The private to public conversion…is it imminent?

Over the last few months, I’ve received a heap of emails from readers regarding my columns on Club Memberships, Social Golf and the like. While the emails have been almost overwhelmingly positive (Thanks!), there have been some which have stated that articles like “Is your club Anti-Social” are missing (or ignoring) important viewpoints.

By far, the most common argument I hear from club members is that social golfers (for example) should not be able to just come to a private club and make use of the clubhouse and facilities which were painstakingly paid for (and built) by the members.

It’s an understandable viewpoint. Members have poured their blood, sweat and tears (and considerable money) into building their clubs and facilities. So they have a fair amount of pride of ownership, and can justifiably feel threatened when a non-member just waltzes in to enjoy the fruits of the members’ labour.

But what many of these members fail to realise is that today’s golfer sees golf MUCH differently than golfers of the past. And if you ignore that fact, things will only get more difficult.

In general, the modern golfer sees a course as a “facility” to be hired for the day. Like the neighbourhood tennis court, your local gymnasium, swimming pool or even a movie theatre. It doesn’t matter who built the facility, or when it was constructed or how much it cost. It only matters that it is there, open and in good condition.  If your facility isn’t up to scratch (or open to non-members), they will find another one that is. Plain and simple.

To put it another way, consider the MCG.  Originally built in the 1800’s for cricket (and ONLY for cricket), economics of the 1900’s soon dictated that it be opened up for other uses. Its long-term future is now dependent upon things like AFL , concerts and other “users” of the facility.

Were the original members of the Melbourne Cricket Club worried that their grand stadium was going to be opened up to things like footy? Sure, in so much that there was a concern that there would be damage to the turf, etc. (in much the same way that a guest golfer at your club might make a divot, or fail to repair a pitch mark, etc).

Now, yes, golf is different than cricket. And yes, there are golfers that are looking for camaraderie, social interaction and friendly members, etc. That shouldn’t be ignored, especially if it is your club’s point of difference. But understand that today’s “Social Network” has a different definition. It isn’t found in a Member’s Lounge, but rather online (via Facebook, Twitter, etc), so the majority of Generation Y (and Z, and all the others that your club should be working hard to attract), don’t usually need a golf club for anything more than a round of golf. If they want to play, they are likely to bring their own mates (Welcome to our golf club… BYOM.)

If you need further proof of the trends in golfers’ preferences, then let’s look across the pond to the U.S., which is often used as a predictor of future trends here in Australia.

In 2008, the National Golf Foundation in the US published a report, “The future of private clubs in America”, which uncovered some trends that are eerily similar to what is currently happening here in Australia.

For instance, golf courses in the US are experiencing increasing levels of “Private to Public conversion”:

While the total number of clubs has remained relatively constant over the past several decades, there has been considerable conversion activity. And, while many clubs have faced severe challenges, it hasn’t resulted in closures so much as opening doors to public play. In fact, conversions outnumber closures by 10 to one,” the report says.

Private-to-public conversions are usually prompted by a drop in memberships and associated revenues (initiation fees, dues, food and beverage, etc.) resulting in an inability to meet operating costs and debt service.”

Sound familiar?

Further points hit even closer to home.

Other reasons for conversion to public include: an aging membership, underutilization, competition from other clubs or courses, assessments that drive members away or a poor local economy. In almost all cases, a club’s financial difficulty leads to a sale which marks the conversion to public.

After converting from private to public, most clubs enjoy an increase in rounds and revenue. Club conversions have an impact on the local market, as some members join other clubs and some play a variety of public courses. Some members decide to stay at the now semi-private club, typically with a reduced dues structure.”

Most importantly, the report recommends that clubs take a cold, hard look at themselves.

Club presidents and their boards, especially those whose clubs are financially at risk, need to honestly assess their club’s business situation. This involves conducting an objective competitive analysis, analyzing current and latent demand, and preparing realistic financial forecasts.

The development of a strategic plan is a must. Too many clubs operate without one. Member input into the planning process is critical and can bring everyone together for the cause. All options, including raising membership caps, converting to semi-private status, introducing new membership categories, and even bringing in third-party management, should be put on the table.”

The list of similarities to what’s happening here goes on. In essence, if your club is failing to plan, then your club is planning to fail.

For a bit of inspiration, perhaps we should all look at forward-thinking clubs like Portsea Golf Club (see this month’s Industry feature). A traditional private club, with a passionate member base, they were struggling just like many other clubs in the country. But instead of burying their heads in the sand, they took a proactive approach. They built a $20million facility that will not only be good for members, but more importantly will embrace social golfers, tourists and other “users” of their new facility. And they are well-positioned for weddings, corporate events and other revenue-generating activities that are becoming a must-have for many courses. Portsea have certainly set themselves up for success.

And that’s my point with all of these columns: To help ensure the future of the game that we all love by helping the clubs to succeed long into the future.

See you on the fairways

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