Now that I’ve got your attention, a slight row-back for all of those clubs that are run to a high level, where the outside economic environment is reflected in the same way within the board or committee rooms.
The simple facts are that many golf clubs – despite their mainly ABC1membership demographic – are very often run like vulnerable ventures – where the overriding strategy is not to offend the membership by increasing fees when necessary.
In other words, they are self-governed through an overriding fear of causing offence.
Often, completely unimportant issues can get in the way of the vital financial and operational management of a golf club: ‘Why are the scones not good?’ or ‘Why is the pint not cooler?’
And the old chestnut: ‘Why are my fees going up?’
The simple reality is that the price of almost everything to do with the running of your club went up in the last recorded year according to thought-provoking data collated by Club Benchmarking (CB).
Overall wages increased at the median by 4% in 2023, course maintenance costs went up at the median by 3% and subscription rates increased by 3.4%.
Increase in membership fees is the one area which causes the most stress for golf clubs, where Boards and Committees are apprehensive of leaving a legacy where the narrative might be: “They increased costs, and for what?”
While certainly true with a small number of members, usually the traditional 5% that complain loudest, the simple fact is that golf clubs must increase their subscription costs to ensure the long-term viability of the club.
To hit a very obvious point, the best indicator on the total revenue for a club in direct and consistent income is through membership values, where an interesting picture emerged from the CB data.
Just over one fifth of golf clubs saw membership numbers increase throughout the year, with 65% reporting that its numbers remained stable and just over 10% declaring they had lost 2% or more of their members.
When it comes to secondary income generation through food and beverage things get even more interesting.
When asked: “Are you projecting to make a deficit, surplus or break-even result in your food and beverage operation in 2024?”, the answers were negative for almost half of clubs.
Just under 50% predicted a deficit for the year, with approximately 35% forecasting a surplus, while almost 17% said they expected to break even.
Interestingly the data informs us that the clubs who attract the highest subscriptions and entrance fees have realised that food and beverage is a service to members and are happy to make a controlled deficit in this area. The F&B deficit is then effectively charged to members through the annual subscription.
Most relative to the times we live in is the question of inflation and how it has “impacted your club the most”.
When identifying challenges, wages were identified as the most significant with more than 70% of clubs, while energy costs come in at just north of 60% affected, with food and beverage cost of goods coming in at under 60%.
Golf course supplies, including chemicals and other essentials to the maintenance of courses, sits at 45%, with golf operations supplies hitting at just over 20%, while increased costs for capital projects was at 4%.
Capital remains the most important driver of success for all clubs, but so too does the challenge of filling positions and staffing clubhouses and courses – one of the ‘downsides’ of having full employment.
Clubs were asked to use a scale to indicate their ability to fill hourly positions since the beginning of this year, 2024.
Almost 10% said it was ‘Extremely difficult’ while just under 20% described the situation as ‘Moderately difficult’.
Between one quarter and one third of clubs said filling hourly positions was ‘Slightly difficult’ while the most responses, sitting at under 40% said it was ‘Same as always’.
Only around 8% said it was ‘Slightly easy’ while there were no responses for ‘Moderately easy’ and ‘Extremely easy’.
To summarise this rich stream of data which came from a strong sample size of 63 clubs, is best analysed as follows.
Staff costs, particularly wages, are increasing, maintenance costs are going up and clubs are not losing as many members as they’re gaining… for now, and almost half of clubs will work to a deficit in the bar and restaurant area.
Inflation remains a concern, although the figures that Club Benchmarking gather for 2024 will put all of this in context, adding an even more accurate picture on what the short-term future holds for clubs.
But how does the short-term future look for you as a member while clubs consider putting up the cost of subscriptions or decide to leave them flat for the year ahead?
Not increasing membership subscriptions as required is the wrong thing to do according to John McCormack of Club Benchmarking, where a large part of the financial problem and stress for golf clubs is that “if they’re honest many don’t have a robust plan in place”.
“They use emotion over data – emotions take over, they’re afraid to put the sub up for a variety of reasons.
“Fear of getting a hard time in the bar from members is a perfect example of emotion taking over decision-making,” explains McCormack.
“Even clubs that think they have a plan don’t have a robust plan that has factored in not just day-to-day operations but more importantly financing their capital needs for at least the next 10 years.
“How often are Members presented with a list of projects for them to approve each year. It should make sense that we as club members are being presented annually with a 10-year rolling capital plan for our club.”
His colleague James Burns puts it another way: “If we want to be controversial, it suits Boards and Committees, at times, not to have a plan, they can run the club the way they want, everything from the golf course to the clubhouse – ensuring their ‘pet projects’ are prioritised.”
This is mainly down to the short-term approach to golf club governance, where you have Boards and Committees changing regularly, and nobody being brave enough to make difficult decisions, afraid of damaging their own legacy.
