Generally attributed to Albert Einstein, the definition of insanity is stated as follows: “Insanity is doing the same thing over and over and expecting different results.” Regardless of who’s responsible for this definition, it makes sense. Unfortunately, many private clubs and golf courses (and other businesses) practice complacency and fail to solve some of their most pressing challenges.
Recently, I visited a club on a consulting assignment and while discussing with board and committee members the challenges they face, one club leader exclaimed that there would be no debt incurred or assessments levied. This particular club has a variety of challenges, most requiring capital investment. Like most clubs experiencing distress, they lack sufficient membership numbers and to compound the problem, membership rates are suppressed by the fear of competition. Even in the current COVID enriched membership environment, the club has no entrance fee and has made “deals” to encourage membership development.
Combined with a golf course irrigation system having components exceeding 50 years in age, clubhouse roof issues and various other capital needs, funding is an issue. The budget has been balanced in the past 2 years largely from PPP funds, and while membership has grown modestly, there is no plan for membership development and no membership director. The club has limited capital funds. Diversity is lacking with only one African-American member and no women serving on the club’s board of directors.
Having once belonged to a club with similar challenges, the thing I heard loudest was an unwillingness to change course. The club has a culture of “customers” which needs to be converted to “ownership” – and quickly. Leadership at the club I formerly belonged to declined to act, closed 5 years ago and is now a mixed-use development. 80 years of history, relationships, memories and more down the drain.
The town fathers for a municipal course we’re working with can’t decide between the politics of subsidizing an excessive number of resident rounds and running the facility as more of a self-sustaining business. Located in a vacation destination area, there is potential for considerable outside play. They need to make a decision!
Each and every club is different. Some have locational challenges, some have competition to be considered (not feared) and some have capital and infrastructure needs. As many clubs diversify their membership, some don’t simply because they fail to get the word out to those groups not historically included that they’re welcome. Some simply decline to diversify. Many of the clubs and courses that have failed in recent years simply declined to address these challenges and expected members to join or players to play before they either addressed their problems (required) or enhanced their facilities with updated and modern amenities coveted and demanded by the next generation of members and golfers, who will find someplace that has them.
Now, one might conclude that only clubs that decline to reinvest can fail. Not true. While there are most certainly situations where we encourage clubs to invest and take on debt, spending uncontrollably and incurring excessive debt can be a death knell. A combination of large debt, and revenue challenges has sunk many a golf or country club. There are several companies focused on acquiring clubs with excess debt and capital needs they can’t – or won’t – address. Those clubs went too far.
The solutions to these challenges vary. Sometimes the culture has to evolve from customers to owners. In other cases, a long term plan is required to first address more pressing issues while having a longer term plan for others, and to “sell” to future members as well as those existing members possibly considering alternatives. If the club has overspent, the solution may be a restructuring of debt or, in the case of many clubs, organization of a committed group of members willing to provide financing (usually debt) on favorable terms to the club. Finding a balance between happy members/golfers and fiscal responsibility is key. It’s not “one size fits all”.
In the COVID charged environment of increased play and membership, fees and dues have skyrocketed, often outpacing the inflation rates we hear about every day. No doubt, those clubs and courses that become too aggressive will push people away. This should be a caution flag. Clubs need members and courses need golfers more than the members and golfers need them.
The bottom line is that continuing on the same path (DOING NOTHING) when in distress is not a viable option for success. Neither is beating up your customers. The challenge is that – at many clubs – CHANGE is a scary word, and is often hard to swallow. Accordingly, I like to use the term EVOLVE. Some clubs need significant change, but all clubs need to evolve. My father always said that “the longer you let a problem go, the bigger it grows”. DO SOMETHING! It’s those clubs with forward thinking vision and the ability to anticipate and act appropriately that succeed. Leadership must not be complacent, and must have long term best interests of the club (not personal agendas) in mind. It’s not your father’s country club anymore, and those perpetuating that thinking will experience distress. Repeating the same mistakes over and over again is a recipe for failure.