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John Kirk

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Re: What is the Future of American Private Club Golf?
« Reply #50 on: July 29, 2013, 10:04:37 PM »
(Post-script)  Yes!  Scores the fiftieth response by chance!

Forty-nine replies and not one comment about the changing financial distribution, nor the dwindling natural resources.

This link has a series of tables which show the historical breakdown of income.  I chose the top table.  Looking at the data in "2011 dollars" makes the most sense.  It shows what is usually reported - in the last forty years, the bottom half of the economy is treading water, while the upper middle class family income has grown some, and top earners are making, on average, 50-70% more in constant dollars.

http://www.census.gov/hhes/www/income/data/historical/household/

It seems to me this should be a primary indicator for private club golf.  The other future indicator will be more profound, and that is when world resources become more scarce.  Golfing on manicured surfaces requiring heavy doses of water and/or fertilizer, or courses that require a great deal of fossil fuels to maintain, will become increasingly unpopular.

I'm in the middle of a good debate on The Motley Fool where the Peak Oil theorists are debating those who believe there's still plenty of oil left (sometimes referred to as "Cornucopians").  If you believe official statistics such as the EIA (Energy Information Administration), world oil reserves will last about 50 years at current consumption rates.

http://en.wikipedia.org/wiki/List_of_countries_by_proven_oil_reserves

http://en.wikipedia.org/wiki/List_of_countries_by_oil_consumption

Natural gas can also be used to power heavy machinery.  At current consumption rates and stated reserves, natural gas will last about 60 years.  But if called upon to also provide the power for heavy vehicles, it will deplete much faster.

http://en.wikipedia.org/wiki/List_of_countries_by_natural_gas_proven_reserves

http://www.eia.gov/todayinenergy/detail.cfm?id=5810

It depends whether you trust the oil and gas statistics, whether you have faith in the geologists and oil scientists who continue to innovate and design new equipment to extract oil from shale and other dwindling oil reserves.

Frankly, I think anyone who wishes to play golf in a highly manicured country club setting fifty years from now will do so under armed guard.  The end is relatively near, and we should all thank our lucky stars for living in the Industrial Age.  In the next twenty or so years, because of the changing demographics, I see a significant number of winning clubs, who recruit and keep those wealthy enough to afford this incredible luxury, while all other private clubs struggle to stay afloat.  After that, it's a slow inexorable decline back to a more localized, agrarian society, where golf is still played by the locals on walkable, easily maintainable courses.

I might be wrong by twenty, maybe even forty years, but this change is inevitable.  Have a great day.



« Last Edit: July 29, 2013, 10:09:14 PM by John Kirk »

Carl Johnson

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Re: What is the Future of American Private Club Golf?
« Reply #51 on: July 29, 2013, 10:15:14 PM »
Is the class and status system really that prevelent in the US?  Play Royal Melbourne on any given comp day and you have as much chance of playing along side a captain of industry as a plumber.  Would farting, or pissing in the bushes be frowned upon at Pine Valley?
Pissing in the bushes is fine but there is very little chance of playing with a plumber at a North American club, although plumber's make good money here.
My understanding is that PITB at Pine Valley would not work (though FTing would probably be overlooked).  Regarding the "plumber," it depends on a couple of things.  (1) Are you talking about the actual worker who comes to your house to do the work, or the guy who used to do that and now owns a large plumbing company?  (2) The club's age and history, at least in the case of a few clubs. 

Ryan McLaughlin

  • Karma: +0/-0
Re: What is the Future of American Private Club Golf?
« Reply #52 on: July 29, 2013, 10:17:48 PM »
So as someone who has been exploring local clubs I have to say it is very discouraging in my area.  A very AVERAGE club is 600-700 month not considering FB and other fees.  I am butting up against the higher age range for any junior executive or young family membership which might lower fees by 20%.  My question is should I just wait out the market or jump in.  I dont see the value right now in exchange for the faster rounds and somewhat better conditions. The problem is public golf is quality public golf and even nice muni is getting super expensive...$100 for high end public $60 for a muni....not to mention the pace of play is garbage.

