A (Mike) Kahn, Golf Business Consulting. Phone: 941.739.3990 Fax: 425.675.6909
The article was originally published right here in 2004.
AND COUNTRY CLUB FINANCIAL WOES - WORSE IN 2013? YES! HOW BAD?
2013: A once high-end private club is selling public rounds as low as $25.00 in-season (Florida). Not long ago you had to be invited by a member at $100.00 to play the course. Worse than that, they hired a management company with a 'bargain-basement' style marketing, managing and fee plan. It's embarrassing for the members, so I will not identify the club. As I fully predicted, the management company was subsequently fired.
Be sure to consult me before hiring any management company. Remember, your first consultation is free. Phone: 941-739-3990, or write: firstname.lastname@example.org
age of the membership well up in the 60's - even 70's
resistance to fee increases or assessments
paths, irrigation, equipment, greens desperate for refurbishment
flow cannot keep pace with costs - but refuses outside play
'pride' not willing to give up control of the club
rosters are shrinking. Average age of the membership well into the 60's.
The 30-year members won't 'hear' of allowing guest play - but won't
pay higher dues either. Irrigation system needs a $1 million dollar
overhaul. Greens are begging for new turf. The fairway unit has up to
12,000 hours on the job. Worse: The bank won't renew the note!
CLUB IS IN A CASH CRUNCH, THIS LINK TO MPS MIGHT HELP
EPIDEMIC IN 2011! (I wrote this originally back in early 2003)
get messages at my Email address, email@example.com
from country club board members from just about everywhere in the USA.
They are asking for ways they can escape from a financial mess! I wonder
if there aren't thousands of courses in trouble with their bankers!
Country club financial disasters seem to be more frequent at older clubs
- especially after they built their new $ multi-million clubhouse.
The toughest ones to solve are member-owned, board managed private country
are usually managed by an elected board, and like any governing body
represented by different interests, their decisions tend to be indecisive,
emotionally driven, or based on self-interest. When the bread-and-butter
decision is finally realized, it is often too late. Most (not
all in 2010) of these financial messes I believe can be cleaned
up, but the solution starts with the board giving up control of the
club to people who are experienced at operating golf courses and country
Many of you
who have followed www.Golfmak.com know my attitude toward golf courses
that try to be 'everything-to-everybody' by adding swimming pools, tennis
courts, fitness centers, and 40,000 square foot clubhouses. Many of
these please-everybody golf and country clubs are in the deepest financial
trouble. It's a shame, because without the amenities the golf course,
standing alone, is often quite profitable!
for these financial disasters at private country clubs are classic:
membership today is an average ten to twenty years older than they
were back in the heydays. Rosters are shrinking and 'young blood' is
not attracted to the 'shuffler' crowd (if you think I'm kidding, listen
to the Benny Goodman music at the club's New Years party). Don't forget
that the game of golf is also competing with many other pastimes and
hobbies like bird watching, quilting, fishing, motor cycling, bicycling,
traveling, and such. Old guys are playing baseball, basketball and other
sports our fathers felt they were too old to play . - giving up golf!
country clubs ran into trouble by not properly maintaining, or mismanaging
their contingency fund. Later, when it came time to repair the irrigation
system, replace greens, or repair the clubhouse roof they had to assess
the membership, or borrow from the bank. "I believe almost all
golf course loans taken out prior to 9/11 are in trouble in 2003."
clubs often refinanced the property during good times rather than
appropriately raise dues in smaller incremental amounts. Lately, the
bankers, who picked up the dinner check a year ago, are calling in or
not renewing their notes!
4. For the
past three years (maybe five years by 2010), golf club
revenues have been trending down with many showing net earning below
their banker's DSR threshold (usually 1.2 to 1.25). These challenged
cash flows are the result of stagnant growth in the game, too many golf
courses, yet costs still rising.
maintenance issues are piling up, machinery is breaking down, and
staff levels are down. All these symptoms are the product of falling
membership rosters and rising costs. [A recent article in The Golf
Course Industry, August 2010 issue, in a survey of superintendents,
73% of them indicated they wanted more staff.]
40,000 square foot clubhouse is a big dark building costing a fortune
to keep warm (or cool). We see dismal efforts to increase outside
functions like weddings, and banquets to supplement cash flow (see
why weddings make me cry). However, in most cases the cost to host
a $10,000 wedding generally works to $10,000+ when the cost of supporting
the infrastructure is included in the equation.
superintendent is constantly running to the hardware store to keep machines
running. Like item #5 above, old machinery is difficult to keep
running when parts like bearings, belts, and bushings are failing due
club's accounts payable are at the 75+ day average causing suppliers
like Titleist, Coca-Cola, and Sisco Foods to put the club on C.O.D.
country club board meets those and the horrible words, "Outside
play!" keep coming up. Recently, I overheard an older board
member saying, "I've been a member here for thirty years and I
won't stand for bringing in riffraff!" Meanwhile the club is heavily
in debt and nowhere to turn.
complain their fellow members don't patronize the club enough. I hear
that everywhere I go. People simply cannot dine at the country club
all the time. Sometimes they (like you) want Italian, Sea Food, Chinese
food or menu items not served at the club. In 2010 there are likely
200 excellent restaurants within 30-minutes of the club. "I don't
know too many country club dining rooms capable of consistently serving
a better steak at a better price than Charlie's. Depending
on the membership to patronize the dining room often enough to compete
with Ruth's Chris, Outback, or Longhorn ainít going to happen
in 2010!" Mike Kahn
WHAT IS THE SOLUTION?
clubs have tried one or even all of three ways to solving their financial
woes. One is to raise dues. Another is to assess the membership. The
other is to open to public play.
or assessing the club membership usually results in resignations - an
outright offset. Worse, a smaller membership results in lower normal
revenues - placing the club in an even more desperate mess. In the highly
competitive 2003 golf market, I believe raising dues or assessing the
membership is not likely to work.
line shrinks - less money than before
members - less collateral spending
line shrinks - less money than before
members - less collateral spending
against allowing public play is based on the loss of sanctuary, which
- unless properly presented - will also result in member resignations.
However, I believe the public-play strategy (limited play, or totally
open), will ultimately be more successful than assessments or raising
dues. Later, if fortunes turn around the club may even go back to private
'empty' tee times members don't frequent
to promote new memberships
needed revenue from fees and collateral spending
UP TO GOLF BUSINESS EXPERTS
One of the
most difficult strategies for a private country club to adopt is to
entrust the club's operations to third-party management. After all,
country club board members are usually experienced, successful, and
proud people. It's tough for an attorney, school principal, or successful
business person to admit there are others out there who know how to
manage the club's affairs better than they. Usually it's the bank that
hires the third-party - after foreclosure!
YOUR FIRST CONSULTATION IS FREE
If your golf
and country club is experiencing any of the symptoms you see above, you need
a hard-nosed wake up session by Mike Kahn. If you and your board are
willing to hear the truth and implement measures necessary to save the
club, call: 941-739-3990, or email: firstname.lastname@example.org.
It will be a 100% free consultation.
Do it before
your beautiful fairways are paved over.
a site review for your club here.