How much longer can the game of golf survive the business of golf?

[Mike_Young]

Most private clubs operate like the government.  They are led by the unknowing (which is understandable) and they float along doing what they wish and increase dues to compensate for expenses.  Developers and private business can't operate in such a manner yet most of the golf business has learned to thrive on the club environment and help justify it.  IMHO many clubs are reach a point of "I'm mad as hell and I'm not going to take it anymore" syndrome like many taxpayers.
What brought this rant on was realizing today that Taylormade was also contributing to the PGA Retirement program 6% of proshop sales just like Titleist.  And IMHO that is just wrong.

[Jim_Kennedy]

What could possibly be wrong with that?  

"Golf Retirement Plus is a retirement program for PGA Professionals and apprentices, GCSAA Superintendents and CMAA Club Managers, which allows them to make their own contributions or have their employers contribute to their Golf Retirement Plus account on their behalf. PGA Professionals may also earn personal incentives by participating in the Golf Retirement Plus Partner Programs."

It's a 100% aboveboard program.

[Mac Plumart]

How much longer can the game of golf survive the business of golf?


Too infinity and beyond.  Golf will be hear forever.

Anthony



 

[Tiger_Bernhardt]

Mike you are so right on the money. I see nothing but dues and minimum increases. Yet, the clubs are run like a government project with waste being the easiest thing to see. The increases are significant and far more then any number which can be compared to an inflation index.

[Mike_Young]

What could possibly be wrong with that?  

"Golf Retirement Plus is a retirement program for PGA Professionals and apprentices, GCSAA Superintendents and CMAA Club Managers, which allows them to make their own contributions or have their employers contribute to their Golf Retirement Plus account on their behalf. PGA Professionals may also earn personal incentives by participating in the Golf Retirement Plus Partner Programs."

It's a 100% aboveboard program.

Jim,
You are kidding right?

[Peter Pallotta]

The "club environment".  It brings to mind a 19th century club chair, all fine worn leather, speckled with cigar ashes and stained with scotch and water, and of an over-fed and self-satisfied generation luxuriating in the dim lights and chummy chatter of an artificial world. I'm not saying that describes today's clubs; but I have a suspicion that there's a fair percentage of folks who want to live that life  -- and the guys who run such places know it.

Peter

[Jim_Kennedy]

Mike,

No, I'm not. I think you're just on another of your winges and trying to lay off the blame for the downturn in the golf business on someone else. But don't worry, '11 was better than '10 and hopefully '12 will be better than '11. Pretty soon all will be normal once more, clubs that are smart will survive by constructing a model that fits their new reality, and all will be well in the world.  

It's been that way forever.

[Dean DiBerardino]

Mike:

Can you explain, in  more detail, why you have issues with TaylorMade, PGA Retirement Plus, and those who benefit from PGARP as it relates to the "business of golf"?

Thanks.

[Mike_Young]

Dean,
See if the below helps explain.

Jim,
I'm not on a winge and I don't really lay the blame for the downturn on anyone else.  I've actually done better with the downturn than some years before the downturn.  Anyway, here's my issue.  If the owner of a club had a purchasing agent and every time the purchasing agent purchased a product from particular companies, the purchasing agent had 6% of the purchase price placed in a retirement account for him.  What would that be called.  If you are a member of a club and every time you see clubs and other merchandise from the past year sitting on a sale rack from the last year or year before, but yet your golf pro just got a 6% retirement account contribution when he purchased these items, what would you say?
And now we have the Golf Now group trying to manipulate their way into the PGA endorsement.  
As an owner, why would I wish to purchase from companies whether, golf cars, turf products, golf balls or whatever when I know that they are contributing heavily to the various associations that are trying to be compensated by these same companies via my own employees when they make purchases for their employer's club.  AND if the owner/employer is not a member of PGA, GCSAA etc then he can't have the same 6%.
OH...I have no problem if they would reduce the pricing to people who are not members of the PGA, GCSAA etc.
Jim, think I'm bitching if you wish but I think these are legitimate issues that would not be tolerated in many businesses.  It has only worked in golf because the associations have manipulated the model to where the fox watches the hen house and the occupants of the hen house are afraid to call the fox on it.
Cheers,
Mike

[Jim_Kennedy]

Dave,
The club knows, and probably has no problem with the idea that the pro is getting a small contribution to a retirement plan that they don't have to make, if they're giving their pro one in the first place. The member may not, but just how much business do you think the pro is doing in total?. The number of off course sales of golf equipment is staggering when compared to on course sales.  It's your own sad outlook if you don't trust the integrity of the pro to steer his/her member to the product that is best suited for that member. Remember, if the member is unhappy with what he just bought its only the pro who'll suffer in the end.

