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Apr 6th, 2020

COVID-19 will hasten demise of clubs

But the writing has been on the wall

I’m just about to pay my annual subscription, a tad late but hopefully given the current circumstances my tardiness is overlooked.  I will be signing a cheque, or more likely be doing an online transfer, for a chunky sum of money, at a time when I have absolutely no idea when my next round will come. I am happy to pay up but many up and down the country will be thinking twice.

COVID-19 will hasten demise of clubs

Given the current COVID-19 crisis my club’s board emailed all members with the actions they are taking.

  • The greenkeeping staff are still working, subject to social distancing measures, to keep the course in good nick.
  • Most of the staff have been furloughed under the government’s scheme to pay 80% of their wages.
  • The Secretary and office staff are still working apparently.
  • The local authority has agreed to relief from business rates.
  • All nonessential expenditure including capital expenditure is being reviewed and cut back where possible

Finally, under the heading of ‘Annual Subscriptions’ we get the recognition that these are hard times, blah blah blah but we need your subs so pay up, please.

No mention of deferral schemes or hardship funds just pay up, or you risk the future of the club. And herein lies the problem. Sadly, to most of those running golf clubs, the members are purely cash cows whose duty it is to stump up, without question, whatever is required to balance the books.

My golf subscription has increased by 30% in the last seven years in a post-financial crisis world where average earnings only grew by some 5%.

As hard-working and worthy they are, many of those running clubs have become detached from the realities of the world. They have forgotten how expensive it is to raise a family or to pay the mortgage on that overpriced home.

Up and down the land golfers are shelling out ever-increasing sums each year and spending the next year despairing over issues such as:

  • The club steward who everybody hates but has been there for five years now and nobody seems keen to decide to get rid of him.
  • The greenkeeper who is over the hill and the course is suffering.
  • The new catering contract that has resulted in higher prices for the food and still the club is losing money on food and drink.
  • Poorly managed capital projects that go sailing over budget

For some time, clubs have been slowly waking up to the fact that the golf landscape is changing and there is no longer an unlimited supply of golfers willing to pay what they decide is the going rate. Young men are deciding that golf club membership is not a ‘must have’ and instead choose to be nomadic in their playing habits.

Add into this the high cost bases that have been created by pay increases out of line with the general wage market and reduced cost control and black holes are starting to appear in the cash flows.

The top clubs will undoubtedly survive and will continue to evolve slowly; however, the vast majority of clubs are going to struggle and many will fail. The Coronavirus crisis is merely going to accelerate matters with 2020 likely to see many clubs going to the wall.

Golf clubs need to adapt and take a more business-like approach to the running and finances of the club. They need to be more creative in the subscription packages they are offering and they have to start controlling costs.

A further challenge is the online disruptors but I will leave that discussion for another day. I fear 2020 will be a car crash for golf clubs but this was an accident waiting to happen and sadly for many, this wake-up call will have come too late.

 

And another thing...

R&A needs to make a decision

COVID-19 will hasten demise of clubs

TAGS: Ed's letter, Coronavirus