THE BUSINESS
OF GOLF CLUBS
By Jeff Blunden
A few years ago, we changed
our business name to include
the word ‘Business’ for one
simple reason. That reason was
to clearly communicate to our
clients how we approached our
work and the outcomes that
flow from it. Including this word
in our name also helps to at
least remind but hopefully focus
everyone in the industry on what
our real reality is.
With financial outcomes
achieved within club land being
increasingly challenged, this
article we explore:
• What the business of golf
clubs is
• The lack of foresight in
classification and a term that
could actually be the root
problems
• The existence of some
structures that don’t help
the cause, heightened by
increasing self interest
• The messaging to members
and what term we’d lead with
if we could start again
When the term ‘Business’ is
applied to club land it could be
defined as “one that derives
revenue from services provided
across a cost base that is
(hopefully) structured in a way
that produces a reoccurring
profit. This profit then allows
for re-investment in the
club facilities, amenities and
infrastructure - all of which
are required to continue to
enhance the value proposition
being offered to both retain
existing players and attract new
participants.”
It sounds quite simple when you
type it out like that but we are
still seeing regular examples of
club thinking still not moving or
being able to get into this space.
In working out why we wonder if
perhaps history is to blame?
I don’t know who coined the
actual term ‘not for profit’ but
in focusing outcomes on a
measure (profit) that is so vital
to long-term sustainability,
we’ve concluded that it has
encouraged completely the
wrong thinking.
In closing we ask if accepting less
but more financial sustainable
golf (in some cases better golf)
has to be a better long-term
outcome for the industry. Going back in time to when
clubs were first created, if there
was one thing we could actually
change it is this term, believing it
to be completely inappropriate,
not orientating focus to what
is actually required for long-
term sustainability. A more
appropriate classification would
have been ‘not for tax’ as that
really is the only benefit afforded
those entities which are created
as a club.
10 I
• Current financial
performance numbers are
presented, highlighting that
those that have scale are
performing better than those
who don’t.
I GOLF MANAGEMENT AUSTRALIA
SPRING EDITION 2017
The challenges flowing from
the ’not for profit’ moniker
further increase with the use of
another phrase ‘for the benefit
of members.’ With club status
granted where the outcomes
achieved are to accrue and be
for ‘the benefit of members’ -
not be distributed or paid to
any particular shareholder or
owner – this phrase and its
interpretation could also be part
of the root issue.
I am certain that the original
thinking around interpretation
of the term ‘for the benefit of
members’ was meant to indicate
that a club with members could
re-invest all that it made back in
itself, with the improved asset
outcome being the said benefit.
Where we are at however is
that the term ‘for the benefit
of members’ is now being
interpreted by many as offering
the lowest price possible (this
being the benefit) to cover one’s
expense base.
This type of thinking is evident
when attention is first turned to
reducing expenses in order to
maintain or improve outcomes,
as opposed to increasing
revenue - which could possibly
come via increased prices. By
its very design, the term ‘for the
benefit of members’ thus creates
an environment where long-term
thinking becomes very difficult.
Some structural realities further
re-state this reality. Likely
considered a good idea at the
time, and very democratic,
but constitutional clauses