Josh Stevens

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Re: What is the Future of American Private Club Golf?
« Reply #53 on: July 29, 2013, 10:31:35 PM »
Yes the actual guy wielding the wrench. We have our fair share of movers and shakers at my club, but they know better than to ponce around like little lords - they know we would just laugh and the club president would tell them to get over themsevelves.

Wayne_Kozun

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Re: What is the Future of American Private Club Golf?
« Reply #54 on: July 29, 2013, 10:39:04 PM »
This link has a series of tables which show the historical breakdown of income.  I chose the top table.  Looking at the data in "2011 dollars" makes the most sense.  It shows what is usually reported - in the last forty years, the bottom half of the economy is treading water, while the upper middle class family income has grown some, and top earners are making, on average, 50-70% more in constant dollars.
i don't quite understand what you are getting at.  If the rich are getting richer isn't that bullish for golf clubs since it is generally the rich (the highest quintile) that join golf clubs?  If this trend continues then any rich person can easily afford to join a club, even if they aren't that avid a golfer.   And given the way things are going the other four quintiles will be lucky to cut the grass, shine shoes, clean clubs, serve beer, etc.

Wayne_Kozun

  • Karma: +0/-0
Re: What is the Future of American Private Club Golf?
« Reply #55 on: July 29, 2013, 10:41:25 PM »
My experience at the more exclusive clubs is that pissing in the bush is less frowned upon than using your cell phone on club property.

Philip Caccamise

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Re: What is the Future of American Private Club Golf?
« Reply #56 on: July 29, 2013, 11:16:17 PM »
Great topic.

I have argued for several years that outside of the top top end clubs, the private course model is dead for three major reasons. (1) Players seek variety in scenery for their weekly game, (2) Unless one gets in over two rounds a week it's not cost beneficial and (3) of course discretionary income has been severely impacted by the economy.

Then again, a lot of this is regional.

Back in my home state of NY, the vast majority of clubs will survive in their current form. Not in my lifetime will Winged Foot or Quaker Ridge or Garden City or NGLA be available for a daily fee. A few will move to semiprivate- the Leewoods or Waccabucs of the world.

Contrast that to here in KY. I know of 3-4 low end private courses in Lexington and Louisville that have already moved to semiprivate, 4-5 more that are bank owned and on the brink, and rumors of problems at 3-4 more. This from a pool of only about 35 total private courses. If their name is not Valhalla, Big Spring, Idle Hour, or Louisville, I'm not sure they will stay fully private long term.

John Kirk

  • Karma: +0/-0
Re: What is the Future of American Private Club Golf?
« Reply #57 on: July 29, 2013, 11:16:29 PM »
This link has a series of tables which show the historical breakdown of income.  I chose the top table.  Looking at the data in "2011 dollars" makes the most sense.  It shows what is usually reported - in the last forty years, the bottom half of the economy is treading water, while the upper middle class family income has grown some, and top earners are making, on average, 50-70% more in constant dollars.
i don't quite understand what you are getting at.  If the rich are getting richer isn't that bullish for golf clubs since it is generally the rich (the highest quintile) that join golf clubs?  If this trend continues then any rich person can easily afford to join a club, even if they aren't that avid a golfer.   And given the way things are going the other four quintiles will be lucky to cut the grass, shine shoes, clean clubs, serve beer, etc.

Yes, you may be right, that high end private clubs will continue to thrive.  That's not how I see it, partly because I believe America has a surplus of fancy golf courses.  I suppose the relative cost of golf club membership must be weighed against the cost of non-discretionary expenses.  If health care and education become more expensive, then golfing moves down the list of priorities.

John Kirk

  • Karma: +0/-0
Re: What is the Future of American Private Club Golf?
« Reply #58 on: July 29, 2013, 11:23:32 PM »
...
« Last Edit: July 29, 2013, 11:36:04 PM by John Kirk »

Patrick_Mucci

Re: What is the Future of American Private Club Golf?
« Reply #59 on: July 29, 2013, 11:41:37 PM »
Does the current model still work? Will it continue to work going forward?

