Golf Course versus Clubhouse

[Ira Fishman]

Regardless of the maximum increase in DS points a restoration can produce, is anyone aware of any market research on whether investing in the course or the clubhouse has a bigger bang for the dollar in terms of attracting new members or retaining existing ones? I have long asserted that so long as the clubhouse is already decent, an improved course is the better investment, but all of my evidence is anecdotal.


Thanks,


Ira

[Lou_Duran]

Being a negotiator, you know that there is "research" to support whatever your position is.  Common sense might tell you that there are way too many variables to answer the question definitively, but perhaps looking at what the professionals in the golf investments business are doing provides some useful insights.


Anecdotally, the universe of golfers who place half as much importance on golf architecture as the frequent DG participants here is pretty small.  That doesn't mean that these golfers don't value a well-conditioned golf course, challenge, attractive bunkers and water features, variety.  They just don't typically lose sleep over how far the ball travels, whether the routing is compact in 4.5 miles as opposed to 6.5 miles on good concrete cart paths, or if the greens and tees are not squared off to mimic construction of an early era.


Club Corp is really good at delivering what the retail golfer seems to want.  Its top officers have stated that they're in the entertainment business in which golf is an important part, but only one of several.  Consequently, when they acquire a club, they typically do put some money into the golf course, but much more into the clubhouse and other related amenities.  You will always find people who don't like this approach, but their clubs seem to have large, active memberships.


My home club is a good example in that it is located in an area of superior demographics with a good mix of affluent retirees and young families headed by well-educated parents with an affinity for competitive sports.  The course was built as a golf club with the infrastructure to support it (the developer was a member of Preston Trail, and though not a golfer, he liked the idea of a similar club further north to create residential development, but at an affordable price point).  If an operator like CC buys the club, I think it would put most of its money in expanding or rebuilding the clubhouse, putting in a pool, and maybe even acquiring land nearby for tennis.


Our course was rated in the top 20 in Texas in its first five years of existence.  It has good bones, but it suffers from considerable deferred maintenance.  My bet is that the owner would likely spend $3 or $4 to $1 on things other than the golf course, putting band-aids on the bunkers, irrigation, and green renovations it sorely needs to regain some of its lost glory.


   


   

[Ally Mcintosh]

I suspect the answer might be very different depending on which country you live in.

[Jeff_Brauer]

Ira,


No broad answers, but as a gca I usually am pretty loud about investing more in the golf course.  Why do they come to the facility?  To eat or golf?  So, I agree in general.


Some places, like the ones Lou is talking about have adopted a strategy or more activity, health club, tennis (and the new hot sport, Pickleball!) etc.


The old CCA (i.e., direct quote from Robert Dedman that I personally heard him say (so not urban legend) is that the quality of the clubhouse should equal the quality of the golf course and vice versa.  I can think of examples that break these rules and do well.


I think every facility should look at where there revenues come from and prioritize that.  Of course, auxiliary facilities require upkeep just to maintain status quo, and rational customers will probably use a nice facility, reasonably priced to eat, at least once in a while.


So, even in just America, it depends, LOL.

[Ian Mackenzie]

Great question. The answer is in Pandora’s box. Careful treading on that one.
Approach it from an economics standpoint.


What is the initiation and monthly dues at that club?
Will new members want to spend that much to enjoy clubhouse amenities or golf course excellence?


What are the “peer clubs” offering?
Is there a club that has excellent amenities WITHOUT a golf course and is it thriving?


However, unless your course has true pedigree to begin with, why would your membership even care...?...

[Ira Fishman]

I suspect the answer might be very different depending on which country you live in.

A very good point. My anecdotal observation also is that clubs are more willing to take on debt for the clubhouse than the course. Perhaps that reflects the return on investment or just the cultural bias toward physical structures.


Ira

[Duncan Cheslett]

Increasingly, golfers keep their clubs in the trunk of their car rather than in the club locker room. They arrive ten or twenty minutes before their tee time and head straight to the practice green rather than having some breakfast in the dining room.


After their round they might or might not have a quick beer or a cup of tea before heading home or to work. They might or might not take a leak - hardly anyone bothers having a shower.


Total interaction with the clubhouse - fifteen minutes at most in a bar containing maybe half a dozen other golfers each enjoying their fifteen minute beer or cup of tea before going home.


Social events at the golf club are attended generally by a dwindling number of older members who bemoan the passing of the “good old days” when everyone spent half their lives at the club getting pissed out of their heads before driving home to a grateful and accommodating wife.