Mike,
Free enterprise is its own worst enemy at times. You don't like the discount model of a Golfnow, but did you ever refuse a job in an area that already had too many courses? Did the architects who built the 101st through 125th golf course in Myrtle Beach even think of the dilution that they were causing to what was a healthy market? There is no effective difference between dscounting a round of golf or overbuilding in an area.

You've railed on about muni golf, yet privately owned public access courses represent an 80% share of the public market and munis have the remainiing 20%, and although I don't have the figures I would suspect that privately owned management companies are at the helm of at least 50% of those munis.

And when it comes to those clubs sitting on the rack, well, they 'lose' a whole lot less for the club than the restaurant does, and when they sell at a discount they are going to make some lucky member very happy, and happy members join next year.

Try getting that out of week old shrimp.    

[Mike_Young]

Jim,
Heres the fact:  Everyone could save 6% on purchase of Taylormade (and other products) if the pro was not getting a kickback to the retirement account.
 Put the retirement account deals in the club newsletter and let's see how many members have a problem, especially when most of the members probably are not getting retirement accounts anymore.  All of this was created by the PGA organization. 

As Mac said earlier the game will overcome it but when golf comes to the point it is now then entrepreneurship will take over and  all of these little "add-ons" will cease.  It's all a game at the expense of unknowing members and owners. 

Also, I like week-old shrimp....they have a special flavor....

[Ken Fry]

Mike,

I've agreed with you on many of the "business issues" you've brought up within the golf industry, but this is one I'll call BS.

Full disclosure:  I had a PGA Retirement account when I was in the business.

At certain facilities, companies were not allowed to provide these incentives.  If the facility owned the shop, they had to provide prior authorization for any incentives to be placed into a PGA member's account.  Some would, some wouldn't.  It didn't cost the facility anything and if a pro overbuys that much, he loses his job.  When I owned my own shop, I didn't need authorization because that was my money sitting on the floor.  Did I intentionally work with companies that would provide an incentive?  Absolutely, but it better be a product I believed in and could stand behind or I'd lose a customer forever as Jim Kennedy mentions (not a good move at a private club).

If you're worried about 6% going to a PGA member's retirement account but instead think the customer should get it?  Fine.  There are bigger discounts to be found at the "big box" retailers and at WalMart where I've found the same equipment in my shop priced below the cost I paid for it (hence why I stopped doing business with Taylor Made completely).

There's nothing underhanded about this program and provides a group who doesn't make much money to get a small account started for retirement.  The golf courses and golfers of the world are not getting gouged to fund this program.

The only thing I'll say about the Golf Now deal is the PGA was smart enough to pull back on this program when their own membership revolted.  It never should have gone that far in the first place.  Golf Retirement Plus isn't Golf Now.

Ken

[Jim_Kennedy]

Mike,
That's not true, neither company would be lowering their prices by 6% as the majority of their sales happen off-course, and out of the hands of golf pros. In Titleist's case, the vast majority of their income is in ball sales, and a quick search will show you where the majority of golf balls are being sold, tain't the pro shop.  
And let's get real, there's no comparison between a true retirement account and the 6% that T & TM give the pro. Look around the shop at the next 'average' club you visit and see how many non T & TM products you see. And while you're there try to gauge just how much in overall sales the guy is doing. He probably ain't retiring on the Gold Coast from his T & TM sales.        

Titleist started their program in 1997, and if I'm doing the math correctly that's 15 years ago. I would guess that you'd have known about the program back then, so you're pretty late to the party. Your shrimp are really old now.  

[Mike_Young]

Ken,
Call it BS if you wish.  And if you had an account, that's fine.  I have plenty of buddies that have one and we still argue the points with some of them agreeing.  There are plenty of jobs out there that make the same wages as a PGA pro w/o retirement accounts so I don't buy the "poor golf pro" scenario.  And I do understand the "facility approval" for such.  
Let me ask you these questions:
1.  Do the particular vendors provide the 6% retirement supplement because they like you?  Or is it a means to make you buy their product?
2.  Did they absorb the 6% or was the product marked up to allow for it? (that's $12 on a 200 dollar driver)
3.  Would the PGA membership revolted and forced a "pullback" if not for their owners saying they would be out of a job if it was initiated?
4.  Why is this incentive not provided to non members of the PGA?, GCSAA etc?  
My gripe isn't with the golf pros.  They know the PGA has shafted them in many areas but many don't know what to do about it.  They know they can't attack the CMAA because the members of the CMAA are the ones that hire the members of the PGA.   My gripe is with the power that these associations hold over the clubs and owners for no reason.  And they try to take that power and pressure the vendors to support them and provide the little incentives to their members all at the expense of the members employers.  
My solution is simple:  vendors need to have a loyalty to owners and not to employees of owners...owners are looking at bottom lines and would appreciate the 6% savings.  Why don't these vendors address that?
Cheers.

