How will your club survive in 2010?

[Eric Strulowitz]

I hear of so many clubs closing in 2009 and more already forecast in 2010.

Is your club in jeopardy in 2010?  If yes, what measures are being taken to cut costs or entice new members?

My club, the membership is down quite a bit.  We have cut costs and services, they have done a great job of that.  But attracting new members, that is very hard.  Committing to dues over $400/month is tough, when so many can barely pay their mortgages these days. They are trying new programs to entice members, just wonder how successful it will be.  Seems like no one is willing to pay out an intitiation fee these days, especially with so many clubs closing.  An intitiation fee, with all the uncertainty, could be just "money out the window".

I love my club, hope it survives.  But unless things get better, the concept of private golf eventually might become something reserved once again for just a very small elite group.

[Ryan Admussen]

Iniation fees and annual dues at the majority of the clubs in Calgary keep rising steadily unfortunately 

[Mike Sweeney]

A couple of ideas and thoughts:

1. The Connecticut Golf Association started a Players Club. There are a bunch of rules and restrictions but it is a way for golfers to see private and some public courses in CT that are obviously looking for members: http://www.csgalinks.org/tournaments/2010/Players_Club/2010_Players_Club.asp

2. I belong to the Cornell Club in NYC where we have playing privileges at two private golf clubs locally. Obviously they are not National or Winged Foot, but one is GCA approved and the other has hosted a number of pro events.

3. Get your club to host private golfing societies. There are many big clubs doing it in NYC today: http://sgagolf.net/course.html

4. Eliminate the long interview process. Who has time? Your general manager or pro should be able to sniff out the bad guys quick enough  and you toss them out.

5. Pricing models - We are a modern family. Working Mom and Dad, kids in school with lots of weekend activities and vacations..... Don't make me fall in love with the place where I HAVE to go there to get my money's worth. It is rare for me to play on a weekend morning which is the #1 reason many people around NY join a club.....to get out on a Saturday AM. Create some different models to get people in the door. If you have a good product, they will spend more money. See baseball stadiums and amusement parks, how much other revenue do they pick up?

6. Pick a social/playing model. Don't try to be everything to everyone. If you are a family club, you better support my Autistic son when he rides a cart with me. If you are a golfers club, make it clear he is not welcome during busy times. That's okay, I won't bring him and the club will be my escape.

Obviously the top 10-20% of private clubs are immune to most of the above. My suggestions are for the other 80%.

Reality is most of it, private and public, comes down to pricing in this environment. I played last year at Deltona near Orlando late in the day with my son riding with me for something like $45. It was very empty as the club was still early in its opening. This year I went back and it was $22 to ride in a cart with my son after 2:00 during the holiday week. Place was packed, and sadly I probably won't go back because it is a very fun course but it was better for me to pay more and have an emptier course at Sugarloaf.

[Brent Hutto]

I'm not involved in governance at our club but so far we seem to be staying reasonably healthy by cutting back payroll and deferring expenses any way possible that doesn't kill the grass. Most of the clubs in our area are in much worse shape than we are (especially the ones tied in any way to real estate) and we continue to gain a steady trickle of new members each month. Our initiation fees have always been modest compared to those in larger metro areas but during the current wintry economic climate they are lower than normal.

In the short term, I can't imagine things are going to be helped by the brutal (by South Carolina standards) winter weather so far. Way more days than normal when nobody shows up to play golf.

[Mark Chaplin]

Cut costs wherever possible, do you need valet parking, 5 staff in the formal dining room with 3 couples dining and 5 staff on the first tee/range??

Form relationships with other clubs in the area. Grant a daily tee time to the partner club for reciprocal golf between the two memberships. This is a zero cost way of adding value for your members.

Seriously look at the UK model of membership and access, you pay between 5-20x the amount to play member golf than we do.

