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Published 08 August 2012 01:25, Updated 10 August 2012 10:46
Lucy Buxton*, lawyer and mother of two, doesn’t want her husband Steven* playing golf any more at the weekends. Since she returned from maternity leave she feels that with both of them working there’s no time in their lives for a leisurely four or five-hour game of 18 holes. The result is that Steven has given up his $3000 a year membership of his golf club.
Buxton is not alone in this. Across the country families have less leisure time and women are less keen on their partner heading out with their clubs for a whole day at the weekend. This scenario is taking its toll on the business of golf and the future of many clubs is in the balance.
A recent report by accounting firm HLB Mann Judd says nearly three-quarters of Sydney metropolitan golf clubs are losing money, largely because of an ageing membership base and an increasingly time-poor society.
For families like hers, spending close to $3000 a year on a private golf club membership is not a priority, Buxton says. Some of her friends have also persuaded their partners to relinquish their golf memberships, saying it was more to do with a lack of time rather than the cost of the memberships.
“Steven was reluctant to give up his membership, especially since he had been on a long waiting list to get it, but he realised he had only played twice in the last nine months,” she says. “We are both working and it’s hard for us to find time to spend together as a family … and this club is not family friendly. It was exclusive and the kids did not feel comfortable there.”
Meanwhile, Steven acknowledges that women’s changing expectations of their partners mean that spending seven or eight hours on the golf course every week is not practical.
“It’s one thing if you’re young and single and you have money and time to throw at lots of different things, or even if you’re 60 and retired and looking for a good way to spend your time,” he says. “But when you’re in your mid-30s with a full-time job and family, then life is just too full. It’s not about the money. It’s about having the time … and I’d rather be with my family on the weekends to be honest.”
The problem for clubs, however, is that they haven’t adapted their business models to the times.
Many private golf clubs, Steven Buxton says, are “stuck in the past” and are ignoring a huge potential market by failing to meet the needs of women, families and younger players, he says. “They’re renowned for being stuck in their ways,” he says.
But clubs need to get smarter about the way they do business to survive. HLB Mann Judd partner and author of the inaugural Sydney Golf Survey Simon James says that just as the game of cricket has been adapted to the 21st century with its faster Twenty20 games and focus on training new young players, golf needs to be remodel its game to meet the needs of modern players.
“Golf is a fairly simple business model,” James says. “Fees are paid in return for use of the club, then the money is paid to keep the facilities in good working order. Unfortunately, the amount of money required to keep a golf course running well is millions of dollars a year.”
The response to falling membership numbers from clubs has been to either increase prices or offer discounts – neither of which is working.
“Historically, people have paid fees to be a member of a club,” he says. “Unfortunately, with the fees charged and the lack of time people have, they are not seeing the value of becoming a member. They might say, ‘I have my own group of mates and my own networks, so I don’t need to go to a golf club for socialisation’.”
There is hope, however, according to golf marketer and PGA USA and Australia member Michael Orloff, who says the issues facing golf clubs in Australia have nothing to do with the game itself. “People still love the game and want to play.” Rather, he says, it is about changing social expectations and demographics and the time-poor nature of society.
He points to new golfing models that are being explored in Asia and the US. Golf 2.0 – a simulated version of the physical game – is gaining popularity in Asia. Twilight golf – played in the early hours of the evening (usually after work) – is also an option, as are shorter games, such as six and nine-hole competitions. Forward-thinking clubs are also embracing a family atmosphere, with incentives for juniors and more women to become members.
However, for many clubs – particularly smaller regional and suburban clubs – this is a cultural change that older members may resist.
“[Clubs can] get stuck, especially when it comes to constitutional change and convincing members to vote for change,” Orloff says.
“But there are some really proactive clubs out there, too. They’re the ones who have reinvented their product and given greater accessibility to their course and improved their competitions. They are giving people what they want and they are being creative about it.”
One great asset that clubs have is their land – normally lots of it in a good location. This gives them the opportunity to diversify their revenue streams.
Six years ago Portsea Golf Club in Victoria could see it was running into problems. It simply wasn’t generating enough revenue to cover its outgoings. The club enlisted the advice of accounting and advisory firm Ernst & Young, which recommended a redevelopment of the club. It said an existing subdivision should be used to sell land to fund its upgrade.
Taking this advice, the club is undergoing a $12 million redevelopment and land sale. The club, which is ranked at 31 in top Australian course ratings, has brought in hotel group Accor to develop 24, 4.5 star apartments on its property by May 2013 and it is also selling 21 blocks of land for between $975,000 and $2.7 million.
Club president Paul Cannon says it hasn’t been a simple process and has required getting the agreement of members and local residents but it’s been worth it.
“It was about providing greater services to our membership … and delivering a sustainable future to the club,” he says. “We want to build a legacy … to have a facility that gives us a long-term outlook.”
While the land sale continues, Portsea is undergoing several other changes to increase membership and revenue. It offers nine-hole memberships and is targeting junior and female players.
“Like most clubs, we have an ageing membership,” says Cannon. “We are targeting juniors and finding we are getting far more girls in. We offer junior clinics and discounted memberships and go out of our way to embrace younger players and have a family atmosphere.”
Having a long-term outlook such as Portsea’s is crucial to a club’s survival, according to HLB Mann Judd’s James. “Time goes very quickly in golf,” he says. “Twenty years is the average life span of a golfing green and after that it needs to be replaced, which in itself, is a hugely costly exercise that needs to be planned for years in advance.”
He advises clubs to develop a business plan with an outlook of at least 10 years to properly budget for future projects. By enacting long-term plans members and committees can gain a better understand of a club’s finances and any upcoming costs that may arise.
“If members see that there’s a lot of cash sitting in a bank for purchases in the future, they complain when fees are increased,” he says. “But if they understand the long-term strategy, then they have a better idea of why cash needs to be held.”
There are two types of strategies clubs can develop to plan for the future, James says.
First, larger, more established private clubs can choose to work with their existing members to develop better facilities and value, while protecting the club’s longevity.
Top courses – such as Sydney’s exclusive Bonnie Doon, which has undergone a 10-year, multi-million dollar upgrade – have taken that strategy and in doing so have become grade one courses with long waiting lists.
Second, suburban clubs with clubhouse function facilities and restaurants can often make additional revenue from these facilities.
However, it is the remaining clubs that are neither top grade courses nor clubs with function facilities that are “caught in the middle” and will struggle to retain existing members and recruit new ones.
James advises that one way smaller regional clubs can improve their offerings to members while saving money is to merge with neighbouring clubs and combine services, such as grounds keeping and administration.
“Golf is definitely not dead,” he says. “I think people still love golf and will continue to want to play. It’s just that the way they play – how they approach it and the time taken to play will change. As we have seen overseas, it has already started to happen.”
Lucy Buxton has never heard of a nine-hole competition but to her it sounds promising. She says she would consider agreeing to her husband playing in a shorter nine-hole competition, particularly if the club was family friendly.
“I think a couple of hours would be OK,” she says. “Just as long as he doesn’t expect me to take lessons.”
* Some names have been changed.