Chapter 20 Golf and Club Management

1. Chapter 20 Golf and Club Management

2. Introduction • Within the last decade, close to 30 million Americans played golf on nearly 16,000 courses • During the last quarter of the 20th century, number of golfers increased four times faster than nation’s population, from 10 million to 30 million golfers • Courses either public or private • Private outnumbered Public until the 1960s • Development of more public courses created periods of rapid growth • Now in mature phase of life cycle

3. 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 had arrived as the world banking center, this created moneyed class of individuals who sought to spend time with people of their own kind, away from average citizens of modest means

4. 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 with Apple Tree Gang • USGA formed in 1895 • 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

5. 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: clubhouse • Members go to enjoy sports and sportsmanship, engage in activities for pursuit of happiness, develop friendships, co-mingle with friends and like-minded others

6. 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 • Place not open to public • Member or individual must be accepted by rest of membership before he or she can join • Has a standard meeting place • Place where co-mingling of social, recreational, or educational purposes • Private exclusive club – restrict membership to only those who are invited to join

7. What is a Club? (cont.) • 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

8. Ownership and Types of ClubsEquity Clubs • Member-owned clubs • Typically have a private, non-profit status, 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 • Substantially all of the club’s activities must be for pleasure, recreation and other non-profit purposes • No inumment (no net earning may benefit owners) • Must not discriminate on the basis of race, color or religion

9. Ownership and Types of ClubsNon-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

10. 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

11. 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 the club conduct ongoing activities • Ad Hoc committees – formed for special purpose

12. Market Drivers • Participation • 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, restricted to high-end or unique courses

13. Market Drivers (cont.) • Price to play a round of golf • Available time to play a full 18-hole round of golf • Seasonal play and weather patterns • Turf grass conditions

14. Market Segmentation • Average golfer is 37 years old • 75% of golfer are men • Participation directly related to income levels • Highest rate with income >$150,00 (30%) • Steady base of approximately 5-6 million frequent golfers who play golf more than 40 days per year

15. Market Segmentation Product Types • Public (38.5% of market) • Attract individual golfers who play on an occasional basis • Private golf courses (34.1% • Yearly memberships available • Also open to public • Private exclusive country clubs (27.4%) • More full service and higher quality

16. Course Locations and Participation Levels • Over the years, the bulk of new golf course and club construction has moved both south and west • Southeastern region holds the highest percentage level of revenue • Larger number of golf courses and country clubs • Increase in the golf playing population • More golfing vacation days or visits to the region • Older and aging population and longer term residents who migrated from the northern climates who have increased leisure time availability

17. Golf and Country Club Firms • There are no dominant players in the golf course and country club industry • ClubCorp (2.5% market share), American Golf Corporation (1.2%), Century Golf Partners (1.0%), Troon Golf (1.0%), Palmer Golf (<1.0%) • Level of market share not likely to change • High fragmentation, geographic challenges in achieving economies of scale, operations not standardized, high investment costs, high development costs

18. Cost Factor Benchmarks • This sector observes a relative poor level of growing profitability • Economic downturn plus large number of non-profits • Profits largely based on achieving membership goals, maintaining or increasing attendance at various functions, and maintaining or increasing participation (use) benchmarks • Major cost factors are direct purchases (fertilizer, plants, food, beverages, golf equipment) and labor costs

19. Basis of Competition in the Marketplace • Success of golf and country club operations rely on: • Ability to attract new members, retain existing members, sell club’s amenities, maintain or increase usage • Private exclusives 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

20. Professional Staff Positions in a Private 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 (carry out policies set by the board) • Golf Professional – in charge of all activities related to the club’s golf program (certified through PGA, trained in golf instruction and management) • Tennis Professional – manage club’s tennis program (certified by USTA)

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

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

23. Strategies for Entering Golf Management and Club Operations • Largely achieved by following the strategy to become a certified club manager (CCM) • Students may accumulate certification points while still 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

24. Strategies for Entering Golf Management and Club Operations • 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

25. Pay Scales and Salaries • Club staff and employees often enjoy wages and benefits competitive with or even higher than those of other employees in the hospitality industry • It is not unusual to find club line employees who have worked at their clubs for decades • Private for-profit and public facilities – wages typically lower

26. Entry Level and Mid Management Salary Scales • The two fastest growing positions in clubs are membership manager/director and director of technology • Assistant manager positions are also being expanded in larger clubs to spread the work effort and improve the quality of life for young managers in the profession as well as to prepare them for promotions

27. Professional Executive Management Club Positions • Working conditions in the industry are comparable to those in the hospitality industry and other sport management areas • A number of clubs will have seasonal operational peak period and slow periods • Staffing clubs for managers is a challenge when the open hours for clubs may require up to two or three 40-hour shifts per week • Certification is rewarded

28. Current and Future Issues for Golf and Club Management • Six major trends affecting game • Plateauing of participation • Connected-ness • New power of women • Winner/Loser Society • Child preparation • Health imperative

29. Current and Future Issues for Golf and Club Management (cont.) • Need for better benchmarking • Socio-economic issues • Demography • Diversity • Youth Introduction • Finances • Develop new program to introduce game, develop more consistency, etc.