How will your club survive in 2010?

[Carl Nichols]

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:

Mike-

I am 38 and like you, my wife works 60 hours a week we have two small children and a DC mortgage.  That equation leaves no time and certainly no money to join a private club.  I would really love to join the club 2 miles from house, Kenwood Club.  The course is short but decent and the facilities are really top notch (clubhouse, tennis, indoor tennis, pools, etc etc).  But even in the new world we are living in it is still (I looked yesterday) $64,000 initiation fee and $500 a month.  I suppose I could in a bizarre math way figure out how to justify the $500 a month, but where do people get $64,000 liquid laying around to join a club???  I obviously took the wrong turn at Albuquerque!

And that whole discussion was about a FAMILY club where I can justify and absorb the cost over 4 family members.  Joining a private golf only club is a laughable proposition until my kids are in/out of college.  I do have my eye on one particular place for that though 

Chip

Chip:
Do you have a sense of how Kenwood is doing these days?  It's obviously in a great location and has great facilities, but given that it's competing with places with better ranked golf courses, it wouldn't surprise me if the club was struggling a little.  Perhaps not, given the figures you cite.
Carl

[JMEvensky]

So the bottom line is that while golf is clearly the most important part of the club to me (and, I guess, my family), there's no way I/we would've joined if it was golf only -- at least for a cost somewhere around current club costs.

Mucci will probably call you insane or an alien from another planet--and in several different colors.

[Dan Boerger]

I would also not have joined my club if it were golf only.

[Richard Choi]

My family recently joined a local tennis club (a pretty fancy one for my area). The initiation fees were $3,000 and we pay about $170 per month for the whole family, but between lessons and what not, we probably spend $400/month. But it is worth it as the whole family goes that at least 2 to 3 times a week.

Compare that to $10,000~$50,000 initiation and $500 to $700 per month dues for joing a local golf club. I probably will only go there on weekends and not during winter months. My family as a whole will probably only go once or twice a week, if that.

That is not a fight I can win with my wife...

[Roger Wolfe]

My family recently joined a local tennis club (a pretty fancy one for my area). The initiation fees were $3,000 and we pay about $170 per month for the whole family, but between lessons and what not, we probably spend $400/month. But it is worth it as the whole family goes that at least 2 to 3 times a week.

Compare that to $10,000~$50,000 initiation and $500 to $700 per month dues for joing a local golf club. I probably will only go there on weekends and not during winter months. My family as a whole will probably only go once or twice a week, if that.

That is not a fight I can win with my wife...

Good points Richard,

If the tennis club stopped replacing the nets and let their playing surfaces deteriorate, would you still be a member?

If membership dropped 20% due to a recession would you rather pay $270 per month for the same club... or would
you rather pay the same $170 per month and have them cut out the non-tennis BS (snack bar, pro shop, fancy
tennis pro, towels, etc...).

If you lost your job but could still play tennis down the street for free and pay a pro for occasional lessons, would you
still be a member? 

I think these types of questions is what we are talking about on this topic.  I agree with a lot of folks who say a pure "Golf Club" is a tough sell to a family; however, "Golf Club" with swimming pool, bar, nformal picnics and bbq's is a different animal.  I thiink Pat is saying that you should tone down the DINING but keep the other amenities even if it is just a swimming pool with one lifeguard.  The kids (and the family for that matter) don't want to eat... they want to PLAY.

[Carl Johnson]

We focused on the amenities that we know our members want and that we can do the best job providing:  1) a wonderful practice facility 2) a wonderfully designed golf course 3) excellent playing conditions... focusing on areas "in play" 4) an uncrowded, fun swimming pool close to downtown 5) a golfer oriented, casual F&B service with friendly waitstaff, great comfort food and cold drinks 5) informal, family oriented events like picnics, holiday brunches, an oyster roast, etc....

Items 1-5 are thoroughly enjoyed and used by 93% of our members (to be exact).  We had to eliminate a lot of the other 7%.  With 10% fewer full members, this enabled us to significantly reduce the expected dues increase AND cut the dreaded F&B minimum in half.  Tough decisions, but these are tough times!