I'm not talking about the elite clubs. Places like Oakmont and Pine Valley are obviously going to be fine for the foreseeable future.

But is the market for mid-tier private golf dying? I worry that it is, both literally and figuratively. I'm in my twenties, and golf is more accessible for my generation than it has been for any other. While that accessibility means that many people my age have played and do play golf, I think it's also killed a bit of the "golf lifestyle" that goes along with mid-tier clubs.

We've chronicled the struggles of clubs that spend irresponsibly and fail to identify their place in the market. But I'm noting more and more clubs that do things the right way and work to serve a niche that should exist, but are still struggling mightily and finding a lack of demand. I just wonder if the market is disappearing.

Jason,

Your fears are well founded.

Things that impact membership and viability have changed, economically and culturally.

As you point out, even well run clubs are struggling.

I predict that they'll struggle even more as the war on business and success escalates via higher taxes and increasing expenses.


So what does the future look like, and what factors are shaping it?

Mike Sweeney

Re: What is the Future of American Private Club Golf?
« Reply #60 on: July 30, 2013, 06:32:09 AM »
Living in NYC during the week, life is not typical especially when compared to my friend Jaka in the boonies. My weekends are typically in Connecticut and I have kept a 15 round membership at Yale for years, and it fits perfectly with our family lifestyle. My free passes from the wife typically come on Saturday night dinner with my wife and I sneak up early on Sunday am.

With kids doing sports, family and friends, we bounce around alot on weekends and are rarely in one place. In addition, I can't imagine holding a membership at one club, as I would get bored. At the price points around NYC, you really need to love your club.

Yale is still a good 45 minutes away from our house in Connecticut so I was very excited when Pound Ridge GC was announced, but unfortunately it just is not a fun course to play. In a perfect world, here is the club/course via Lester George that I would love to have closer to our house, and I really don't care if it is private:

_______________________________________________________

2600 yard course
practice facily

http://www.golfclubatlas.com/forum/index.php/topic,50913.0.html

Thanks for the nice comments about our Proving Grounds at Dormie Club.  It is in design development right now, however, there is no start-date in focus yet.  

Yes there are 10 holes because of variety and why not?  Yes there are 11 greens because playing 15 back to our 5th green would have brought the back of someones yard into play from a par five angle.  When we cut it short it also afforded us a chance for different par on the counter loop.  

The theory being that on Monday, Wednesday, Friday (for example) the course plays clockwise, the other days it plays counterclockwise.  Its just a variety and teaching thing.  Water and wind dictated the reversible nature, besides, I think it  could become boring if always played the same.  

I think it is a hell-of-a place to sit with cigar, drink, friends to start or (more importantly) end the day.  It has not been determined yet if it will be exclusive to Dormie, but it sure makes sense to leave it available to reservations for all until Dormie fills up.  I like it as a stand-alone profit center and I think it could work nicely into other amenities and golf packages.

______________________________________________

I would still play the BIG ROUNDS at Yale and as guest at other places, but this would be a great place to hang for 2-3 hours at a time. In the modern world, 6-8 hours is difficult to carve out during the work week and with family life...


Sean_A

  • Karma: +0/-0
Re: What is the Future of American Private Club Golf?
« Reply #61 on: July 30, 2013, 06:55:04 AM »
Good point. Even my club which can't afford to turn away anyone short of a infamous axe murderer or the dictator of North Korea does not have one its web page a clear "Here's what it costs to be a member" but instead gets by with a general solicitation to get in touch for complete membership information. Seems strange in the current day and age.

Yep.  Of course this doesn't apply to the elite clubs or those that are thriving, but there lack of information for clubs in need of members is bad business, imo.  Any "product" that wont provide a price without getting a sales pitch "like a timeshare" screams bad deal to me.

As I said in the post above yours, it's because most US clubs enjoy tax exempt status.  If you advertise, your club may be deemed to be no longer operating for the "enjoyment of its members", but for profit.  

So, in effect, you're right about it being bad for business....b/c it's not a business in the eyes of the IRS.  The second it becomes one, goodbye tax exempt status.  Prospective members need to be "recruited" by current members which is why you always see "invitation only" when you know darn well a phone call and a check will likely get a new member in at many, many clubs.  

