Private Clubs at a Crossroads

[John Foley]

Will consolidation help? I know it is not the fix for the overall industries ailment but it can help where two courses merge and you get two clubs? I know it all depends upon the debt service, membership numbers and maintenance budgets but I would think it a potential help. I know Sand Ridge & Mayfield in Cleveland combined but are there other examples where this that proven helpful?

[Bernie Bell]

Property taxes are the biggest threat to private clubs in my neck of the woods.  Local politicians have introduced legislation in each of the last 2 years that would immediately jeopardize many of the lower tier clubs.  The bills have been narrowly defeated twice, but it's a good bet the sponsors will keep trying every year.  The politicians are also trying to use taxes to effectively prohibit maintenance practices of which they disapprove.  I've no idea if this is just a deep blue state issue or not.

[Carl Nichols]

What I cannot figure out is why some clubs struggle and others do not. I was a member at Four Streams outside of DC. Golf only and excellent golf and world class food. We had a good caddie program and it was a second club for most. At one time we were capped at 250 single members (meaning no spouses). It was over leveraged when we bought it from the developer and the initiation fee went from $60,000 to a fraction of that. We still lost members. A member bought the club but from what I understand the club is struggling again. I wonder if some of the clubs that struggle the most are second clubs. The other area country clubs to which I belonged are doing fine.

Golf courses struggle because of supply and demand.

Indeed. 


As Tommy knows, I am a big fan of Four Streams.  But from a demand perspective, there are at least two big things working against it:  (1) it's 20 miles farther outside the beltway than many of the "down-county" clubs in Montgomery County; and (2) it's not a country club, so for many people with families, it can't be their only club. 

[Lou_Duran]

As in any business, some golf courses will struggle simply because they're poorly directed.

Very true.  In some areas like D/FW, even these are able to stay afloat during good times.  Economic cycles are biblical, and like the first day of pheasant season, all the young/dumb ones get thinned out.


Sadly, though things are rocking presently, there are courses still deferring necessary maintenance.  And there are some which are incurring debt to complete major renovations which may only make marginal improvements to their product.


I admire Ryan's newly found humility.  Perhaps we are sailing in unchartered waters.

[Ian Mackenzie]

Chicago has a huge concentration of golf courses - both private and public.


Most private courses are nervous, but also in denial. Clubs that had 300 full members in 2005 now have 250.
They hire "consultants" who all deliver pages out of the same playbook to desperate committees seeking the "silver bullet" to pitch to their memberships.


"Spend, spend, spend" is the matra. Add a gym, a daycare, a candy store, "grab n go" food", new dress codes, casual this, relaxed that...


Most clubs have boards of "big company guys" who love hiring consultants to solve their problems. When, in reality, most clubs are like $5-7M small businesses that should be nimble and flexible.


Not once do these clubs look at demographic trends and discuss reducing overhead to adjust to the changing landscape and the new realities.


What they usually miss:


1. Clubs with the best golf courses do not have membership issues.
2. Clubs that invest silly sums of money in their clubhouses to chase the new "millennial member" are setting themselves up for disappointment. "Build it and they will come" never works. "Hope is not a strategy."


3. Why would the "new Millennial" pay a huge country club downstroke and monthly dues just to eat dinner and splash in a pool? Plus, there are clubs that do that already. In Chicago, the Saddle and Cycle Club kicks ass at just that, for half the price of "country club dues".


The bifurcation will continue and the list of casualties and "body bags" is sure to grow.
The US created a monster and now has to pay for it.


"There will be blood."

[Lou_Duran]

Ian,


Do you see any of this tied to the political philosophy and control of an urban area?  Do clubs in blue cities face a different environment those in red to purplish areas?


My theory has been that disposable income and affordability in the populations that play golf are keys.  The intersection of economics and politics (as the art against the art of economics) might be worth exploring. 

[Phil McDade]

Here in Wisconsin, it's unclear how the private country clubs are doing. But Mike Keiser is about to kill off municipal golf in the state's second-largest city:


https://madison.com/ct/news/local/govt-and-politics/record-loss-for-madison-golf-courses-prompts-mayor-satya-rhodes/article_fa3adfbf-e5d5-53ad-9a06-13bf2be67c70.html


Maybe that's too much of a reach. But this is more than a-butterfly-flapping-its-wings territory.


I moved to Wisconsin 30 years ago, just when my interest in golf was taking off. Lucky me. In that time, just in my home county alone, I've seen six public courses built, all of decent quality. Heck, when I arrived, Madison muni Odana Hills (Slow-dana Hills back in the day, when its tee sheet seemed jam-packed seven days a week) was the second-best public option in the entire county. A private country club was built in the suburbs, joining the four private clubs already well-established in the Madison area.