Look at compulsory caddies - another $2500+pa on a weekly game

[Adrian_Stiff]

In the UK (bristol) we have just gone 77 days with probably only 7 of those nice for golf. It was -5 today, 3 people played, sorry went for a walk. The forecast weather wise is for things to get worse over the next week and the forecast for the economic future is not good for the year either. Most private clubs are doing green fee deals at say £15 for a round and a meal, better deals than what a member gets, members leave because the pay as you go options are better. Its a nasty spiral. The goverments reaction to heping business' and therefore saving jobs is to hike up business rates and put  VAT tax up. Well done.

[Tim Nugent]

Those are some good observations.  Clubs are more than a golf course, they are a multi-million dollar business.   Hopefully, this periiod will enable clubs to do what businesses have done, evaluate the entire structure/business model and make changes accordingly to become a leaner and better club.  Money losing departments can no lnger be propped up.  If fine dining is only used when members have to "spend" their  monthly minimums - it may not be as desired as management thinks.

 I think many clubs got used to being able to keep dues low with a combination of high initiation fees and selling the course for corporate outings.  Now that both of these income streams have dried up, clubs are being forced to live within their own means.  This means either raise dues or cut services/expenses to survive.  Sad, but true, many lower or fixed income members may be forced out.  But if they can't afford higher dues, odds are they weren't spending any extra money at the club and would be the ones vocally opposing any capital improvement assessment.  I have found that clubs that go the "cut spending"  end up in a death-spiral.  And this is in a normal economy.  In a stressed economy, I would expect things to be magnified.  You may find it harder to bring in new members if things appear "thread-bare".  Additionally, you might even start to see an exodus by more affluent members who can now move up to more stable clubs.  Or "see the hand-writing on the wall" and want to get out while they still can.  These are the members management should be catering to.  They are the life blood to any club.  So, you may find a slimmed-down membership may also be a healthier one.

Adrain - what, that Global Warming thing not working out for you yet?  Well, it isn't any warmer here in Chi-town.  And what good is that VAT thing anyway?  It would just make me NOT spend money.  Well our Slaes Tax is fast approaching VAT rates.  In fact I just did an estimate today where, for the first time, I put a line item in for Sales Tax.  Ended up tacking on 3.4% to the tally.

When there is just a finite amount of funds to be spent, the more going to the Gov. is less being spent on things that actually employ people (voters).

[Adrian_Stiff]

The only real solution is the saddest one. Cut Labour. You have to look at how one person could do two persons job, with downturn there is less buisness which equals less work, some areas just cant justify a full position. Everyone in the UK this year has pretty much got in trenches and helped by not having pay rises, but they are talking about VAT going to 20% and one of the partys talk of a 60% tax band for the very high paid.

[Will MacEwen]

I like Mike Sweeney's post.

I am a member at a public course.  This year they are offering more levels of membership.  I chose one that doesn't include weekend mornings - I pay $25 for those times a la carte (not cart).  I only play those times once or twice per year, so this saves me $500.

I'm not sure that these new memberships will attract people, but they may retain them.

Sadly, I think another adjustment clubs will make is fewer professionals on staff.  People in the proshops will not be certified pros, but retail clerks. 

[Mark Chaplin]

I am not advocating private clubs run on shoestrings, but if you go to Starbucks or McDonalds you will not see staff standing around wth little or nothing to do. But I've been to golf clubs where 4 different waitresses deliver sandwiches to the bar when one could easily bring up a plate every 5-10 minutes. Staffing levels should reflect demand, they do in industry.

The fine dining room is great if the club has that culture, but if it's used to finish up monthlies then your only paying it to keep the staff employed and say you have fine dining. Perfect chicken and egg situation.

I've been to clubs where members are paying $10000pa and more yet each visit costs at least another $100 by the time you've paid the valet, shoeshine, starter and caddie. Tenable when things are going well but when times get hard it's very difficult to justify.

The vast majority of GB&I clubs charge between $1000-$1500 a year all in, you just pay for your food and drink AND clubs are open 364 days a year.

[Kevin Cahoon]

This is a timely thread as I am waiting for a membership meeting to begin to start discussing the marketing plan for my club. At a certain point the budgets can only be cut as most clubs have such large fixed costs and debts. We have pared our initiation fees as much as is prudent.