I think the tax status deal is blown out of proportion.  Wasn't it something like 20% of outside income okay?  Given the huge dues and budgets of many clubs that is a lot of visitor green fees.  I think more accurately is most clubs choose to host events which bring in the income rather than allow visitors/guests money to trickle through to hit the max.  

So far as maintenance in the UK, there is no question we get away with less staff because a lower standard of conditions is deemed acceptable. Remember, nowhere near the majority of courses over here are on sandy ground.  Most are parkland courses which don't cut the grass or rake the bunkers as much as in the States.  

Mike S - your outlook seems similar to mine.  While I belong to a club, its only a country membership.  I tried the hardcore membership and it just didn't suit me - I got bored and found I was playing with the same people anyway.  Why did I need to join a club to play with those people? 

Ciao
« Last Edit: July 30, 2013, 07:09:25 AM by Sean_A »
New plays planned for 2024: Nothing

Jud_T

  • Karma: +0/-0
Re: What is the Future of American Private Club Golf?
« Reply #62 on: July 30, 2013, 07:12:52 AM »
John K,

I know exactly 1 rich guy who is better off than he was 5 years ago and he's the last guy I'd want in my Saturday morning game.  Good luck with that world view though...where do we sign up for the militia?
Golf is a game. We play it. Somewhere along the way we took the fun out of it and charged a premium to be punished.- - Ron Sirak

Dan Herrmann

  • Karma: +0/-0
Re: What is the Future of American Private Club Golf?
« Reply #63 on: July 30, 2013, 09:13:28 AM »
John Kirk - In reply to your reply #50, please see my post #16.

C. Squier

  • Karma: +0/-0
Re: What is the Future of American Private Club Golf?
« Reply #64 on: July 30, 2013, 10:19:28 AM »
As I said in the post above yours, it's because most US clubs enjoy tax exempt status.  If you advertise, your club may be deemed to be no longer operating for the "enjoyment of its members", but for profit. 

So, in effect, you're right about it being bad for business....b/c it's not a business in the eyes of the IRS.  The second it becomes one, goodbye tax exempt status.  Prospective members need to be "recruited" by current members which is why you always see "invitation only" when you know darn well a phone call and a check will likely get a new member in at many, many clubs. 

I think the tax status deal is blown out of proportion.  Wasn't it something like 20% of outside income okay?  Given the huge dues and budgets of many clubs that is a lot of visitor green fees.  I think more accurately is most clubs choose to host events which bring in the income rather than allow visitors/guests money to trickle through to hit the max. 

So far as maintenance in the UK, there is no question we get away with less staff because a lower standard of conditions is deemed acceptable. Remember, nowhere near the majority of courses over here are on sandy ground.  Most are parkland courses which don't cut the grass or rake the bunkers as much as in the States. 

Ciao

Two completely different tax issues here Sean.  One has to do with revenue, one has to do with advertising.  It is my understanding that a private club can't advertise AT ALL.  I think what you're saying is that a club should advertise itself until it reaches that magic revenue number from outside play and then shut it off.  Doesn't work that way.  A private club gets its tax exempt status b/c it's a club formed around the sole purpose of providing entertainment for its members.  Advertising to the outside world does not jive w/ that purpose, not even for the first dollar.  The IRS has differentiated between a non-member inquiring to play / host a wedding / whatever on their own and the club advertising those services.  At least that is how it was explained to me by an accountant who audits private clubs here in the Midwest.

As far as dues go, I'd also venture to guess clubs near metropolitan areas all over the US have real estate taxes that dwarf those outside the US.  That's a fixed cost you just can't get around no matter what decisions you make as a club.  I've seen some annual dues figures from clubs in the UK that would just barely cover our per person share of our tax bill.  Note - I'm not defending our tax laws/rates for a second, but am pointing out differences that exist that US clubs must operate around. 