Implicit in the "cut-the-dreaded-F&B-minimum-in-half" is that we cut out what some referred to (both tongue-in-cheek and seriously) as "fine dining" with the intent of cutting our "losses" on food service.  I hope that we'll have to do little more cutting.  From my perspective, we, and we are not alone, need to work on pro-actively (a word I detest) providing a great golf experience for as many members as we can.  The borderline members, from a user standpoint, need to be brought more fully into the picture.  These are the members we'll be most likely to lose in tight times.

[Steve Salmen]

Someone earlier posted about GB players that used to play almost all of their golf at their home club.  Has golf travel increases a lot over the years?  I believe it has.  This alone makes joining a private club less justifiable.  Why pay a lot of money for something you aren't going to uses as much?

Also, with the accessibility of information such as GCA and golf course rankings, the desire to play all the great courses increases.  This again takes away time from the home club and costs money for travel and accommodations.

There was also discussion of the different models between GB/AU vs. USA.  Sure, there differences in the ways the revenues are treated differently by the tax authorities.  The ironic thing is that we are less class conscious in the US but are more exclusive and exclusionary when it comes to our golf clubs, ie. we don't need your green fee, our members sustain our club.

Because of the short golf season and my travel, I dropped membership at my home club of four years.  I saved about $10,000.  My annual dues for four overseas clubs is $1495, and I played over 200 rounds at them last year.  There is a good chance that I will not be able to financially justify all these for the rest of my life. 

[Patrick_Mucci]

So the bottom line is that while golf is clearly the most important part of the club to me (and, I guess, my family), there's no way I/we would've joined if it was golf only -- at least for a cost somewhere around current club costs.

Mucci will probably call you insane or an alien from another planet--and in several different colors.

No, I think you've stated that quite well.

What you and many seem to forget is the most important factor, RETAINING existing members.

If you don't cut costly services the existing members won't be able to afford to continue at the club, especially as more and more members reach retirement age.

As each member leaves, his share of the costs are borne by the remaining members, making the club more and more expensive and unattractive to existing and prospective members.

Thus, the club begins a financial death spiral

Clubs that DON"T make the difficult adjustments will perish

Clubs can no longer be all things to all people, those days are over.
Clubs must streamline services and reduce costs or suffer the consequences

[David Lott]

why don't you charge the curling members  the necessary fees to cover their expenses?

Because you would have to do the same with the golf members?

[Jeff Goldman]

I'm sorry, but I reject the idea that one formula is the solution for every club.  Each club needs to analyze its particular situation based on what kind of club it is, what its members want and are willing to pay for, what are usage patterns over the years, whether certain trends are temporary or permanent, etc. etc. etc.  It can be a pretty complex process.

In the Chicago area, there are a number of what I would call "local" clubs, where much of the membership lives very nearby, and that do tremendous F/B business, including dinner (think Butterfield CC, for example, or Ruth Lake).  For them, it seems that a big part of the club is the social and community aspect that comes from activities "in the clubhouse."  Other clubs are true family country clubs where the membership seems to insist on and is willing to pay for nice pool/tennis facilities, other amenities.  Pool and Tennis are very expensive and generate tiny amounts of revenue, but may be necessary to encourage families to join, or help seal the deal so that the golfer (usually the husband) can get the ok to join.  Still other clubs have sufficient prestige to attract significant guest fee revenue that holds down member costs (think Medinah, Butler, Olympia), while still others are often "2nd clubs" that offer few services beyond golf and lunch (Blacksheep).  Still others are relatively lower-tier clubs that try to survive on minimal costs and services, low initiation fees, which can attract more transient members who might bail when any proposal is made that might cost money.  I think by the end there were a lot of members at Ravisloe like that, along with the core of traditional members trying to keep the club alive.  