One of our tactics is to approach local non golf clubs to see if we can exchange membership lists. The hope is we will be able to attract members from these non golf clubs who understand the nature of a private club but may have be unaware of my clubs opportunities and attributes.

The UK model is really appealing but due to tax ramifications in the US it is not a real possibility for any club that is run as a not for profit 501 c 7.   

[Mark Chaplin]

Kevin,

What is defined as profit? Certainly very few clubs actually make a cash profit on our model. Most break even or make a very small profit which is invested in the club. Are we talking more about outside income as opposed to proper profit on the US tax model?

Mark

[Mike Sweeney]

The UK model is really appealing but due to tax ramifications in the US it is not a real possibility for any club that is run as a not for profit 501 c 7.  

Kevin,

I have no idea about the tax and legal implications but most of the private clubs in Maine and many other small New England clubs allow significant outside play. The most famous being Cape Arundel and Sankaty Head. Considering that the members of those two clubs include former Presidents and CEO's, I have to believe that they are IRS compliant. Maybe give them a call and see how they do it.

PS. Deane Beman former PGA head is a member at Webhannet in Maine and they have outside play too.

[paul cowley]

Those are some good observations.  Clubs are more than a golf course, they are a multi-million dollar business.   Hopefully, this periiod will enable clubs to do what businesses have done, evaluate the entire structure/business model and make changes accordingly to become a leaner and better club.  Money losing departments can no lnger be propped up.  If fine dining is only used when members have to "spend" their  monthly minimums - it may not be as desired as management thinks.

 I think many clubs got used to being able to keep dues low with a combination of high initiation fees and selling the course for corporate outings.  Now that both of these income streams have dried up, clubs are being forced to live within their own means.  This means either raise dues or cut services/expenses to survive.  Sad, but true, many lower or fixed income members may be forced out.  But if they can't afford higher dues, odds are they weren't spending any extra money at the club and would be the ones vocally opposing any capital improvement assessment.  I have found that clubs that go the "cut spending"  end up in a death-spiral.  And this is in a normal economy.  In a stressed economy, I would expect things to be magnified.  You may find it harder to bring in new members if things appear "thread-bare".  Additionally, you might even start to see an exodus by more affluent members who can now move up to more stable clubs.  Or "see the hand-writing on the wall" and want to get out while they still can.  These are the members management should be catering to.  They are the life blood to any club.  So, you may find a slimmed-down membership may also be a healthier one.

Adrain - what, that Global Warming thing not working out for you yet?  Well, it isn't any warmer here in Chi-town.  And what good is that VAT thing anyway?  It would just make me NOT spend money.  Well our Slaes Tax is fast approaching VAT rates.  In fact I just did an estimate today where, for the first time, I put a line item in for Sales Tax.  Ended up tacking on 3.4% to the tally.

When there is just a finite amount of funds to be spent, the more going to the Gov. is less being spent on things that actually employ people (voters).
[/quote



Good post tim....I agree.

[Kevin Cahoon]

Mark and Mike,

The tax issue is not simply tied to outside play. In order to be tax compliant less than 15% of a 501 c 7 club's total revenue can be derived from non member sources. At my club these non-member revenues include charity golf outings on Mondays (We have about 8-10 per year), banquets, weddings and meetings. In most recent fiscal years they have accounted for about 12.5% of our revenue. That leaves the club with little room for outside play.

The other issue with the UK model for many US club members is that club, in essence, is not truly private. By making the club accessible to the general public, somehow the value of ones membership is diminished. I do not hold that belief. I have argued with our board that one of the world's most exclusive clubs, Muirfield, allows visitor play on restricted days and times. I believe that in a city the size of Chicago with the ardent golfers who live here would enjoy access to any number of private courses and be happy to pay reasonable fee for that access. Outside play is also a way to showcase a club to potential members.



