Earlier this week, I was on an appraisal site visit at a new private club project under construction in the Midwestern US. That alone has been an unusual occurrence in recent years and among the topics of conversation was how to make golf’s COVID surge sustainable and grow the game.
A very upscale project with significant cost and being a destination club, the developer has established a membership program designed to ensure access to the membership and their guests while avoiding the seemingly excessive costs of some of the more recent private club projects we’ve all read about. How long will members (even the wealthiest) be willing, even if able, to plunk down up to 7 figure entrance fees and annual dues often at more than $30,000 per year? How long will even the most avid golfers be willing to pay up to $1,000 in some cases to play one round of golf, even at their bucket list daily-fee or resort course? It’s no longer difficult to spend more than $1,000 for just a driver and a premium putter – off the rack and ultimately have $3,000 invested in a set of clubs, bag, golf shoes and balls.
The debate about the cost of golf, and whether it’s reasonable will likely go on forever. Currently, in very positive economic times, combined with COVID’s impact on golf, demand has surged and cost spiraled up. That said, when the economy slows, will golf be able to sustain the growth of the past 4 years and expand further, especially to those groups historically left out? As mentioned within a website description of Old Barnwell Golf Club (SC), “Golf hasn’t always done a good job of making newcomers feel welcome or supported. The primary reasons people don’t pick up the sport, aside from a basic absence of interest, are usually lack of meaningful access and opportunity. Cost—green fees, memberships, equipment—is another. There are also cultural obstacles preventing people from taking up the sport, ranging from exposure to outright exclusion.”
There are now a variety of membership options available to golfers ranging from the Dormie Club model where one joins a network of clubs, to the Outpost Club model where members enjoy scheduled events at a variety of venues, and divisible memberships where a membership can be split among a group of people and there is an allotment of rounds available to each membership. I’ve often wondered if the club operating model found at many clubs in the UK where visitors are welcome for a (significant) fee at many (often bucket list) clubs in favor of very affordable (often less than $1,000 per year) dues for members. The revenue generated by visitors subsidizes the membership. One such club I’m familiar with generates twice as much visitor revenue as dues revenue. Maybe it’s not as private, but access isn’t an overwhelming problem and nobody seems to mind the dues levels.
Members join private golf clubs for (among other things) access and playing conditions. Thus, regardless of the model chosen, the product has to be desirable and members have to be able to get tee times. What this means is that it’s critical for a club to understand its culture and know how active the membership is and determine the right number of members to ensure access. While most certainly good playing conditions are essential, it often seems as though many clubs are in a “space race” to see how much they can spend versus providing great conditions as efficiently as possible. It’s often interesting to compare maintenance costs of competitive clubs in a specific market and observe the conditions at each. Some get “more bang for the buck” and I’ve seen disparities of more than $1 million in costs with little or marginal impact on conditions. Think about it. At a club with 400 members, additional incremental expenditures of $1 million costs each member $2,500 per year. I know of one (very busy) club that spends more than $95 per round played and over $7,000 per golf member on golf course maintenance. There are other examples of super-exclusive clubs with very few members and limited play where those numbers are even higher. It’s not uncommon for maintenance costs to exceed 35% to 40% of a member’s annual dues. On the opposite end of the spectrum, for example, is a daily-fee course I recently visited that spends about $15 per round and less than 25% of revenues on maintenance, and provides very good conditions. The ultimate result here is not only that clubs can become more profitable with more efficient maintenance, but more courses could be developed if more players can afford the game.
While most certainly I’m a golfer who enjoys the benefits of pristine conditions, logic tells us that striving to be like Augusta National simply doesn’t make sense for most clubs. IMHO, the first way to help sustain golf’s COVID surge and avoid regressing to the pre-COVID days is to maintain golf courses more efficiently. Modern, drought resistant turfgrasses, more efficient irrigation and establishment of more natural areas are just a few of the strategies that I’ve seen employed to manage maintenance costs effectively. As Dr. Rotella says, “Golf is not a Game of Perfect”, why should our courses be perfect? I know of numerous courses, both in the US and abroad that feature excellent playing surfaces (if not perfect) for a fraction of what some clubs spend. It CAN be done.
As Old Barnwell developer Nick Schreiber said, there are also the cultural obstacles to real growth that need to be taken down. There has been progress in this regard but not nearly enough. How many of us, who are members of private clubs invite those who “don’t look like us” as guests to our club? How many have you sponsored to join? One thing I’ve observed at numerous, if not most, clubs is too many (often unnecessary) rules. Such an environment turns many in the Millennial & Gen Z generations off and they seek other activities, even after trying golf for awhile. Golf (while often maddening) is a game. As a recreational pursuit, it needs to be fun and the atmosphere needs to be inclusive. What is so offensive about cargo shorts? Is a little (non-intrusive to others) music on-course the end of the world? Wouldn’t it be cool to take the family dog out on the course for an evening nine (like they do in Scotland)? I realize some of the more ardent “traditionalists” among us may resist these concepts, but my interest is in growing golf. I vehemently oppose the idea that golf should be “aspirational” and that rather than being a status symbol it can be an “everyman’s game” like in Scotland, the home of golf.
As a volunteer assistant coach for a high school golf team, I hope to pass on to our players, including several novices, the beauty of what golf is all about while helping them improve their games and continue playing and enjoying the game for a lifetime, like I’ve had the opportunity to do. Growing the game is important to ensure that golf courses will be economically viable in the future.
So, back to the original question – How do we make golf’s COVID surge sustainable? Growing the game requires progressive thinking. Nationally, we’ve lost more than 2,000 golf courses in the past 15 years to financial distress or alternative (more economically feasible) development. Few new courses have been developed, and most of those are uber upscale clubs that won’t help grow the game. For the rest of the world, golf needs to be affordable and inclusive to sustain this growth, avoid a return to the days of losing 200 courses per year to closure and begin adding more courses again.