One "housing development" club I know of spent a bundle on a new clubhouse, often a recipe for disaster, but in this case it seems to have been a success because most of the members live very close by, and there are few good restaurants etc nearby, and so there is a demand for more facilities and better dining and banquet facilities.  Most of the time I cringe when I hear about a plan to redo a clubhouse, but this one seems to have worked because of the particular circumstances of the membership.  To say that each of these clubs should adopt the same formula for success or survival seems to me ridiculous. (during our golf course project, one member said fairly loudly that "all bunkers should have 2 foot lips!  Same difference).  

[Jason Hines]

Jeff,
You make a very good point, I think every club solution or outcome will be different.  My club 25 miles away is actually gaining members and their plan is to take over the public 18 across the road to become a 36 hole private facility.  They have a low to no debt and have lowered the dues to be aggressive and I do believe that effort has slowed but still gaining.  The club is also in a city of 100k and only has one private competitor club and only one other 18 hole public competitor.  There is a large university in the town which I believe is why we have a large social membership for dinning and swimming.  I do not know the finances of the dining, but I can tell you my food minimum has gone up and up.
Here in KC metro area you can choose from anything, a pure golf club with a grill that only serves breakfast and lunch, very large % of the club walks and it is very expensive to join.  We still have the “landed gentry” clubs that will survive the storm, newer clubs struggling to stay private or have given up the quest to fully go private.  The club that is the closest proximity to my house and is technically in my neighborhood, lowered their initiation by 80%, but raised other fees and charges for carts (you almost need a repelling rope to walk the course) where the dues hover around $1k per month.
IMHO, things are going to change, and the middle tier private club trying to be everything to everyone will be gone.  I don’t see how that changes when their memberships were disappearing even when times were good.
My family has decided that this will be something we belong to for golf.  I am 39, two young sons, travel 50% or greater for work and a wife that will soon be returning to the work force.  To me, the private club here in the States is where I get to spend time with my sons.  On a Saturday afternoon the course is quiet and even when you do run into members, they get why you are there teaching your sons about the game.  Even though at 4-2, sometimes they would rather be making snow angels in the bunkers or throwing balls out of my bag into the hazard etc.
I used to think that the hardest part of joining a club will be giving up the variety of courses.  I honestly don’t miss that at all.  I need a 3.5 hour round or less and a place where you wave at the starter and march to the first tee.

[Mike Sweeney]

Still others are relatively lower-tier clubs that try to survive on minimal costs and services, low initiation fees, which can attract more transient members who might bail when any proposal is made that might cost money.  I think by the end there were a lot of members at Ravisloe like that, along with the core of traditional members trying to keep the club alive.  

Jeff,

Like most longer threads on GCA, we tend to evolve into how to solve the world's problems.  

I think Ravisloe is probably what Patrick is really talking about. IMO, Olympia and Medinah and a few others are excluded from this conversation by sitting at the top of the food chain.

The question is how do you prevent Ravisloe and others like it from turning into The Knoll (former private club, now town owned Raynor, now restored as best as possible by Uncle George Bahto)?

Pat is probably channeling his former club which has a very good golf course. Along the years, especially the good ones, a pool gets built, then a clubhouse extension, then some tennis courts, and finally some paddle. Problem is those facilities are not nearlly as good as local restaurants, a local pool club ....... Members use them less and less, the overhead stays.

Now what?

There is one course in Westchester that sits in this category. Great course, neighborhood has changed, huge huge overhead with the clubhouse. The heating bill scares me and I have no idea what it is. I would love to see it have one of the mysterious "fires" from the 60's (see Fishers Island!) where the elephant of a clubhouse burns down on a cold January night like tonight and destroys the tennis pavilion and the courts. Replace with a small clubhouse for bagels and coffee in the morning and sandwiches in the afternoon. Drop the minimums. Keep the pool for my wife and kids. Give me the "B" membership since I never play on weekend mornings and I don't want to spend my life there, and I am done.

Of course, Yale will probably put in a pool first or I will probably get the call from National's membership committee before that happens so............. 