The “good old days” ain’t coming back.


Rather than investing money in their oversized legacy clubhouses most clubs would be a lot better off renting them out to a professional hospitality operator and retaining a small members’ room, or even better selling the place off as a care home or wedding venue and building a small bar/restroom facility capable of accommodating a couple of dozen golfers after their round at most and a little pro shop-cum-office.


And before I get jumped on by members of elite clubs who refute the above, I am talking from a U.K. perspective and about the 90% of golf clubs, not the 10%.

[Thomas Dai]

Duncan makes a bunch of good UK related points above.
The course is the asset, the clubhouse essentially the financial drain.
atb

[JMEvensky]

In my limited experience, the justification for clubhouse spending versus the golf course was to keep the wives/children happy. The baseline premise was the golfers would put up with CapEx prioritized for "social" things if the entire club became more "valuable" to the entire family.


I disagreed with that theory then and still disagree with it--but I too have nothing but anecdotal evidence to back me up.

[Jeff_Brauer]

Increasingly, golfers keep their clubs in the trunk of their car rather than in the club locker room. They arrive ten or twenty minutes before their tee time and head straight to the practice green rather than having some breakfast in the dining room.


After their round they might or might not have a quick beer or a cup of tea before heading home or to work. They might or might not take a leak - hardly anyone bothers having a shower.


Total interaction with the clubhouse - fifteen minutes at most in a bar containing maybe half a dozen other golfers each enjoying their fifteen minute beer or cup of tea before going home.


Social events at the golf club are attended generally by a dwindling number of older members who bemoan the passing of the “good old days” when everyone spent half their lives at the club getting pissed out of their heads before driving home to a grateful and accommodating wife.


The “good old days” ain’t coming back.


Rather than investing money in their oversized legacy clubhouses most clubs would be a lot better off renting them out to a professional hospitality operator and retaining a small members’ room, or even better selling the place off as a care home or wedding venue and building a small bar/restroom facility capable of accommodating a couple of dozen golfers after their round at most and a little pro shop-cum-office.


And before I get jumped on by members of elite clubs who refute the above, I am talking from a U.K. perspective and about the 90% of golf clubs, not the 10%.

I fixed that for you for American courses.......


In general, I associate big clubhouses with loss of money.  A very few do well with F and B, and the most weddings I have seen hosted at one of my courses with a bigger clubhouse is 34 annually, with the average more like 3-4.  Both are separate businesses and both require slightly different demographics and competitive market reviews/studies to even attempt.


The most profitable outside events for clubhouses start with corporate outings and parties (mostly Xmas), because they have more money to spend, with weddings being about the least profitable type of event to host. (Because dear old dad is really, really, trying to hold costs down without spoiling the big day for his daughter.


Intriguing statistics I found in trying to dissuade a client from building a big clubhouse -


Average wedding size is down from 175 to 136.  His consultant wanted him to build for 250......which if he had, would have only given him a shot at 3 out of the 147 weddings in that county that year. The traditional wedding venue is losing out to destination weddings.  The biggest growth area is gay weddings, but it is always somewhat problematic to have drunk golfers anywhere near the special event, and I suspect gay weddings and drunk redneck golfers have a probability to be much worse in some areas of the country.


There are some success stories with clubhouses, certainly less than 10%.  With some space sharing a few times a year (which club members do object to losing their dining room, or whatever) many clubhouses are just over built.  If you have a big one (in Chicagoland, the Wheeling Park District took over the famed Chevy Chase Golf Course, and its huge clubhouse frequented by Capone and such.  With no debt on it, and the quintessential Chicago experience, they do a nice wedding visit.  Just a room won't draw files....


Sorry for the rant.  It's a pet peeve of mine.

[Jeff Schley]

For older courses that have were originally built with grand clubhouses such as Olympia Fields, the costs go to maintenance and restoration. By creating a separate non-profit historical society to preserve such registered national landmarks, such as Olympia Fields and others is a great way to go. The membership buys in to the tax deduction attractiveness while helping their club accomplish their preservation goals.
I think if properly preserved, the old grand clubhouses are an allure to members and their guests.

[SL_Solow]

I always ask the appropriate committees, "How many hamburgers do you think you would sell without the golf course?"  As Barney knows my club has a relatively small clubhouse, circa 1958 with a wonderful kitchen.  Competition from other clubs led us to build a paddle tennis facility.  But our area has multiple health clubs and restaurants.  So generally the golf course takes priority.  We don't ignore the rest of our facilities but we understand our priorities (at least most of the members do).