Clubs and Courses – Is the middle class disappearing?

Much has been written about golf being an elitist activity, about it being too expensive for the masses and the resulting decline in participation. I’ve written extensively (http://golfprop.com/blog/) about broadening golf’s appeal to the “3-M’s”.As I see it, a big part of the problem is that just like our societal shift in distribution of wealth, more seems to be going to the top.

When I look back over the past few years at our appraisal, consulting and brokerage assignments, there is a clear distinction between the upscale private clubs (which are performing favorably) with the mid-market and affordable clubs (which aren’t faring as well). This is consistent in other areas as well, where upscale restaurants like Del Frisco’s and Capital Grille, are thriving while Red Lobster and Olive Garden are struggling. Have you noticed that there’s rarely an empty seat in First Class lately?

We all know that golf courses are closing at record rates, but do we know which ones? While it is true that some of the closures are upscale, in some cases “destination” courses, like Wynn in Las Vegas and Glen Abbey in Toronto, and several well-known courses in the Myrtle Beach area, many of the courses closing are middle market and affordable private clubs and middle market daily-fee facilities. In most markets, the upscale, sometimes iconic and prestigious private clubs are thriving and rounds are up at many municipal courses. Golf for the middle class is disappearing.

After a long growth period from the 1950s and ’60s originally spearheaded by Arnold Palmer and later Tiger Woods, is golf returning to its elitist roots? In 1960, slightly more than half of U.S. courses were private. At the end of 2016, about 25 percent were private. Over the same period, the number of municipal courses grew from roughly 900 to about 2,500 and from roughly 14 percent to 17 percent of the national total. While it is unlikely that affordable golf will disappear, it is clear that middle market private clubs and those daily-fee courses serving the mid-market are challenged. The “working man’s” private club seems to be particularly challenged.

Whether these clubs close and cease operations in favor of alternative use development, the members sell to management firms or the clubs convert to a semi-private or daily-fee model, these clubs are most definitely a casualty of current market conditions. Why?

I’ve observed the following issues that seem to impact middle-market clubs the most:

Governance. Either club leaders stay too long or they change every year. Therefore, there’s no leadership or leadership that becomes stale.

Reinvestment. Those clubs that need capital investment the most can’t afford it or decline to invest, thus continuing their downward spiral.

Evolution. Many clubs become obsessed with tradition and history, often ignoring the desires of today’s members. They refuse to evolve and include facilities, programs and groups that would enhance the club’s prospects for economic success.

It is essential for clubs to understand their goals and objectives. I like to say that a club needs to know what it wants to be when it grows up. Every club needs to be realistic about establishing those goals. A club’s facilities, location, competitive market and membership makeup all need to be considered, and it is not uncommon to see clubs either reach too high beyond their capability or elect to control their pricing by avoiding upgrades and enhancements. In those instances, the club often declines physically and economically to a point where there’s little reason for anyone to join. With most markets having multiple clubs to choose from, the exodus begins to the other clubs.

Private golf, which basically exists for uninhibited access, is expensive by nature. There is a place for the middle class, but making it too cheap usually fails and making it too expensive results in a limited market. It is my sincere belief that private golf in the U.S. has succumbed to the social pressures of creating an “exclusive” atmosphere and to the “Augusta Syndrome” which motivates many clubs to spend too much on golf course maintenance. Like most golfers, I enjoy the near perfect conditions experienced at my club on a regular basis. I’m willing to pay for it. At many clubs, membership seeks those same conditions but isn’t willing to pay for it. If golf’s middle class is to survive, we need to find that happy medium where the club matches the market. It’s different with every club.