[Patrick_Mucci]

Jason Hines,

In discussing your club,you stated:

They have a low to no debt and have lowered the dues to be aggressive and I do believe that effort has slowed but still gaining.

[/b]

If revenues are $ 3,000,000 and expenses $ 3,000,000 or more, how do you lower dues ?

How will the excess of expenses over revenue be paid/accounted for ?

Expenses have been rising steadily over the last few decades, if members leave due to financial reasons, lowering revenue, how do you lower dues and recoup that lost revenue plus the revenue needed to meet escalating expenses ?

[Patrick_Mucci]

Jeff Goldman,

I didn't suggest one solution for every club, except for a basic principle, revenue must equal or exceed expenses.
If it doesn't, the club can't survive long without making adjustments.

As to certain clubs, I don't think the PV's, CPC's and Seminoles of the world feel the economic downturn nearly as much as local clubs.

My focus was on local clubs, not the icons of American golf.

[Jason Hines]

Jason Hines,

In discussing your club,you stated:

They have a low to no debt and have lowered the dues to be aggressive and I do believe that effort has slowed but still gaining.

[/b]

If revenues are $ 3,000,000 and expenses $ 3,000,000 or more, how do you lower dues ?

How will the excess of expenses over revenue be paid/accounted for ?

Expenses have been rising steadily over the last few decades, if members leave due to financial reasons, lowering revenue, how do you lower dues and recoup that lost revenue plus the revenue needed to meet escalating expenses ?

Hi Pat,

By adding 250 new golf members net in the last 2 years.  The club is comfortably in the black and has as strong swim membership as well, I believe the last time I looked, several hundred.

I am afraid however that their effort is beginning to stall and I would seriously doubt the could fully take over the public side.

J.

[Patrick_Mucci]

Jason,

250 net new members in two years is unprecedented, it's mind boggling.

Most clubs would be ecstatic with one tenth that number.

It's certainly not what's happening in general with local clubs

[Jason Hines]

I would agree, the club benefits from the small market as well as being in college town where there really isnt anywhere nice you can take someone to eat besides a pub.

I will correct my previous number, I went to the membership directory and there are approximately 200 new golf members and 50 swim and dinning members in the last two years.  I also counted that there in addition to the 600 golf members, there are now 350 swimming and Dining memberships as well.

In my three short years at this club, I have noticed that they are conservative but ample in their expenses.  I am worried about taking over the other 18, that could be a game changer.

J.

[Eric Strulowitz]

Thanks for the great response, a lot of good ideas here and food for thought.  I have had nothing but bad luck with golf clubs for most of my golfing career.  Wonder if anyone else has a hsitory like this, in a span of 15 years or so.

First, I was a member of Snapfinger Woods, in Decatur GA.  I loved that club, but it was sold and became known as Atlanta International, and also became public.  It soon went to hell.

Then I joined Southland CC in Stone Mountain.  It was a very hilly, tricked up layout, but the price was right.  Had some really neat holes.  Sadly, was not walkable.  After a few years, the neighborhood went down hill a bit and the course slipped in terms of maintainance and eventually it too became public.  It has really went downhill since, it was once a great layout.

And then I joined Canterbury in Marrieta.  That was my longest stay with a club, about 8 years or so.   The member/owners decided to sell the club to a developer, and it closed thereafter.   The people there were really great.  We had a deck overlooking the 18th hole, and that was a major spot to hang out after a round.  There was many a night they would keep it open till the last member left.  That is what I remember most about Canterbury.

And now I have been with Pinetree CC in Kennesaw for several years.  We are coming off a major renovation by Bill Bergin.  Bill did a great job.  It is a great club, a very hard working, customer oriented  staff,  and a layout that will challenge the best of the best.  We have lost members sadly.  And more than a few.  I sure hope we can survive, I would love to call this club home for many years.  We have some very proactive people running this club with a lot of great ideas, I have great faith in them.  But the economy is what it is, and I just cannot see many people these days willing to put down a sizable intiitation fee or commit to dues over $400/month, it is a tough sell.

