectly serviceable – if not “architecturally significant” – private clubs where annual dues are less than or comparable to a trip to Bandon.  Has the Instagram effect has contributed to millennial decisions to forego one for the other? 
I hear a millennial desire for “pure golf,” “no frills” and “golf as it was meant to be."  And yet the millennial influencers on golf social media are cross-marketing $250 ostrich skin yardage book covers, $1100 walking bags and $100 polos that “capture an aristocratic bohemian aesthetic with colors and fabric naturally aged by the ocean.”  Something about that seems off to me. But I'm coming up hard on 60.

Bernie--


Your last paragraph is pure gold! Without calling out any person or entity specifically, I share your bemusement at the interesting juxtaposition of the premium leather walking golf bag and a $30-green-fee golf course. It's definitely an emerging aesthetic!


I would caution against assigning too much significance to the influencer aesthetic, because the understandable association of social media success with highfalutin lifestyles and experiences is a) more aspirational than realistic, and b) partially an act, a curated best self, and one which I believe the younger generations will get increasingly savvy at sussing out (fingers crossed). I work in golf media and so feel obligated to have a social media presence, one where I try to avoid indulging too much in this dynamic, though I think results are mixed so far. It's a tricky landscape to navigate!


Re: your "millennial misconception" line, you may well be right, but nevertheless I believe the differences in the ways younger generations communicate and relate has rendered the formality of community that private clubs offer somewhat outdated.


One problem country clubs need to solve, especially with younger generations, is to make their hangout spaces somehow preferable to individual members' own homes. My guess is that today's average 30 year old's dwelling is, on average, nicer than that of a 30 year old 30 years ago. But country clubs are lagging behind in their efforts to modernize. The casual dining/drinking spaces are a step in the right direction, but it has to be more about the people and the "vibe," which means different things to different people.


Golf and country clubs have not exactly been a bastion of creative thinking in the past. That used to be something of a feature, but now it's definitely a bug.

[Bernie Bell]

Also, 120+ posts in this thread on "private golf at a crossroads" without a mention of women golfers, millennial or otherwise.

[Daryl David]

My guess is that today's average 30 year old's dwelling is, on average, nicer than that of a 30 year old 30 years ago.


These 30 year old's parents must have some really nice basements. 

[Kalen Braley]

I think Tim makes a good point.

30 years ago.  Cable was still relatively new.  No Internet and No Cell Phones for the other 99%.  PCs were still pretty rudimentary and only interesting to the geeks and kids. No gaming consoles or cell phone games. No wi-fi...

 What else was a 30 year old gonna do with his time?  Sit at home and stare at the walls and read a book or get out of the house and go do something?