Add on to that: four Kohler courses, including Blackwolf Run and Whistling Straits; Erin Hills; a half-dozen public designer courses with names like Nicklaus, Palmer, Trevino, Player and Andy North (big name in these parts!) attached -- all within a half-day's drive for much of the state. Oh, and Sentry World and Lawsonia have upped their games with notable renovations/maintenance enhancements. (I can leave my front door and tee off on the first hole at Lawsonia in 90 minutes, so I know how this sounds; I get it. Still....) And now Keiser's sandbox Sand Valley.


Are the golf options better than when I arrived three decades ago? Unquestionably so. Wisconsin punches well above its weight when it comes to publicly accessible courses of merit.

But too much? I've long thought so. And I've long thought the courses that would get hit the hardest are the muni's and mom-and-pop small courses that dot the landscape of rural Wisconsin. Do they offer much architecturally? Maybe not, but the game losing something when those courses disappear.

[Ben Sims]

Millennial here. I think pure economics misses the boat. Though I agree with many posts here, I feel as if the idea behind why me and my peers—that can afford to—don’t flock to clubs is time related. There’s a time value to what young families spend their time on. My generation takes their kids to the brewery on weeknights. We go to restaurants. We travel a lot. And we have more than one hobby. A line item that eats up a considerable amount of time for other things is hard to justify. 


The other issue is cost. Ian touches on it above. It’s hard to justify paying for all that crap that we never use. Invariably, the gym, food, daycare, and pool is better almost anywhere else than at the club. The only draw for many my age is the golf. If I could uproot Palmetto GC and put a place just like it near me, that’s a slam dunk. But that club model is increasingly rare.

[John Kirk]

I'm pretty sure that housing, education, health care and healthy food are more expensive than they used to be.  All four.    These are essential products and services; therefore, even though the millenial professional has a comparable salary to Americans of 30-40-50 years ago, he has less disposable income.  When I was 33-34 years old, I didn't know anybody my age who belonged to a private club.

Tom D. says:
"Golf courses struggle because of supply and demand."
I'd say yes, that may be the primary factor, but the cost of maintaining and managing a golf course demands a minimum investment.

[Mike_Young]

I'd say yes, that may be the primary factor, but the cost of maintaining and managing a golf course demands a minimum investment.

Imagine if we all decided to put slate roofs on our homes.  The average American home cost would probably increase by at least 50%. Great roof but it would not be affordable and the weight of the roof would require substantial structural change to our homes. e couldn't afford the home and yet we did this to our golf courses while the industry profited from it...oh well...

[John Kirk]

Hi Mike,

I think we're on the same page.  I'm not saying that golf course operators need to make additional investments in their courses.  I'm saying golf courses require a minimum revenue from their clientele in order to stay solvent.  And it doesn't matter how many golfers there are if they can't afford that amount that keeps the course solvent.

[David Restrepo]

Millennial here too. Could American CCs take a page from Australia's book? I like to think of the latter as a no frills, "a la carte" golf. Initiation fees and annual dues are significantly lower - though generally there are more members.


For many Aussie private courses - you show up and put your clubs on the pull cart (rather than the ~5 helpers waiting at top American CCs). Pay a few bucks for range balls/tees. Play golf. Finish. Clean your own clubs/shoes and put them back in your trunk.


Maybe this has to do with hiring staff that could be considered as non-essential? I would rather pay less and pay as needed rather than seeing my pyramid of range balls magically replenished when I look away.


Also want to acknowledge that there has been consolidation in the Aussie market and quite a few clubs are struggling financially - I think this might be attributed to less playing and proximity from the CBD.   

[Bernie Bell]

In the Four Streams market, supply (number of golf courses) has been constant since the early shakeout from the recession.  I see no evidence that demand (number of golfers) has fallen.  If we're talking about demand for second memberships, that's a different story.  But if anything, simple demand for golf seems to have increased, as initiations at the lower end of private market are slowly creeping back up.  Public golf is a substitute for private golf.  So price matters.  Four Streams was in a position to compete for the golfer, millennial or otherwise, who wants amazing golf and nothing else.  Neighborhood pool/tennis clubs and gyms in the market are available to many/most at a fraction of country club costs.  But a private club has to want to compete.  Among other things, you can't make business decisions around your kitchen and have non-competitive dues to subsidize your F&B.  Your target market are golfers willing to drive 45 minutes from down county or NW DC to play golf; they MAY pay a premium for purely private golf but will not for the soup.  I think there were ways in which a more remote golf-only club with that caliber course would have been able to do well in the market, either in combination with a downcountry CC or stand-alone as a tightly directed pure golf club.

[John Kavanaugh]

This is the problem when you play for fun. You can have fun doing just about anything. Oh, and who really needs their precious ego stroked by belonging to a fancy club. The world has changed, the snobs are outside the gates looking in.