   

[Sean_A]

Mark and Mike,

The tax issue is not simply tied to outside play. In order to be tax compliant less than 15% of a 501 c 7 club's total revenue can be derived from non member sources. At my club these non-member revenues include charity golf outings on Mondays (We have about 8-10 per year), banquets, weddings and meetings. In most recent fiscal years they have accounted for about 12.5% of our revenue. That leaves the club with little room for outside play.

The other issue with the UK model for many US club members is that club, in essence, is not truly private. By making the club accessible to the general public, somehow the value of ones membership is diminished. I do not hold that belief. I have argued with our board that one of the world's most exclusive clubs, Muirfield, allows visitor play on restricted days and times. I believe that in a city the size of Chicago with the ardent golfers who live here would enjoy access to any number of private courses and be happy to pay reasonable fee for that access. Outside play is also a way to showcase a club to potential members.



   

Kevin

2.5% of total revenue is potentially quite a large amount of money not generated by the club.  This is exactly the sort of thing I would be looking for my club to exploit for the right green fee and likely akin to the Muirfield model (a model I have always admired). 

My main club doesn't seem o think there is a problem with the economy.  We have broken ground fora huge new reservoir and a new irrigation system - there goes our reserves! 

I suspect my other club will do what it always does - be frugal.  I trust and have always trusted that they will run things well.  To date, I believe this has been the case except for the stupid debacle with the 2nd green.  That was a major bonehead move.

Ciao

[Mike Sweeney]

Mark and Mike,

The tax issue is not simply tied to outside play. In order to be tax compliant less than 15% of a 501 c 7 club's total revenue can be derived from non member sources. At my club these non-member revenues include charity golf outings on Mondays (We have about 8-10 per year), banquets, weddings and meetings. In most recent fiscal years they have accounted for about 12.5% of our revenue. That leaves the club with little room for outside play.

The other issue with the UK model for many US club members is that club, in essence, is not truly private. By making the club accessible to the general public, somehow the value of ones membership is diminished. I do not hold that belief. I have argued with our board that one of the world's most exclusive clubs, Muirfield, allows visitor play on restricted days and times. I believe that in a city the size of Chicago with the ardent golfers who live here would enjoy access to any number of private courses and be happy to pay reasonable fee for that access. Outside play is also a way to showcase a club to potential members.
  

Kevin,

Without knowing you or the club, it sounds like a somewhat typical problem in the current era. The obvious question is when is this era going to end and what is the new normal on the other end?

The big question is what is the value of your tax-exempt status?

Right now I would assume that there is no surplus to be taxed so the answer is small for now in terms of taxes on profits. The next question is what would be the property taxes if you lost your status? I have heard that Yale Golf Course went through a tax problem with New Haven some years ago. Obviously Yale is the #1 employer in New Haven so they have some pull. While your club may not have this kind of pull, the local town does not want to close you down and put your employees on unemployment. Thus as an outsider looking in, it would seem like a worthy conversation.

Finally, the biggest hurdle for so many clubs is and will be the "private status" of the club from a perception rather than tax or compliance perspective. I once heard someone here say "they are all public, some are just more public than others"!! Again, I don't know your club but it seems like more clubs are going to go down in this era holding onto this privacy and status weight around them.

Last night I was at a well known private and eating club for a squash match that was historically a Jewish club and sits at the crossroads of Manhattan across from the club that was the historically a WASP club. I spoke to a Jewish friend later as the club was rather empty by 7:30 PM when we left. The Jewish and WASP clubs would be more than happy to have Sweeney's, Goldstein's or Tom Paul's as a member these days. Reality is I can join the publicly traded NY Sports Clubs that have over 100 facilities over the East Coast including Boston and Philly where we travel and I don't have to get a letter from my club to get in the club in Boston. I have a magic card key that works in all 100!

I love the intimacy of private clubs as much as most around here, but reality is the world is changing and private clubs should take a hard look at the City Athletic Clubs model that changed radically when NY Sports and similar gym started to open. My uncle was a member at the Downtown Athletic Club (Heisman Trophy) for years and 9/11 was the final blow to the club. If you are not Winged Foot, Garden City or one of the bulge bracket clubs, it seems like a time to take a look. Good luck.