Andrew Buck

  • Karma: +0/-0
Re: What is the Future of American Private Club Golf?
« Reply #65 on: July 30, 2013, 10:40:32 AM »
(Post-script)  Yes!  Scores the fiftieth response by chance!

Forty-nine replies and not one comment about the changing financial distribution, nor the dwindling natural resources.

This link has a series of tables which show the historical breakdown of income.  I chose the top table.  Looking at the data in "2011 dollars" makes the most sense.  It shows what is usually reported - in the last forty years, the bottom half of the economy is treading water, while the upper middle class family income has grown some, and top earners are making, on average, 50-70% more in constant dollars.

http://www.census.gov/hhes/www/income/data/historical/household/

It seems to me this should be a primary indicator for private club golf.  The other future indicator will be more profound, and that is when world resources become more scarce.  


John,

I looked at this file and here is what I see.  Every class is up over 10% in inflation adjusted dollars than the 1960's, meaning there is more disposable income at every level now, especially at the top.  Every class is up in inflation adjusted dollars since 1980, about 5% at the bottom, and over 25% at the top, so there is more disposable income now than during thus time frame.  Now, staring in 1993 is where it becomes dicey, to me.  The bottom half has been flat since this time in inflation adjusted dollars (no better and no worse), but the top half is still in a better place in 2011 (ignoring education, as mentioned earlier) than they were in the mid-90's.  Looking closer, there are now nearly 20% of households that make what only the top 5 percent made in the 60's and nearly 40% of households make what the top 20 percent made in the 1960's.  

I will be the first to admit that the crash in 2007/2008 was a death blow for some clubs, and weakened others, but that's mostly because they were already weakened prior to that time (despite an available pool of people with disposable income that had grown rapidly) due to other factors.  Now, discussing the potential impacts of a wealth gap on healthy society is a worthwhile endeavor, however, when it comes to the current and near term stress on the private club in America, it seems to me the other factors are overriding.  

My club was thriving with over 200 members in the 1960's to 1980's.  It was already weakened by 2007 to the point of 120'iish members and has been fighting to stay consistent sense.  Essentially, before any downturn the club was down about 40% of it's membership.  I'm sure there were a few "financial hardships" along the way, but I highly doubt that number was more than the number of potential new member households that could now afford a membership that couldn't in those days.  It seems in our case, far more people left because of other golfing options, lack of business deductions, or members weren't replaced because of generational changes in time/family commitments.



Golfing on manicured surfaces requiring heavy doses of water and/or fertilizer, or courses that require a great deal of fossil fuels to maintain, will become increasingly unpopular.


I'm in the middle of a good debate on The Motley Fool where the Peak Oil theorists are debating those who believe there's still plenty of oil left (sometimes referred to as "Cornucopians").  If you believe official statistics such as the EIA (Energy Information Administration), world oil reserves will last about 50 years at current consumption rates.

http://en.wikipedia.org/wiki/List_of_countries_by_proven_oil_reserves

http://en.wikipedia.org/wiki/List_of_countries_by_oil_consumption

Natural gas can also be used to power heavy machinery.  At current consumption rates and stated reserves, natural gas will last about 60 years.  But if called upon to also provide the power for heavy vehicles, it will deplete much faster.

http://en.wikipedia.org/wiki/List_of_countries_by_natural_gas_proven_reserves

http://www.eia.gov/todayinenergy/detail.cfm?id=5810

It depends whether you trust the oil and gas statistics, whether you have faith in the geologists and oil scientists who continue to innovate and design new equipment to extract oil from shale and other dwindling oil reserves.

Frankly, I think anyone who wishes to play golf in a highly manicured country club setting fifty years from now will do so under armed guard.  The end is relatively near, and we should all thank our lucky stars for living in the Industrial Age.  In the next twenty or so years, because of the changing demographics, I see a significant number of winning clubs, who recruit and keep those wealthy enough to afford this incredible luxury, while all other private clubs struggle to stay afloat.  After that, it's a slow inexorable decline back to a more localized, agrarian society, where golf is still played by the locals on walkable, easily maintainable courses.

I might be wrong by twenty, maybe even forty years, but this change is inevitable.  Have a great day.