The  best to all of you and your clubs in 2010!

[Mark Chaplin]

This thread proves that every club has it's own requirements, if you belong to a member owned club you have the opportunity to ensure your money isn't wasted through your vote.

If members want and use high end catering and it washes it's feet financially then there is no issue with it. The problem comes when a static or shrinking golf membership is expected to keep swimming, dining, curling, tennis, etc afloat and the golfers have little or no say in what is happening.

Jeff - OFCC has already cut it's cloth, I remember hearing in the old days each alley in the locker room had it's own attendant!

[Steve Pozaric]

A lot of good points made by all here.  Last year, we challenged management to really look into cost control, but wages and other costs and that really made a difference.  This year, we are looking at a lot of different incentives for new members (group discounts, "free looks" - minimal initial down, pay dues and if decide to stay, pay the initiation fee later), reaching out to adjoining neighborhoods, etc.  (if anyone has other thoughts on these, I would appreciate input)

Our biggest hurdle this year is that we are planning to gas and regrass our greens come fall.  With the pending elimination of methyl bromide and a lot of poa in our greens, we decided we needed to take this step.  The fact that almost all of our peer clubs have done it makes it a competitive necessity.  Fortuitously, the local sewer district will initiate a project going through our course at the same time, so it makes the choice easier.

On the social side, I am hoping we have more family friendly events, such as pool movie nights as others have suggested.

[Paul Stephenson]

So the bottom line is that while golf is clearly the most important part of the club to me (and, I guess, my family), there's no way I/we would've joined if it was golf only -- at least for a cost somewhere around current club costs.

Mucci will probably call you insane or an alien from another planet--and in several different colors.

No, I think you've stated that quite well.

What you and many seem to forget is the most important factor, RETAINING existing members.

If you don't cut costly services the existing members won't be able to afford to continue at the club, especially as more and more members reach retirement age.

As each member leaves, his share of the costs are borne by the remaining members, making the club more and more expensive and unattractive to existing and prospective members.

Thus, the club begins a financial death spiral

Clubs that DON"T make the difficult adjustments will perish

Clubs can no longer be all things to all people, those days are over.
Clubs must streamline services and reduce costs or suffer the consequences

Pat,

Do you take your message on the road?  I have a board that needs to listen to you.  Sadly we have just lost 4 couples who resigned their memberships.  All four couple had been members of the club for 24 years or more.

Of course with the financials of our club we couldn't afford to pay you for your talk 

[Patrick_Mucci]

Paul,

I think many clubs, like many people and businesses, got caught up in an improving economy that they thought would never end.

I witnessed the results of the "desire to please everyone" syndrome leading up to the "reversal of fortune"

My father's generation went through the Great Depression, they experienced Bad Times.

I once asked my father why he continued to work and worry.
He said because he didn't want to starve again.  He didn't want to have to eat out of garbage cans and worry about where he would sleep or get his next meal.

That mentality, based on experiences in his early life, followed him through his adult life.
Those experiences served as a governor/regulator on spending, borrowing and saving.
His generation, his peers, tended to view financial commitments through a spectrum of caution.

As America distanced itself, generationally, from the Great Depression, the younger generation never knew hard times, or thought that the good times would come crashing down.  Hence, they lost their fiscal disciplines and expanded everything in sight.

Club after club redecorated and/or remodeled their club house, expanded their services, and then expanded their clubhouse again to keep up with the expanded services, all the time, incurring debt and/or assessing the members.  Dues kept going up and up and up as the expanded services cost more and more and more.  But, there was a fresh line of new members whose initiation fees and dues offset the increasing costs.

But, when the flow of new members in the pipeline came to a trickle, financial pressure and reality reared their ugly head and few clubs were prepared for hard times.

Now, the great debate started.
Some felt that the solution was in attracting more members while maintaining services.
Some felt that belt tightenting, reducing those expanded services in order to cut costs was necessary.
Others felt that both were needed.
Still others thought that they'd rather pay more, lose more members and have an eite club.

