Member Clubs
club’s profitability. Even though a golf
course or club pays the management entity
a monthly fee for its services, these
companies are often able to significantly
cut costs, allowing courses and clubs to
achieve higher profits. Increased revenue,
and ultimately higher profits, may also
result from enhanced marketing campaigns
that golf management companies
are able to offer through their more sophisticated
and comprehensive resources.
Moreover, because these entities tend
to manage many different golf courses
and clubs, they often provide the opportunity
for players at one club in the management
company’s network to play at
the other clubs also in that same network,
either for free or at a discounted rate. This
perk alone provides an opportunity for
growth at membership-based clubs due
to the increased access players have to a
wider collection of golf courses.
CONS -
Although these positives are intriguing,
there are numerous disadvantages associated
with the use of golf management
entities. One major consideration is what a
golf course or country club may lose when
the golf management company begins to
reduce costs. Often, costs are cut by removing
highly paid and popular individuals at
the course or club and replacing them with
less-qualified individuals. These employees
may be willing to work for as little as half
the salary of the person they replaced, but
may also offer much less value to the golf
course or club as his or her predecessor.
In general, it’s extremely difficult to cut
costs without sacrificing value delivered
to the consumer, and the golf industry is
no different.
Sound strategic management frequently
involves creating value for the consumer
through uniqueness. Accordingly, there is
no cookie-cutter management system that
will lead to the success of every course or
club. Just because a particular management
structure works well at one establishment
does not mean that the same system will
thrive at another. A management structure
that works well at a high-end country club
+ -
Considering the use of a
golf management company
may very well be intriguing
for various courses and
clubs, but it is critical for
the golf course or club to
fully analyze the totality of
the circumstances prior to
taking any such action.
is not necessarily going to provide the same
positive impact at a struggling municipal
course. This may lead to difficulties when a
management company is keen on operating
under one particular system and is unwilling
to adapt based on its environment.
Furthermore, many clubs simply aren’t
in a position to afford the services of a management
company. The annual fees for golf
management companies often total more
than $100,000. This is certainly no small
annual expense for a private club, and even
for an above average public course charging
$75 green fees, it would take about 1,330
rounds just to cover this cost. Ultimately, at
many courses, annual revenues are not high
enough to justify the use of a management
company. These same courses may very
well be operating on a shoestring and the
management company may not be able to
achieve sufficient savings to offset their fees.
A final issue that accompanies the use
of golf management entities is one that
is mostly present in the private golf and
country club realm, and is likely the most
controversial consideration for these types
of clubs. That major issue is the extent that
the members of a private club lose control
of the decision-making when a management
company is introduced. The day-today
operations of most private golf and
country clubs are run by general managers,
who are heavily influenced by a governing
body such as a board of directors. When
golf management companies take over
at these types of clubs, the members lose
decision-making power, particularly in
regard to major financial decisions.
However, this shift in power is not always
a bad thing. While many private clubs have
both effective and efficient boards of directors,
some clubs have power struggles at the
board level. Board members often make, or
certainly influence, decisions based on their
personal interests, rather than focusing
on what is in the best interest of the club
as a whole. When important decisions are
instead made by a golf management company
through a more neutral lens, conflicts
at the board level are likely to be reduced.
CAREFUL CONSIDERATIONS
Whether the use of a golf management
company would work well for your course
or club largely depends on a variety of
considerations. Is your course public or
private? Are there significant conflicts at
the board level? Is the club in financial
position to handle payment of the management
company’s annual fees? Is the
course or club one in which the potential
management company might be able to
combine cost management and leadership
to promote increased profitability?
Considering the use of a golf management
company may very well be intriguing
for various courses and clubs, but it is
critical for the golf course or club to fully
analyze the totality of the circumstances
prior to taking any such action.
Will MacIlwaine is an associate at the law
firm Whiteford, Taylor and Preston in
Richmond.
vsga.org M AY/J UNE 2020 | V IRGINIA G OLFER 13