Transcript Principles & Practice of Sport Management

Chapter 20
Golf and Club
Management
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
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
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
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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
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
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
What is a Club? (cont.)
• People join private clubs for a variety of reasons
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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
Ownership and Types of Clubs
Equity 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
Ownership and Types of Clubs
Non-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
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
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
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
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
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
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
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
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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
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
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
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
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)
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)
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
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
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
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
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
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
Current and Future Issues for
Golf and Club Management
• Six major trends affecting game
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Plateauing of participation
Connected-ness
New power of women
Winner/Loser Society
Child preparation
Health imperative
Current and Future Issues for Golf
and Club Management (cont.)
• Need for better benchmarking
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Socio-economic issues
Demography
Diversity
Youth Introduction
Finances
• Develop new program to introduce game,
develop more consistency, etc.