One thing seems apparent, new members aren't so easy to find. 
Clubs that ignore retention of their existing members are in for a rude awakening

There's nothing wrong with elasticity, in club services.
When times are good, spend to provide desired services, while also funding for capital needs and reserves.
When times are bad, cut back to retain membership.

Is it the Chicken Salad or the golf course that attracts and retains members ?

[J_ Crisham]

Paul,

I think many clubs, like many people and businesses, got caught up in an improving economy that they thought would never end.

I witnessed the results of the "desire to please everyone" syndrome leading up to the "reversal of fortune"

My father's generation went through the Great Depression, they experienced Bad Times.

I once asked my father why he continued to work and worry.
He said because he didn't want to starve again.  He didn't want to have to eat out of garbage cans and worry about where he would sleep or get his next meal.

That mentality, based on experiences in his early life, followed him through his adult life.
Those experiences served as a governor/regulator on spending, borrowing and saving.
His generation, his peers, tended to view financial commitments through a spectrum of caution.

As America distanced itself, generationally, from the Great Depression, the younger generation never knew hard times, or thought that the good times would come crashing down.  Hence, they lost their fiscal disciplines and expanded everything in sight.

Club after club redecorated and/or remodeled their club house, expanded their services, and then expanded their clubhouse again to keep up with the expanded services, all the time, incurring debt and/or assessing the members.  Dues kept going up and up and up as the expanded services cost more and more and more.  But, there was a fresh line of new members whose initiation fees and dues offset the increasing costs.

But, when the flow of new members in the pipeline came to a trickle, financial pressure and reality reared their ugly head and few clubs were prepared for hard times.

Now, the great debate started.
Some felt that the solution was in attracting more members while maintaining services.
Some felt that belt tightenting, reducing those expanded services in order to cut costs was necessary.
Others felt that both were needed.
Still others thought that they'd rather pay more, lose more members and have an eite club.

One thing seems apparent, new members aren't so easy to find. 
Clubs that ignore retention of their existing members are in for a rude awakening

There's nothing wrong with elasticity, in club services.
When times are good, spend to provide desired services, while also funding for capital needs and reserves.
When times are bad, cut back to retain membership.

Is it the Chicken Salad or the golf course that attracts and retains members ?

Pat,  This is  a nice post-the younger people in this counry, myself included, are fortunate to have not tried to raise a family in a depression, fight a World War etc. This past weekend I attended a funeral for one of my old timer patients who fought in Europe, was twice wounded.As they say America's greatest generation is all but gone. American's need to live within their means and cut up the credit cards. We also need to keep our clubs well capitalized,you never know where the next new members/initiation fees willl come from. I agree that this is going to be a tough time as clubs try to entice new members to join.          Jack

[Bill_McBride]

We Vietnam vets get no love?

[Patrick_Mucci]

Jack,

For as long as I was on finance committees and Boards, I always fought against putting clubs in debt.
I think it's risky.

I've always believed in "pay as you go" and to NOT bet on the come when dealing with club finances.

So many clubs incurred debt and projected repayment based on a certain membership count.
But, when times got bad and members left, fewer members had to carry the load, which got proportionately more expensive, causing more members to leave, leading to a financial/membership death spiral.

I don't think there will be a return to a pre 2007 club environment for some time, if ever.

With projected deficits and increased taxes, disposable income will be restricted.
If clubs don't trim their sails and become leaner, more efficient, I don't see them surviving.

At one time there was an abundant pool of prospective members.
That pool has dried up.

Bill,

Every generation seems to have their own wars, but, since 1946 America has enjoyed great prosperity, at almost every level.
I think that progression has come to an end.
I don't see the next generation doing better than their parents, which was a pattern in America for some time.

Clubs that aren't realistic, clubs that don't get efficient will have a hard time surviving.

The prospective membership pool has shrunk considerably, and it may continue shriking, especially with the debt and taxes the next generation will face