You may be right, if we have not found affordable alternatives at some point society will dramatically change.  In addition, there are many societal factors from disparity in income growth between top and bottom on one side, to disparity in governmental benefits and tax rates on the other.  Once again, worthwhile conversation that ultimately *could* dramatically impact society in many ways well beyond private clubs.  That said, for this discussion I prefer to focus on the micro scale for the near future, as opposed to a macro scale that could simply change all aspects of life.

Jason Thurman

  • Karma: +1/-0
Re: What is the Future of American Private Club Golf?
« Reply #66 on: July 30, 2013, 10:45:36 AM »
From a GCA perspective, I'm not sure all of this is bad news.  Aside from the toniest zip codes, the focus will be more on value for money and putting the $$'s into the most important asset, i.e. the golf and doing away with all the other extraneous nonsense, including excessive amounts of water!

That sounds great. The problem I'm finding, though, is that value for money may not actually exist in the private club sphere. There are affordable private clubs in my area that have an ideal maintenance meld, nice but modest facilities, an attractive golf course, low-budget amenities for families, quality and reasonably priced food, and a good, casual membership. These clubs that control expenditures and keep dues affordable SHOULD be the ideal. I'm finding, though, that they really struggle to break even. The economics make it a real struggle to attract members at a price point that keeps the club in the black. I'm sure some will survive the next ten years. But it's a really difficult business, and I worry that over time that segment of the market will disappear and courses will turn public or close altogether.

It's not a bad thing if golf in this country becomes more accessible. But it's unfortunate if that shift happens at the expense of the affordable, responsible clubs that are doing everything the way that seems most right. It's unfortunate if the only private market that can sustain itself is the ultra-elite and exclusive model. But I'm afraid that might be where we're headed.
"There will always be haters. That’s just the way it is. Hating dudes marry hating women and have hating ass kids." - Evan Turner

Some of y'all have never been called out in bold green font and it really shows.

John Kavanaugh

  • Karma: +0/-0
Re: What is the Future of American Private Club Golf?
« Reply #67 on: July 30, 2013, 10:53:28 AM »
To paraphrase Yogi Berra, nobody goes there anymore because it is to crowded. To paraphrase Biggie, mo affordable, mo problems. We need expensive empty courses.

John Kirk

  • Karma: +0/-0
Re: What is the Future of American Private Club Golf?
« Reply #68 on: July 30, 2013, 11:06:05 AM »
John K,

I know exactly 1 rich guy who is better off than he was 5 years ago and he's the last guy I'd want in my Saturday morning game.  Good luck with that world view though...where do we sign up for the militia?

Jud,

The SPY, which tracks the S&P 500, is up 33% in the last five years.  I have a poor record speculating or playing the markets, so I never alter my assets to reflect my personal views.  I've made one or two transactions in the last 5 years.  In general, quantitative easing should have helped the investor class.  The economy is relatively stagnant, and I believe the laws highly favor large corporations and moneyed interests over small business.

I guess I'm one of those people who doesn't alter his world view in order to be popular.  I just want to know the truth about things, so I can make good decisions.  With all the competing arguments made on the Internet, it is increasingly difficult to read between the tea leaves and figure everything out.  I could be wrong.

You and I always take opposite sides on these economic and political threads.  We'd do better with golf and music.



John Kavanaugh

  • Karma: +0/-0
Re: What is the Future of American Private Club Golf?
« Reply #69 on: July 30, 2013, 11:21:12 AM »
Given the Pope's recent comments most of my friends are better off than they were 5 days ago.

John Kirk

  • Karma: +0/-0
Re: What is the Future of American Private Club Golf?
« Reply #70 on: July 30, 2013, 11:37:53 AM »

My club was thriving with over 200 members in the 1960's to 1980's.  It was already weakened by 2007 to the point of 120'iish members and has been fighting to stay consistent sense.  Essentially, before any downturn the club was down about 40% of it's membership.  I'm sure there were a few "financial hardships" along the way, but I highly doubt that number was more than the number of potential new member households that could now afford a membership that couldn't in those days.  It seems in our case, far more people left because of other golfing options, lack of business deductions, or members weren't replaced because of generational changes in time/family commitments...

