[Optosypoeds]

Having spent the last few weeks cruising between courses close enough to join for next year and finally choosing my course and joining has really had me thinking about the economics of the whole thing. The club I joined is actually owned by a group that owns two area courses. As a result my membership gets me total member privileges for both courses. That is a nice added benefit.
The local courses have been very busy this week. Some warm November weather has arrived just in time for the long weekend and the Friday/Sat/Sun bookings reflect the interest in getting out for a round before the snow flies. Knowing what the bookings are and knowing what the regular cost is I really do wonder about the economics of owning a course. The courses around here are running specials for non members as any revenue they can generate after Nov 1 is almost considered gravy.

It is clear from looking at the numbers that a course MUST generate revenue much like a health club generates revenue. Health club business plans are for the most part based on long term membership as opposed to “per use” invoicing. To be more specific, they are based on the fact that if a health club offers membership at reasonable rates, they will draw new members at a much accelerated pace when compared to offering rates that will likely only be attractive to the hard core user. The spectrum of members broadens when the rates drop with most of the new membership being not as hard core as those that would have joined even at a higher price point. As a consequence the heath club ends up with a much higher percentage of members that do not use the facility that much. As such while the club will take its depreciation tax benefits, the actual equipment is not depreciating at the expected rate because it is not being used nearly as much as intended. For example while I am oversimplifying, this is the Planet Fitness business plan for the most part.
If you look at the full boat cost per golfer for eighteen holes on a weekend , it does not work out all that good for a course when you consider salaries, benefits, equipment etc. In fact I worked out some quick numbers and you could book a number of courses and fill them up with per use invoicings and still be on the hairy edge of failure even if you take into account a decent amount of restaurant and bar invoices and Pro Shop sales.

However I am willing to bet that very few members actually get the full benefit of the cost of their membership in terms of what greens fees per use would have cost. Some members will get more for their money by playing more rounds and taking more advantage of what is offered but most will not. Most will be on the other side of the bell curve. I for one believe that there is a considerable benefit to being a member that goes beyond things like not having to pay greens fees per use and the discounts that full members receive. However it does not take much of a rocket scientist to figure out that if you wanted to base your membership considerations solely on greens fees, it would be hard to make the case for membership as it is difficult to see how you are going to be able to play enough rounds.

If you went to a venture capitol group or equities management group with that formula looking for investment dollars you would likely not find a too receptive audience. It is no wonder that so many courses have gone out of business or changed hands under close to fire sale conditions over the past few years. This analysis and my comments have nothing to do with the premier courses around the country that draw an audience of users that simply want the experience of playing that course.

The course I belong to does now offer a membership plan that is more of a pay in advance plan. You pay a certain amount of money and eat into what is a credit each time you play. If you do not use up the entire credit in a single season it carries over to the next. So in effect you are getting member benefits and a reduced cost per round of golf by paying for them in advance. Even that is not as beneficial to the course as full membership. That said I believe in full membership if one can afford it. Sure, you are not likely to play a bunch of different clubs if you are a member at one. I do think you will see more courses become owned by groups that own more than one and allow members membership to multiple courses.

The cost for membership may actually be higher per round because you just cannot play that many rounds but you do get so much more that helps your golf game and at the end of the day I think that is what you really get from full membership these days. If you take advantage of what your course offers you, you put yourself on a path to much more substantive and long lasting improvement.

So the point of all this is to encourage you to go out and join. I assure you that if you are really interested in improving your golf game, membership at a good course will be an invaluable tool in that regard and you are supporting your game with your dollars in a way that I suddenly realize is probably more vital and important than I thought before I started to run some numbers.
Those in the business of actually running golf courses please feel free to contradict me if you think I am off base. I do not run a golf course and have no experience running a golf course. I am a golfer that simply cannot keep from doing business analysis. So, I do this constantly whether the topic is golf or something else.