Golf and Club Management

Chapter 19

Introduction• Within the last decade, approximately 26 million Americans

played golf on nearly 16,000 courses.• During the last quarter of the 20th century, the number of

golfers increased from 10 million to 30 million golfers.• Since then, golf courses and clubs have been challenged by

economic and societal changes that have impacted demand and have forced the industry to reevaluate its management and marketing practices.

• Courses are either public or private.– Private outnumbered public until the 1960s.– More public courses created, now in mature phase of life

cycle

History• The country club originated about 120 years ago and

was conceived by affluent Americans.• The American economic and political climate of the

nineteenth century respected individualism and eschewed inherited nobility and the caste system of Europe.

• As America arrived as the world banking center, a moneyed class of individuals was created who sought to spend time with people of their own kind, away from average citizens of modest means.

History: Country Club Concept• Founded in 1882, The Country Club of Brookline, located

near Boston, Massachusetts, is considered to be the first country club in the United States.

• The rules of sportsmanship were established in the 1880s at Yale.

• Country club: Place located in a country-like setting with open areas and lots of green space that has a standard meeting facility, the clubhouse.– Members go to enjoy sports and sportsmanship, engage

in activities for pursuit of happiness, develop friendships, and co-mingle with friends and like-minded others.

History: The Game of Golf and Golf Course and Club Development

• Game of Golf originated with the Royal and Ancient Golf Club of St. Andrews, Scotland.

• First introduced to US in Yonkers, NY: Apple Tree Gang– 1895: USGA formed– 1910s: Club Managers Association of America (CMAA)– 1910s: Professional Golfers Association (PGA)

• Four major periods of golf course construction– 1878-1919: Concentrated in golf club villages– After WWI: Included Augusta in 1932– 1950s and 1960s: Increased leisure time and affluence– 1970s: Palmer and Nicklaus spurred growth

What is a Club?• Public club: Open to public• Private club: Restricts membership, may either be private

for-profit entity or private non-profit entity– Facilities not open to the public– Member or individual must be accepted by rest of

membership before he or she can join– Has a standard meeting place (typically a clubhouse)– Place for co-mingling: Social, recreational, or

educational • Private exclusive club: Restrict membership to those invited• Public accommodation club (private for-profit club) is open

to the public, may have special membership plans, may advertise and compete readily for the public to use and enjoy its facilities, and restricts only for capacity purposes

Why Join a Private Club?• People join private clubs for a variety of reasons:

– Exclusive atmosphere– Statement of social position– Recreational facilities– Convenient for their types of interests– Close by their neighborhood– Club’s dining facilities– Don’t have to schedule in advance– Get ahead in business– Legacy member

• Built for variety of reasons– Social reasons, help sell homes, attract visitors

Ownership and Types of Clubs: Equity Clubs

• Member-owned clubs– Typically have a private, non-profit status (earning re-

invested in the club), not open to the public• 501c7 club: IRS designation, tax exempt

– Must be a club and organized for club purposes– Organized for pleasure, recreation and other non-profit

purposes; must be clearly stated in club’s by-laws– Substantially all of the club’s activities must be for

pleasure, recreation, and other non-profit purposes– No inurnment: No earnings benefit for club owners– Must not discriminate on the basis of race, color, or

religion (Note: Single-gender clubs approved by IRS.)

Ownership and Types of Clubs:Non-equity Clubs

• Non-member-owned clubs– Typically have a private, for-profit status

• Typically owned by real estate developers, corporations, individuals, or investment firms

• Operated to earn a profit for owners/investors• Income is taxable

Club Organizational Structure• Non-equity and public golf course

– Managed and directed by club’s general manager, who follows owner’s policies instead of club members’.

– Some club have an advisory board (no policy making authority, power, or direct authority).

• Equity club– Club members elect those from its membership to serve

on its board of directors (establish club policy, hire management team, including general manager).

– General manager performs day-to-day operational aspects of the club.

Club Organizational Structure (cont.)

• Board of Directors– Responsibilities include establishing general operating

policies, overseeing financial stability, voting on new members, handling discipline, hiring general manager.

• Executive Committee– Usually composed of club’s officers.– Acts in lieu of full board between meetings.

• Other Club Committees– Standing committees: Permanent committees that help

conduct ongoing activities (strategic or long-range planning, finance, bylaws, nominating, membership, etc.).

– Ad Hoc committees: Formed short-term for special purpose (renovation, professional tour event, etc.).

Golf and Country Club Industry Performance• 12,659 golf courses and country club facilities

(establishments primarily engaged in operating golf courses, except miniature) in the United States that generate $20 billion in annual revenues (IBISWorld, 2013).

• Number of facilities in the United States has decreased each year 2008–2013 and is projected to continue to do so at a rate of between 150 to 180 closures per year.

• Construction of new courses is at historic low, with only 46 new courses built in 2010 and 19 courses in 2011.

• Golf participation stabilized around 25.7 million golfers (National Golf Foundation, 2013).

Market Drivers• Market demand in the golf and country club industry is

influenced by a number of market drivers, including:– Participation and access to playing partners– Number of courses and types of courses available to the

playing public and private club members– Condition of the course and the playing experience– Demand for quality experiences and services– Price to play a round of golf– Available time to play a full 18-hole round of golf– Seasonal play and weather patterns

Market Segmentation• Average US golfer is approximately 41 years old. • Has a household income of $85,000. • Plays 18 rounds annually.• The industry is dominated by male golfers, but the

number of women who play is increasing (“Golf’s 2020 Vision,” 2012).