You may be right, if we have not found affordable alternatives at some point society will dramatically change.  In addition, there are many societal factors from disparity in income growth between top and bottom on one side, to disparity in governmental benefits and tax rates on the other.  Once again, worthwhile conversation that ultimately *could* dramatically impact society in many ways well beyond private clubs.  That said, for this discussion I prefer to focus on the micro scale for the near future, as opposed to a macro scale that could simply change all aspects of life.

Thanks Andrew,

I appreciated your breakdown of the income stats.  Yes, people in general have more discretionary income in some ways, but I'd argue that certain essentials, like nutritious food, education and health care, are relatively more expensive.

Yes, I agree I am talking long term macroeconomics, but maybe these effects are already being felt, that oil and gas constraints are already limiting overall prosperity.  In the near term, there's just not enough work to go around.  The world has grown very efficient in its manufacturing capabilities.  I can't believe how much the world has changed since I was in college.

« Last Edit: July 30, 2013, 11:47:13 AM by John Kirk »

Lou_Duran

  • Karma: +0/-0
Re: What is the Future of American Private Club Golf?
« Reply #71 on: July 30, 2013, 12:28:06 PM »
Here's a thread that deserves the "frank and open" discussion that it is unlikely to receive.  But it has a great start.  And like a Phoenix, Malthus comes back to life in the form of John Kirk!  What an added bonus!

Many years ago, an operator known to most of you, told me that he was fine with the contraction in the golf business he was seeing, provided that he was able to keep his core group of avid players and build on that base.  He was tired of all the yahoos who had come into the golf during the boom phase that displayed little regard for the course, other players, and the etiquette and courtesies of the ancient game.  This was well before the "free mortgages-everyone regardless of income should have a house"/"if it feels good, do it" zeitgeist led to the explosion in the economy.  I thought he was off the mark then; I now think he is a genius.

Like real estate in general, golf is all about location.  I suspect that there are some fantastic deals in Detroit.

In thriving Dallas/Ft. Worth, most of the top tier clubs are doing well, but there are still great deals at every level below.  It does cause some friction- there is a very nice private club which had a $10-$15k initiation fee and $600-$700 monthly dues that opened up a second level of membership at $69/month, no initiation fee, with unrestricted golf after 3:00 p.m. for a cart fee ($18+tax).  Reportedly, 200 new members joined in six weeks, and the manager is now trying to convert some of them to full members at a substantial discount.  Needless to say, the full members are furious to the point of creating a very uncomfortable environment for the second-tier members, but the original owner of the club passed away and the heirs got tired of subsidizing the lifestyle of its relatively prosperous membership.  A cycle has started, where the club is more crowded, conditions are deteriorating slowly, and, reportedly, some longtime full members are leaving.  Harbinger of things to come elsewhere when the various levels of government can't possibly fulfill the promises made to the special interest voters who got them elected?  Food for thought.

No doubt that the two-income household dynamic is a factor, particularly as more women were joining the paid workforce and disposable income grew.  While I haven't looked at the numbers for sometime, that trend is probably slowed to a crawl or is in reverse as the workforce participation rate has declined and more children are born to single parents.  I know a handful of golfers who no longer play largely because of cost.

The gentleman who noted that mothers returning to the home to care for kids actually has a dampening effect on their spouse's golfing behavior resonates.  I know several guys who play considerably less now that the wife is home caring for the kids for reasons noted.  As the Mahan example demonstrates, our present culture expects that the man should spend more time with his family than in the past.  I've known the fathers of several friends who worked 50-80 hours per week, and the weekends were spent at the club playing golf and cards with their friends.  Most of the guys I used to play golf with, myself included, still worked the hours, but could never get away with spending so much time away from the wife and kids.  I suspect that the demand on fathers is even higher now.

And I agree that if golf is to grow again, women will be the key.  Open the doors!