PS. I am 47 years old, and I would be interested to hear the perspective of the younger guys here. It is my perspective that in the Facebook era, privacy and intimacy is not really valued by their generation. See below:

[JC Jones]

Wow, Mike, 47?  I would have never guessed anything other than 57

As a member of the younger generation, it isn't a lack of desire for the private club, it is the inability to join from a financial standpoint.  One of the by products of the last two bubbles is not only ridiculously high housing prices but also a ridiculously high number of people with money.  Therefore there is increased demand for the private club and private clubs set prices that aren't accessible for us in the younger generation.  Either that or clubs that were once private but didn't have full memberships, now have waiting lists.

You're right, however, that those times are changing.  I have recently heard of two golf clubs I'd like to join who have, relatively speaking, inexpensive initiations and dues.  So while that is starting to happen, many "equity" members of clubs aren't willing to have their club devalued with a bunch of non-equity junior members.

That being said, there is a great club here in Naples that is trying to lure junior members in.  They have an under 35 rate, its $40k to join.  That is their understanding of a discount.  I'm 30, I've got 3 kids, $40k is not a possibility nor is it a possibility for most in my age and circumstances (even the ones who were smart enough to not leave big firms to teach  )

Another issue, which is related, is not a lack of desire to join a private club so much as a desire to not be tied to one golf course.  Now, I think that is ridiculous because young professionals could have their professional life served by getting to know members of a club and spending a lot of time with them but there are several in my generation who want to play many golf courses, not just one and with the cost of the membership, there isn't much money left over to play any other course but the one you are a member of.

[Mike Sweeney]

I would be interested to hear the perspective of the younger guys here.

Anyone other than JC! 

JC,

See my email.

[JC Jones]

I would be interested to hear the perspective of the younger guys here.

Anyone other than JC! 

JC,

See my email.

Hey, don't hate me because I'm beautiful.

[Brent Hutto]

Hey, don't hate me because I'm beautiful.

Believe me, nobody hates you because you're beautiful.

[JC Jones]

Hey, don't hate me because I'm beautiful.

Believe me, nobody hates you because you're beautiful.

Are you still bitter about that putt on 16 at Camden?

[Brent Hutto]

Hey, don't hate me because I'm beautiful.

Believe me, nobody hates you because you're beautiful.

Are you still bitter about that putt on 16 at Camden?

No, not really. I've decided I'm bitter about my putt on 16 that stayed out. How could it not catch some lip and drop when that cup was obviously about 7" wide?

But honestly for me to complain about you chipping in on 16 (wasn't it from the fringe?) would have more weight if I had played worth a darn on 12-13-14-15. It's kind of like the Steelers saying they were kept out of the playoffs by Indy and Cincy "laying down" [sic] after they screwed the pooch three weeks in a row.

[JC Jones]

Hey, don't hate me because I'm beautiful.

Believe me, nobody hates you because you're beautiful.

Are you still bitter about that putt on 16 at Camden?

No, not really. I've decided I'm bitter about my putt on 16 that stayed out. How could it not catch some lip and drop when that cup was obviously about 7" wide?

But honestly for me to complain about you chipping in on 16 (wasn't it from the fringe?) would have more weight if I had played worth a darn on 12-13-14-15. It's kind of like the Steelers saying they were kept out of the playoffs by Indy and Cincy "laying down" [sic] after they screwed the pooch three weeks in a row.

The problem with your putt is that it didn't hit the same leaf that mine did

A most enjoyable match and I look forward to our next.

[Josh Stevens]

Cost is the key and that is a question of what you in the US expect from your club.  As has been mentioned, the US idea of what facilities a club should offer is very different to what is expected in the rest of the world.

We in Australia and the UK dont have valet parking, bag drops, shoe shiners, starters, caddies etc etc, other than at some resort courses - that sort of frippery is viewed as being all rather silly.  Many lovely old clubs in the UK operate out of clubhouses that in America would not be considered fit for human habitation.

Your cost base is too high - thats it.