There is an oft-told story by a number of general managers of golf clubs that very often the quality of the scones can sometimes be the central focus for clubs rather than the financial sustainability of the club.
“We have a slide that we use in Board presentations – ‘Operational Governance Over Strategic Governance’ – when you put that in front of a board you can really see that they understand where the focus should be.
“When a committee or board are guided through where their strategic focus must be, you very often see a complete change of their thinking, once it’s pointed out to clubs,” the pair explain.
The proven business model, where most strong businesses outside of the golf club sector are run by a chairman with a longer tenure, is something which is changing the industry for the better.
CB has found that clubs in Leinster are moving favourably to the Chairperson model, where a large percentage of clubs surveyed have gone this way, and strong governance is becoming a keen focus. The key to changing the way clubs approach how they are financially managed – ideally with a 10-year strategy in mind – is all about efficiency in every department, from the bar to the bunkers and all else in between with the overriding goal to produce the best member experience possible.
If clubs focus less on the short-term, the clubhouse being ship shape, the food being good quality, the beer being nice and cold – all important for sure, but not the centre of everything.
“When it comes to the long term, we need to get boards or management committees thinking strategically and about the legacy they will leave for future generations of members.
“Most boards get that, they might come in and say: ‘I’m going to shape it in my image’, but when you talk to them, they generally understand it,” adds McCormack.
“It’s a high fixed cost business, even to open the doors there’s a cost to that, for heating, electricity – you cannot close on a Monday or Tuesday, otherwise you’d impact the members’ experience.”
One of the most “dangerously trending” items witnessed by CB are the high number of ‘red bucket’ golf clubs, who are purely focused on the next 12 months and getting through that, where ‘everything will be okay’ once they do.
“We’ve come across a number of clubs where men and women who get onto committees do so on a manifesto to cut costs and drive efficiency, but that’s going to really affect member experiences,” says James Burns.
The problem with that is that there is never enough money for capital and capital investment, and where there is no long-term plan in place for what CB says is one of the most capital-intensive businesses there is.
“The real issue is fear taking over, back to that whole emotional trigger we spoke of earlier, where every club will have members who will resist and pushback against any form of increase in fees, when common sense dictates that a sustainable model requires it.
“The committee or certain volunteers don’t want to be seen as driving up the sub, but that is simply a lack of reality,” says McCormack.
“You effectively own your club, you have a shareholding of that club, and you have a responsibility to invest in the club to leave it in better shape for the future.
“I think clubs govern in fear and that culture has to change – clubs need to start looking at the data over emotion.”
There is an example of a club, which CB don’t name, which proudly boasted that over five years it hadn’t put its subs up. But when it finally increased membership costs it raised them by 23%, to make up for such a timelapse of failing to increase.
Our latest discussion on this always fascinating topic coincided with an extremely worrying development with Balmoral Golf Club, something which all observers will hope doesn’t become a signature for a new trend in golf.
The Belfast city course is facing financial catastrophe after news broke in November that the club was seeking STG£1,000 from each member in loans to help bail it out of trouble.
Among the reported options for the club was to sell its clubhouse and greenkeeper’s sheds or reduce the south Belfast club to a nine-hole course.
The issue, a £1m+ debt which could see Balmoral being sold in the new year to the Merrion Property Group in Dublin, a move which would allow the course to relocate elsewhere. It would be a sad end to the 110-year history of the club on the Lisburn Road, just three miles from Belfast city centre.
There have been other examples publicised in the UK and Ireland in recent months regarding clubs that have had to downsize or have gone out of business.
This would indicate that those clubs may not have had sustainable long term financial strategies in place, and while we don’t know how the debts accrued to such an extent, it’s a fair conclusion that the income generated through subscriptions and capital levies were significantly inadequate.
So, as well as servicing debt, what does your golf subscription cover?
According to Club Benchmarking the largest cost is wages, a cost which we earlier pointed out is increasing substantially for golf clubs as they struggle to recruit and retain staff.
Course maintenance has also increased by 4-5% annually, just like staffing costs, while energy costs have somewhat stabilised this year.
So, what is the solution? Cut costs? Well that then impacts on the membership experience, but certainly clubs can learn to improve cost control.
It is critically important that clubs ensure that there is enough money to fund capital needs (and not just projects) on an ongoing basis.
Clubs operating at a high level strategically have realised that a 10-year capital plan is the bare minimum requirement.
That value for money starts with the members, and ultimately ends with the members, so when your bill lands for your membership subscription in the coming weeks, try to celebrate the fact that you’re being asked to pay a bit extra.
If you are then you should have been presented with, and can understand that there is, a financial plan in place for spending subscriptions and levies received from members and you are comfortable that yours is a club which isn’t being run by fear and has a long-term vision, and hopefully a long-term future.
For more information on Club Benchmarking please contact
John McCormack: jmccormack@clubbenchmarking.eu
James Burns: jburns@clubbenchmarking.eu
Or visit www.ClubBenchmarking.eu
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