Golf Clubs and Golf Courses – Is the middle class disappearing?

Much has been written about golf being an elitist activity, about it being too expensive for the masses and the resulting decline in participation.  In this space, I’ve written extensively about broadening golf’s appeal to the “3-M’s”.

As I see it, a big part of the problem is that just like our societal shift in distribution of wealth, more seems to be going to the top.

When I look back over the past few years at our appraisal, consulting and brokerage assignments, there is a clear distinction between the upscale private clubs (which are performing favorably) with the mid-market and affordable clubs which aren’t faring as well.  This is consistent in other areas as well, where upscale restaurants like Del Frisco’s and Capital Grille, are thriving while Red Lobster and Olive Garden are struggling.  Have you noticed that there’s rarely an empty seat in First Class lately?  Not many upgrades are available.

We all know that golf courses are closing at record rates, but do we know which ones?  While it is true that some of the closures are upscale, in some cases “destination” courses, like Wynn in Las Vegas and Glen Abbey in Toronto, the frequent host to the Canadian Open and several well-known courses in the Myrtle Beach Area, many of the courses closing are middle market and affordable private clubs and middle-market daily-fee facilities.  In most markets, the upscale, sometimes iconic and prestigious private clubs are thriving and rounds are up at many municipal courses.  Golf for the middle-class is disappearing.  Mr. Trump’s wish that “golf should be aspirational” is coming true.

After a long growth period from the 1950’s and 60’s originally spearheaded by Arnold Palmer and later Tiger Woods, is golf returning to its elitist roots?  In 1960, slightly more than half of US courses were private.  At the end of 2016 that had become about 25% private.  Over the same period, the number of municipal courses grew from roughly 900 to about 2,500, and from roughly 14% to 17% of the national total.  While it is unlikely that affordable golf (represented to some degree by municipal courses) will disappear, it is clear that middle-market private clubs and those daily-fee courses serving the mid-market are challenged.  The “working man’s” private club seems particularly challenged.

Whether these clubs close and cease operations in favor of alternative use development, the members sell to management firms or the clubs convert to a semi-private or daily-fee model, these clubs are most definitely a casualty of current market conditions.  Why?

I’ve observed the following issues that seem to impact middle-market clubs the most:

  • Governance – Either club leaders stay too long or they change every year.  Therefore there’s no leadership or leadership from “the same old crowd” that becomes stale.
  • Re-Investment – Those clubs that need capital investment the most, either can’t afford it or decline to invest.  Thus, they continue their downward spiral.
  • Evolution – Many clubs become obsessed with tradition and history, often ignoring the desires of the members of today and tomorrow.  They refuse to evolve and include facilities, programs and groups that would enhance the club’s prospects for future economic success.

These are the most prominent “big picture” issues that impact, and ultimately seem to kill middle-market clubs.  It is essential for clubs to understand first their goals and objectives.  I like to say that a club needs to know what it wants to be when it grows up.  Additionally, every club needs to be realistic about establishing those goals.  A club’s facilities, location, competitive market and membership makeup all need to be considered when establishing these goals, and it is not uncommon to see clubs either reach too high, beyond their capability, or elect to control their pricing by avoiding upgrades and enhancements in the interest of keeping the cost of membership down.  In those instances, the club often declines both physically and economically to a point where there’s little reason for anyone to join.  With most markets having multiple clubs to choose from, the exodus begins to the other clubs.

Private golf, which basically exists for the purpose of uninhibited access is expensive by nature.  Certainly there is a place for the middle class, but making it too cheap usually fails and making it too expensive results in a limited market.  It is my sincere belief that private golf in the US has succumbed to the social pressures of creating an “exclusive” atmosphere and to the “Augusta Syndrome” which motivates many clubs to spend excessively on golf course maintenance.  Like most golfers would, I enjoy the near perfect conditions experienced at my club on a regular basis.  I’m willing to pay for it.  At many clubs, membership seeks those same conditions but isn’t willing to pay for it.  Is there a happy medium?  If golf’s middle class is to survive, we need to find that happy medium where the club matches the market.  It’s different with every club.