Market Segmentation based on Frequency• According to NGCOA (2013a):

– Avid golfers play more than 25 rounds per year.– Core golfers play 8 to 24 rounds per year.– Occasional golfers play 1 to 7 rounds per year.– Beginning golfers play for the first time.– Junior golfers (children and teens ages 5 to 17

who play at least one round per year).

Market Segmentation Product Types• Public golfers are responsible for approximately 75% of rounds

played and dollars spent on golf in US (Beditz & Kass, 2008). • Public golfers have access to 11,683 public courses of which

approximately 75% are daily fee, privately owned courses and 25% are municipal courses owned by a city or county.

• Nearly one-third of public courses are nine-hole courses. • There are 3936 private courses (National Golf Foundation,

2013).• Private club golfers tend to be older, have higher incomes, and

spend more annually on golf-related purchases.• The number of female golfers playing regularly is higher in

private clubs than on public courses.

Course Locations• Florida and California have the highest number of

courses on a statewide basis (1050 and 920, respectively) (National Golf Foundation, 2013).

• States such as Florida and California can also expand their potential target markets by focusing on tourists.

Management of Golf Club• Management team of a golf club is made up of a

group of highly skilled and trained professionals.• General manager: Official executive management

position (COO) and accountable for all aspects of club’s operation.

• Acts as a liaison to the board of directors while managing the intricacies and day-to-day details of the business.

• Must possess specific skills and competencies for success.

Financial Management and Benchmarking• Club managers must understand the financial issues that

impact the success of the organization.• Golf club revenues include membership dues and initiation

fees (private clubs), food and beverage revenues, room rentals, golf operations, and tournaments.

• Operating expenses include costs related to golf course maintenance, such as equipment and fertilizer; golf operations; food and beverage service; labor; and capital costs (Schmidgall, 2013).

• The PGA and NCGOA have partnered to provide a financial data and benchmarking service for clubs known as PG PerformanceTrak.

Basis of Competition in the Marketplace• Success of golf and country club operations rely on their

ability to attract new members, retain existing members, sell club’s amenities, maintain or increase usage.– Private exclusive clubs not permitted to advertise and

must seek members through referrals, incentives, and other means.

• Geographic location of the facility may be a major influence when choosing a golf course to play.

• Competition can also be based on the skill level of particular players.

Professional Staff Positions in Private Club• Club professional: Directs all golf activities for the club.• Tennis professional: Manages the tennis program and

provides individual lessons to members, establishes clinics, and oversees the maintenance of the tennis courts.

• Golf course superintendent: In charge of maintaining golf course’s green environment and playing areas in an ideal playing condition (typically has a degree in turf management or agronomy, usually certified).

• Aquatics director: Head swim professional (Red Cross offers training and certification).

• Spa director: Rapid development of new day, resort, and club spas (National Certification Board offers certification).

Professional Staff Positions in a Private Golf Club (cont.)

• Department managers: Food & Beverage, Security, IT, etc.• Club house manager: General manager’s second in

command• Controller: Develops and oversees policies to control and

coordinate accounting, auditing, budgeting, and related duties

• Executive chef: Responsible for all food production• Banquet or event manager: Promotes the club’s dining

facilities• Membership director: Help identify, close, and/or introduce

and oversee club membership categories and club’s waitlist

Strategies for Entering Golf Management and Club Operations

• Largely achieved by following the strategy to become a certified club manager (CCM)– Students accumulate certification points while in school.– Pursue positions as assistant professionals who teach and

direct these sports for membership.– Success requires combination of club management

expertise, sport and food service knowledge, and general business skills.

– Degree programs in club management in a hospitality program, sport management, and exercise science or professional golf management are particularly relevant.

Strategies for Entering Golf Management and Club Operations (cont.)

• Largely achieved by following the strategy to become a certified club manager (CCM)– Specific knowledge in sport instruction and event

planning– Connect with the Club Managers Association of America

(CMAA), PGA, or USTA– Golf professional may pursue a golf management degree.– For turf management, can gain a turf management degree

generally in an agronomy, plant, soils, or turf management from an agricultural college or university

Current and Future Issues for Golf and Club Management

• Changing the format of the product– The traditional format of playing 18 holes of

golf is time consuming and often costly. – Today’s golfers seek experiences that allow

them to maintain strong family relationships and, as such, spending a full day at the club or out on the course is no longer considered a viable option for many.

– Golf clubs and courses must change to accommodate these needs.

Current and Future Issues for Golf and Club Management (cont.)

• Golf 2.0 and Player Development

Current and Future Issues for Golf and Club Management (cont.)

• Sustainability and the environment– The golf industry has been considering these issues

when building and managing new courses for many years now.

– Management of existing courses within the context of supporting a sustainable environment requires modification of existing practices in many areas.

– Developers of new courses must be aware of federal guidelines designed to protect the environment from the very beginning of the design process.

Current and Future Issues for Golf and Club Management (cont.)

• Impact of technology– As technology continues to develop, golf managers must

stay ahead of what is new in their field so that they can use these tools to build the business and enhance the experience of their customers.

– Promote the use of social media to reach golfers.– Embrace technological advances with golf equipment.– Utilize technologies for teaching golf, such as tools used

for swing analysis and simulation.

Summary• Golf courses and country clubs are significant

business enterprises operating throughout the United States that provide diverse experiences and opportunities for golfers of all ages.

• New initiatives are currently being implemented in order to make the game more appealing and accessible to a diverse golfing population.

• Future golf professionals must prepare for the complexities of the industry by developing business skills as well acquiring specific knowledge of specialty aspects of the field.