[Mike_Young]

Hi Mike,

I think we're on the same page.  I'm not saying that golf course operators need to make additional investments in their courses.  I'm saying golf courses require a minimum revenue from their clientele in order to stay solvent.  And it doesn't matter how many golfers there are if they can't afford that amount that keeps the course solvent.

AGREE....in many private clubs the member has no idea how much he is paying to play...until it hits him upside the head...

[Jeff Schley]

Hi Mike,

I think we're on the same page.  I'm not saying that golf course operators need to make additional investments in their courses.  I'm saying golf courses require a minimum revenue from their clientele in order to stay solvent.  And it doesn't matter how many golfers there are if they can't afford that amount that keeps the course solvent.

AGREE....in many private clubs the member has no idea how much he is paying to play...until it hits him upside the head...

Yep a.k.a fixed costs.

[corey miller]

And how does a mandatory caddie rule change the value proposition? 


A few of the financially strained clubs (by virtue of advertisements and membership drives) in the NYC metro area have not only dropped initiation fees but have loosened or eliminated the caddie requirement. 

[Steve_ Shaffer]

Corey,


Those "financially strained clubs (by virtue of advertisements and membership drives) in the NYC metroarea"
are not the "Top Tier" clubs. As I said above, those second and third tier clubs will struggle. It will be the survival of the fittest. Some will go semi-private. Some may get an influx of capital by selling to Concert or others. Some may close and sell for development.

[Mike_Young]

Corey,


Those "financially strained clubs (by virtue of advertisements and membership drives) in the NYC metro area"
are not the "Top Tier" clubs. As I said above, those second and third tier clubs will struggle. It will be the survival of the fittest.

Agree.  BUT "top tier" is a very small number of the total golf market...as JK say in an earlier post the "snobs" are now on the outside looking in and have made it uncool to belong...model is changing...

[corey miller]

Regardless of what tier the struggling clubs are in, and regardless of how the club properties are zoned, in many regions is is virtually impossible to sell to a developer.  It is not an option or it would have been done already. 

[Steve_ Shaffer]

In the Eastern Montgomery County area of the Philly 'burbs, within 30 minutes of my former residence , there are the following Private Clubs: Commonwealth. corporate owned and Squires, golf only clubs and the following traditional country member owned clubs- Old York Road, Cedarbrook, Cricket, Manufacturers, Huntingdon Valley,Sunnybrook,  Sandy Run. Doylestown, Lookaway, Green Valley plus Corporate owned clubs- Philmont, Meadowlands, Ace , Spring Mill, North Hills,Melrose,  LuLu also residential clubs- Talamore, Blue Bell.  The only private member owned clubs to close have been Ashbourne and Rydal.  Some publics have closed or will close shortly.


It's a very competitive market and rezoning is difficult but not impossible. Philmont, Meadowlands, North Hills, Melrose and LuLu were formerly member owned.

[George Smiltins]

It's all quite depressing. There are ways to make all of this work. Great ideas by everyone here, but sadly I don't think the decision makers at any club spend much time on golf club atlas. Older gents who long for a return to the "glory" days.


Decisions are made with the millennial golfer in mind, but I don't remember anyone ever reaching out asking for our opinions. I have no interest in mandatory caddies before 4pm, firepits, comfort stations, full lunch service at 11 am on a Tuesday. But that is all that is included on assessment surveys. "Here is a list of 50 improvements, pick which 10 you approve of" "error...you only picked 9...please make another selection." 10 new under 40's every year. 11 leave every year. bump dues up another 75 per month.


How about bulldoze the clubhouse and drop everyone's dues by $200. Has any club ever done that? Does it work?

[B.Ross]

another millennial here. i couldnt' agree more w/ the 3 that posted in last 24 hours (smiltins, restrepo, sims), but it was smiltins post that resonated the most. you're so right in that clubs in all tiers don't ask for the opinions of their youngest and most economically restrained members given that the boards are composed of boomers and maybe some gen x'ers.


i touched on this a bit on the thread about "the flag network", but given the millenial attitude, i think the way to make the club more valuable is to get your club locked into some type of reciprocal network where you get discounted access at other private clubs nationwide for when you travel but they rate limited. mini versions of club-corp travel so to speak. or if variety matters to you locally, more things like this ([size=78%]https://www.sandiegocountryclub.org/Files/Library/CHAMPIONSHIPCOLLECTION2018.PDF[/size])

[John Kirk]

Agree.  BUT "top tier" is a very small number of the total golf market...as JK say in an earlier post the "snobs" are now on the outside looking in and have made it uncool to belong...model is changing...

I think it's the other way around.  The snobs are on the inside looking out, and nobody wants to come in.  What you perceive as a snob may differ, but here's a good definition:

"A person with an exaggerated respect for high social position or wealth who seeks to associate with social superiors and dislikes people or activities regarded as lower-class."


And that is approximately why I've (at least) temporarily moved on.
 

[John Kavanaugh]

John,


Were you ever bullied as a child for having nice things?