[Dale Jackson]

Gentle Folk,

we are in an era similar to the 1930s (though hopefully much less severe), when courses are closing.

I wonder if anyone has some thoughts or examples of clubs then or now that were saved because of the quality of their courses.  I am thinking there must be a Darwinian aspect to this that involves "survival of the fittest".  The membership at some clubs may have been willing to go the extra mile to save a particularly good course, when other memberships would let a more mediocre course go.

Thoughts?

[Richard Choi]

Isn't it obvious that in tough times, only the best or well adapted will survive?

I think the better question is whether or not we will face the same kind decline in quality of architecture that we saw after the Great Depression that did not abate until the 80's and 90's.

If the same kind of decline occurs, how will it happen.

If we avoid that fate, how do we do it?

[Ken Moum]

Well, i play on a Ross that is in deep financial stress.

And it's easily the best course in town. But it gets no respect from anyone except geeks like me.

We only got a decent run of memberships when we dropped our food minimum, and lowered dues to $99 a month. We are up from about 250 members (less than 45 Stock members) to over 450 in a couple of months.

My wife and i are still paying stock dues that are about triple what the newbies are paying, and we have a bunch of "silver" members paying something in between. That's going to have to change be 2010, or there'll be an exodus.

The question remains, can we run a club on the $$$ produced by 450-500 members paying $1200 a year.

Others in the state do it, we should be able to.

Ken

[Adrian_Stiff]

I think it depends how you define best but I think some of the best courses may be early casualtys. Best usually equals expensive, but not always, some of big financial headaches will be seen at the more expensive situations wher as the £10 munis dont have so far too fall, and they may actually get more business as more can afford $10 than $100. Well established members will probably be okay, key points will be location, supply of courses within a 30 minute travel period. Factors such as price and quality will dictate who gets lots of rounds and who gets not so many. We have a local 'not bad' course doing 4 balls at £32 per 4 (£8 each) every afternoon monday-friday. It must cost a lot more than £8 per round to service, yet I still see clubs pumping out deals that will eventually seal their own fates and continually hear from these clubs that their members no longer see a reason to join.
Course quality is a factor but only if factored to a price, I think the big problems will fall in the over £60/ $100 courses I think their target market will shrink quite a bit, some high profile UK clubs are getting less than 10 rounds per day.

[Tom_Doak]

The courses that are most likely to fall are courses with DEBT or memberships that weren't already full.

That would include a bunch of new private clubs (even well-known ones discussed here), because most of them have never filled out their memberships.  It would also include a bunch of older clubs which foolishly borrowed to renovate their clubhouses in the last 4-5 years, thinking they could pay it off with the initiation fees of new members.

But it matters equally who owns the debt.  The local bank in a smaller city is not likely to foreclose on the local country club.  Some big national firms may be readily willing to swallow the loss as part of the bailout, and let the club refinance on more favorable terms.  Other lenders are going to be determined to hold the line.

[Dan Herrmann]

I'll add that the social aspect of a club is directly tied to its ability to survive.  Unless you're a PV type club, you need to adapt to today's culture.  Be family-oriented (let women and kids onto the course with few if any restrictions), let singles join with significant others, and don't burden members with crazy rules.

A club deserves to die if it's mired in the 1950's socially.

I also hate food mins.  I'd much rather the club drop the fancy food servce and cut out monthly/quarterly mins.  Fortunately, my club doesn't have mins for full golf members (the freight is paid for by social members who tend to do a lot of fine dining anyway).

I wrote the by-laws for my club, and they're extremely simple (which was really tough to do).  Pay on time, have fun, and play golf!

So - no, I don't think the quality of the course has a lot to do with it.

[Trey Stiles]

I think Tom nailed it ... A large Debt load is a huge ball and chain that influences every decision an operator makes ...  " How am I going to come up with $ 100,000 next month to make debt service ? "

I've had both little debt ( majority stockholder ) and big debt ( minority stockholder ) ... At the end of the day , the course with little debt is just not that great of a course , but it's positive cash flowed for 17 straight years .... The wonderful course with big debt never cash flowed.

[Sam Maryland]

20 years ago in a training program I heard an experienced guy refer to leverage/debt as "that's like trying to pick up a stick with shit on both ends of it"...

...his thought was to avoid at almost all costs.

The Ross Reno Thread the other day made me think about the subject, there were a few examples given in there where the corresponding costs were not factored in, something to think about.

[Trey Stiles]

20 years ago in a training program I heard an experienced guy refer to leverage/debt as "that's like trying to pick up a stick with shit on both ends of it"...
[b]Reminds me of a conversation with my lender on a fully leveraged deal in the heat of a refi .... He told me that he knew it was a good deal when everybody was pissed off at everybody .... What a way to live ( not )
[/b]
...his thought was to avoid at almost all costs
This has been my objective for almost 20 yrs on the course where I'm the majority stockholder ... I can't begin to tell you how many times people told me what an idiot I was because I did not fully leverage.

[Steve_ Shaffer]

I doubt that some private courses in the 1930s were "saved by the quality of their courses." Rather, they were saved by the quality of their members money. There are many examples of some members carrying their clubs through the Great Depression above and beyond paying just their own dues.

[Adam Clayman]

ANGC was all that came to my mind, but, it was likely a function of a well conected owner operator than to the quality of it's design. It's fairly obvious that the masses wouldn't know quality without further experience. Basing the price of entry on the quality of the golf course is a flawed mindset.

[W.H. Cosgrove]

While debt loads are crucial to the equation, I think the ability of management to react to the situation is most critical. 

A good friend of mine reminds me constantly that true change only begins with urgency.  My own club has been living on a shoestring for years.  With this new sense of urgency, we have been able to make adjustments on the fly that we would never have gotten by the membership in previous years.  Interest groups have been forced to give up on their own sacred cows and we have begun once again to grow with lower dues structures, more reactive maintenance plans, a more exciting web site and a commitment to improvement by members that simply was possible when we were a little fatter.  I wouldn't say we are out of the woods yet but we may be nearing a clearing. 

Our competition in town has been late to adjust and their membership rolls have been rapidly contracting. 

[Adrian_Stiff]

Debt is ofcourse a factor, but currently it is very cheap to borrow, many UK clubs will have borrowing at around 2.25% presently with rates as low as that it should not be the factor that decides the axe. However clubs that don't own their machinery or golf carts could have expensive borrowing. I think the biggest problem will be clubs dropping the fees and the neighbouring clubs drop theirs to compete in the marketplace, ultimately the profit margins will be reduced to near zero and clubs that go below zero will ultimately go to the axe if this economic situation continues for a lengthly period.
High debt levels and an interest rate change back to 'normal' levels coupled with squeezed margins is another scenario ofcourse.
Good membership levels are the key, but don't loose the key by making it more attractive not to be a member by cheap kiss me quick deals to attract visitors.

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