[Mike_Young]

Jim,
I have been aware of the Titleist program for a long time and you probably remember the Slazenger program also? Right?
Trust me .. the off course guys are saving the 6%.  Last year I spent over $50,000 with Taylormade and another $40,000 with Titleist.  I could not get the 6% retirement incentive but I gave them hell until I got the same amount discounted in various ways.  That should not have to happen.  I have had to do it every year and when a vendor would not do it I did not use them.  And as far as Titleist and dealing with them...I quit using them for a few years until they could make up the difference in other programs.  It's just slimy.  What would you call it if your stock broker was working on such incentives? ( some do of course)  .  And just to be sure I'm not singling out pros...you would be amazed at some of the reps that are just open about offering an architect a rebate to specify a particular pump station or sand etc.  Or even a particular contractor....

[Carl Nichols]

Mike,
I assume every club pro makes money off the sale of everything in the shop -- or at least that's what I assume is a big reason that prices are higher than at some retail outlet.  Besides not caring how much they make on my purchases, I also don't care whether their margin goes straight into their pocket or if some portion goes into a retirement account.  

Perhaps another way to look at it is this. What's the difference between a pro charging me $200 for a club that cost him $150, vs a pro charging me $200 for a club that cost him the same $150 because he paid $162 and TM is funneling $12 to a retirement account?

[Mike_Young]

Mike,
I assume every club pro makes money off the sale of everything in the shop -- or at least that's what I assume is a big reason that prices are higher than at some retail outlet.  Besides not caring how much they make on my purchases, I also don't care whether their margin goes straight into their pocket or if some portion goes into a retirement account.  

Perhaps another way to look at it is this. What's the difference between a pro charging me $200 for a club that cost him $150, vs a pro charging me $200 for a club that cost him the same $150 because he paid $162 and TM is funneling $12 to a retirement account?

Carl,
I agree with you if the pro owns the shop or the course.  I don't care how they handle their business....But if he is the employee of a club or an owner who owns the shop, that is where my problem lies.  You see it doesn't matter if the pro sells you the product at cost or below because he makes the retirement incentive off of his wholesale purchases.

[Tiger_Bernhardt]

I personally doubt 10% of any membership knows about 6% or any percentage for that matter of each club purchase goes to the Pro's retirement account. I do not think the majority of the membership would have a problem with retirement plans in general. But might with one that is not disclosed and is set up in that manner.

[Mike_Trenham]

The golf shop at one time was a decent to excellent business with little competition.  Those days are long gone.  Used to be if a PGA Club Professional focused on shop sales they got fired as they owned the shop..  Any Pro taking these today if the club is paying the biills should disclose the facts, and the manufacturers should have a 0% restocking fee for 24 months after invoice under this program, one party in the transaction should have some risk.

Now the genius board of directors insist on the clubs owning the shops and competing against eBay, Golf Galaxy, Dicks...  I hear through the grapevine that the slowest pay clients of Titielst are the private clubs as they are out of cash....  Mike Young the clubs reached the I'm as mad as hell and not going to take it and took the shops from the pros this eliminated incentive compensation and are thse business people are,surprised by the results...

Full disclosure my father has a nice retirement fund from Slazenger. See he owned the shop at the club and he paid his staff and paid his own bills and paid them faster and more reliably than the club paid him, they could string him out a few weeks when they did not want to hit the line of credit.  

I see the numbers as a member and i resigned early in my term as golf chairman of the same club a few years back due to the poor treatment of the golf professionals and the clubs unwillingness to pay a competive salary.

[Mike_Young]

The golf shop at one time was a decent to excellent business with little competition.  Those days are long gone.  Used to be if a PGA Club Professional focused on shop sales they got fired as they owned the shop..  Any Pro taking these today if the club is paying the biills should disclose the facts, and the manufacturers should have a 0% restocking fee for 24 months after invoice under this program, one party in the transaction should have some risk.

Now the genius board of directors insist on the clubs owning the shops and competing against eBay, Golf Galaxy, Dicks...  I hear through the grapevine that the slowest pay clients of Titielst are the private clubs as they are out of cash....  Mike Young the clubs reached the I'm as mad as hell and not going to take it and took the shops from the pros this eliminated incentive compensation and are thse business people are,surprised by the results...

Full disclosure my father has a nice retirement fund from Slazenger, see he owned the shop at the club and paid his staff and paid his own bills and paid them faster and more reliably than the club paid him, they could string him out a few weeks when they did not want to hit the line of credit.  I see the numbers as a member and resigned early in this term golf chairman of the same club today and know my Dad ran a more efficient cost effective operation and he and his entire staff were better paid.