 

Andrew Buck

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Re: What is the Future of American Private Club Golf?
« Reply #72 on: July 30, 2013, 12:32:33 PM »

My club was thriving with over 200 members in the 1960's to 1980's.  It was already weakened by 2007 to the point of 120'iish members and has been fighting to stay consistent sense.  Essentially, before any downturn the club was down about 40% of it's membership.  I'm sure there were a few "financial hardships" along the way, but I highly doubt that number was more than the number of potential new member households that could now afford a membership that couldn't in those days.  It seems in our case, far more people left because of other golfing options, lack of business deductions, or members weren't replaced because of generational changes in time/family commitments...

You may be right, if we have not found affordable alternatives at some point society will dramatically change.  In addition, there are many societal factors from disparity in income growth between top and bottom on one side, to disparity in governmental benefits and tax rates on the other.  Once again, worthwhile conversation that ultimately *could* dramatically impact society in many ways well beyond private clubs.  That said, for this discussion I prefer to focus on the micro scale for the near future, as opposed to a macro scale that could simply change all aspects of life.

Thanks Andrew,

I appreciated your breakdown of the income stats.  Yes, people in general have more discretionary income in some ways, but I'd argue that certain essentials, like nutritious food, education and health care, are relatively more expensive.

Yes, I agree I am talking long term macroeconomics, but maybe these effects are already being felt, that oil and gas constraints are already limiting overall prosperity.  In the near term, there's just not enough work to go around.  The world has grown very efficient in its manufacturing capabilities.  I can't believe how much the world has changed since I was in college.



I agree the world has changed a lot in in my 38 years, and even more if you go back further.  In some way, it's amazing that we haven't seen income levels lower in any quintile, given the exodus of manufacturing jobs.  In addition, costs and expectations around education and healthcare are certainly driving a lot of society, not to mention organic foods, etc.

In reality, there are a lot of variables.  For the time being, it's hard to deny that the middle 30% is splitting up and down with a greater number of "professionals" but many mfg. jobs switching to distribution or service.  There are certainly more high end service jobs as well.  In addition, the industrialization of Southeast Asia, and what happens to labor rates and tarriffs in emerging markets *could* lead to a return of some US manufacturing.  

For now, I still don't buy that is driving anything out of the private golf business compared to last generation.  It has to revolve around better alternatives and change in lifestyles, IMO.  If it was primarily a disposable income thing, and not decisions how to spend it, I couldn't explain the thousands of higher quality luxury resorts and hotels with nightly price tags close to a months dues that are near capacity today (compared to relatively few at that time) as boom in high end restaurants and trendy spots with $25 burgers and martini's.  Just a quick drive through our rural area shoes no shortage of automobiles that come with payments twice that of a months dues at our club, sometimes two such vehicles at a relatively modest house.  I would almost guarantee the % of households that spend more than a month dues on "luxury" vehicles is dramatically up from the 70's - 80's.  

Andrew Buck

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Re: What is the Future of American Private Club Golf?
« Reply #73 on: July 30, 2013, 12:49:35 PM »
It does cause some friction- there is a very nice private club which had a $10-$15k initiation fee and $600-$700 monthly dues that opened up a second level of membership at $69/month, no initiation fee, with unrestricted golf after 3:00 p.m. for a cart fee ($18+tax).  Reportedly, 200 new members joined in six weeks, and the manager is now trying to convert some of them to full members at a substantial discount.  Needless to say, the full members are furious to the point of creating a very uncomfortable environment for the second-tier members, but the original owner of the club passed away and the heirs got tired of subsidizing the lifestyle of its relatively prosperous membership. 

 

Lou,

Great thoughts.  This dynamic is really interesting at an equity club. 

We are currently doing stepped in memberships, and while it's tough to stomach someone paying less than lifelong members, it's also deemed as preferential to more drastic cuts or large assessments.

Dan Herrmann

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Re: What is the Future of American Private Club Golf?
« Reply #74 on: July 30, 2013, 01:57:07 PM »
Or, Andrew - are non-equity clubs the future?

I've been a member of equity and non-equity, and my experience is that the non-equity is better run, more efficient, and has a lot more flexibility in how they price memberships.   No egos to bruise.