Agree.
And IMHO all of the crap you mention above will one day bring the golf pro back into the position he once had.  He was a business man whose customer was the member or golfer and he did what was needed to take care of them because they were his living.  The guys you speak of would not tolerate most of the PGA crap today and there was no problem with them doing whatever they wished with vendors.  BUT today it's all a little game to run around the boards and the members.  The golf shop was there to provide a service for members and not to be a profit center for the club.

[Mike_Trenham]

My club insists on a 100% count of all of the inventory on the first day of the month, does not matter if it is a Saturday or if there is a member guest.   Tell me what business does this today and is not totally inefficient, sure have a cycle count program but 100% count no matter the day?

[Jeff Taylor]

Over time, all inefficiencies go away. The consumer will fuigure this out. There is no problem here.

[Melvyn Morrow]

Excellent Question “How much longer can the game of golf survive the business of golf?”

IMHO the answer lies with the Governing Body.  While they are seen making money it sets a precedent. Also regards the same body, they need to grow a set of ball to face the equipment manufacturers and stop allowing these makers to rip them a new arsehole at every potential confrontation.

Facing up to the problem will speed up its resolution, however failure to even admit there is a problem in the first place does not help anyone.

Let’s be clear there has never been any control over the technology of equipment side of the game, what has occurred has slithered in stage by stage with no real directive or understanding of the consequences. Understandable in the early day, but by the turn of the 20th Century the game had matured, the gutty ball had given some 50 years of stability allowing clubs to develop into what we more or less have today. Development should have been held on design but the developed to maintain the consistency and stability of clubs and ball certainly should have continued. Alas we certainly got that but with the intention to let the equipment eat away at the distance or reducing ones score not by skill but better flight of ball and club design.

By allowing nearly an open specification on ball/clubs you give the power to the manufacturers, and let’s be honest they are there to make money by selling their equipment. So Manufacturers support Groups/Tournaments/Championships, well no one has been there to stop them, so why not?

Why are we surprised, is this not the same authority that has allowed distance aids, non-silent caddies, cart  and accept non walking golf courses. If they stand by and allow this sort of contamination of the game, what chance is there that they will release their hold over money making opportunities? Be it for the good of the game or golfers as a whole.

Accepting control and understand of the consequences of their action is the first stage in trying to survive the business of golf, yet it does not help when the Governing Body is leading that race to make money out of the game i.e. The Open.

“He who is without sin should cast the first stone”, seem to be the stumbling block re this issue.

Melvyn

[Ken Fry]

Mike,

Like I said in my post, as a course owner you've hit on many areas that are certainly wrong with the business of golf, but this is reaching into conspiracy territory.

Most points in time when everything is going well, no one cares.  Hit rough times and pull out the stops on everything.  You're pissed because you feel you're not getting what you deserve.  Of course that's you're right but then you point out the free market has businesses approach you to promote there product as an architect.  That's not an example of the golf business, that's business.  As an architect it's your choice to either partner up with them for your benefit or not.

Whatever these companies offer as "incentives" is quite minor.  Plus, unless these companies have changed their programs, only certain items and under specific programs will qualify for the retirement bump.  You may have shelled out $40 and $50K to Titleist and Taylor Made, but no pro is getting a straight 6% on that.  As a pro, I received free equipment from the manufacturers every year.  How is that different?  Did my receiving a driver from Titleist increase the price for the public?  Does the public care?

The Masters provides PGA and GCSAA members entrance into their tournament but you must be a full member to do so.  Is that unfair and only because they're such big organizations?

Trust me Mike there are a lot of things the modern PGA of America has been doing I disagree with, especially to its own members (which I am no longer one).  The same can be said for the CMAA and GCSAA.  As a course owner, does an affiliation with any of them provide you with a benefit?  Only you can make that call.

As a course owner I'd be much more upset at insurance and liability fees, fuel prices, fert and chemical prices and the national down to local discount green fee schemes popping up.  This incentive business is peanuts in comparison.

Ken

[Mike_Young]

Ken,
Our basic beliefs on the subject are very similar.  BUT where we differ are definition of incentives.  Yes, I'm pissed because they only offer the retirement account bumps to the PGA members.  Why?  It's not that I care about their not giving it to me as much as I care about an organization like the PGA getting to the point where the tail is wagging the dog.  I have zero problem with a company giving you clubs or PUD merchandise etc but cash is different.  You mention "Of course that's you're right but then you point out the free market has businesses approach you to promote there product as an architect.  That's not an example of the golf business, that's business.  As an architect it's your choice to either partner up with them for your benefit or not."  IMHO their is no choice above.  It is a pure and simple offering of a kickback. 
I still want you to tell me why vendors need to be in the business of contributing to a percentage of sales to a particular business to the retirement account of an employee of that business?  And how did this come about? It's all about the organization not the golf pro.  As Jeff says above it will eventually go away. 
Oh...and I'm not pissed about any of this I'm just in the house because it's been raining and this is my entertainment.