‘VAT distortion’ blamed on golf club losing 9 holes

Martyn Clapham
By Martyn Clapham January 5, 2015 14:17

An 18 hole proprietary golf club has downsized to nine holes and blamed its loss on a ‘VAT distortion’ in the golf industry that has caused it economic problems.

St Andrews Major Golf Club in Wales has removed half of its golf course following two years of what the club describes as a “severe financial downturn”.

A spokesman added that while all golf clubs have faced the challenge of a trend away from traditional golf club memberships, the same tax system does not apply to proprietary clubs as it does to private members’ clubs, as, for example, membership subscriptions at proprietary clubs incur VAT charges which they don’t at private members’ clubs.

The Edmunds family, which owns the 21-year-old club, wrote to its members to state: “Over the last couple of years we have experienced a severe financial downturn that has also been the case across the whole golfing sector, with many clubs struggling financially.

st andrews major

St Andrews Major Golf Club

 

“We do not benefit from the 0% VAT relief that all-member clubs benefit from and we have no relief from the extortionate business rates that are levied on us.

“With the continuing, ever-increasing running costs and business not improving, we have reached a point where it is no longer viable to continue running as an 18-hole golf course.

“St Andrews Major Golf Club will return to being a nine-hole golf course, as it was when it opened in 1993.

“This is now the only way forward as it is no longer an option to continue as we are.”

While there is some evidence that nine holes attracts non traditional golfers to clubs, some of the members at St Andrews Major Golf Club said they were devastated at the loss of the holes.

“It’s very sad because the club is very much part of the community but the juniors probably haven’t got a future there with nine holes,” member Steve Thomas told WalesOnline.

“Going from 18 holes to nine means they won’t have enough of a course to improve on.

“It’s very sad. I had a meeting with the kids and their parents and none of them want to go. There’s a lovely atmosphere at the club.

“Golf is a luxury not a necessity and has suffered quite badly in the recession. St Andrews Major charges £500 a year membership compared to most which are £800 but fewer and fewer people are joining and more people pay and play.”

Members committee treasurer and former club president Roger Parsons said he was shocked by the news.

“We new it was struggling but we no one thought it would come to this. It’s a massive shock,” he said.

“I won’t leave because I am 69, I’ve been playing here 16 years and it’s where I always play golf, but members are very upset. It’s like a community club where rates are not that high.”

Brian Sullivan, a member for 10 years, said he would just go around the nine holes twice.

St-Andrews-Major

“I can understand the owner’s difficulty. It’s the only option open,” he said.

“The club is handy for older people who live nearby. The nearest 18 hole course would be Wenvoe or Brynhill so I’ll probably go around the nine holes twice.”

John Lock, former club captain for the 2012-2013 season was saddened by the news,

“The club has always been noted for its friendly banter and camaraderie,” he said.

“It is with sadness I heard the news that having failed to find a buyer for the site, then for financial reasons, the course will be reduced to a nine hole venue.

“This effectively turns it back into a ‘pay and play’ recreational centre.

“Unfortunately, the owners have no real option as the financial restrictions have taken their toll over the last couple of years but the flat, picturesque, 18-hole course was the training ground for many youngsters who learnt their skills there.”

The Edmunds family, which tried unsuccessfully to sell the club with a guide price of about £800,000, said they now wanted to introduce cheaper prices to attract new players and reducing the number of holes was part of that plan.

Club manager Andrew Edmunds said: “By returning St Andrew’s Major Golf Club back to its original setup of a nine-hole golf course, we hope to make golf more affordable and accessible to our local community.

“We will be introducing new, cheaper green fee prices and more affordable membership fees, with the aim of attracting new players and especially families to the game of golf.”

 

Martyn Clapham
By Martyn Clapham January 5, 2015 14:17
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5 Comments

  1. Bob Braban January 9, 15:14

    The closure of any course is a sad day for the members. However, If the owners are not selling the land and ploughing the income back into the nine hole facility, given that unless the course is unusual maintenance costs for 18 holes are very little greater than for 9, it’s difficult to see how reducing the course in size can be very beneficial. From a golfing venue standpoint, nine holes is not very attractive to visitors or members, particularly if there is a full eighteen hole facility within easy driving distance as there is in this case. I doubt that VAT is the problem here.

    Reply to this comment
    • Bryn Jones January 10, 08:17

      Hi Bob. I don’t think that you understand the problem. If you lost 20% of your wages what effect would that have on your household? There are many proprietary golf courses struggling. I agree that there may be other issues, we have also suffered over the last 3 or four years, that is until this last summer, when we had a fantastic year. But 20% more income would have been better still. Don’t tell me that ‘members owned courses’ are non-profit making, just look at the P/L and Balance Sheets of some of the large courses in this country. They make huge profits and don’t pay VAT or Rates. B.

      Reply to this comment
      • Bob Braban January 10, 09:53

        Of course Bryn, I cannot totally understand the problem as I don’t have all the facts, but what I can say is that the VAT distortion is sometimes blamed when it is not the main factor. Members’ clubs do enjoy an advantage on VAT and some of the big and famous do make profits (perhaps it’s those profits that should be taxed). However, the majority of small members clubs simply struggle to stay alive and it is they that provide the biggest access to recreation for an enormous number of people. As a proprietary course you have an important advantage in that you can manage efficiently. In my dealings with members’ clubs around the country I find that the most common factors holding them back are very poor management and avoidance of decision making. Many are still operating as if they were in the mid-1950s.

        I hope you go on to be successful and eventually manage to reopen the whole course. There will be a number of member’s clubs that fail in the next few years and those that are still in the market will see better times.

        Bob Braban
        http://www.golfclubmarketing.org

        Reply to this comment
      • GolfSec January 12, 16:49

        Hello Bryan. I feel that you are entirely missing the point here, and as with most people who talk about the VAT issue with regards to non-profit making member owned courses you are perpetuating the misinformation which is delivered by Vivienne Saunders every time she discusses this matter.

        Firstly, you mention the loss of 20%, well, if you do not have it in the first place then it cannot be considered a loss.

        Secondly, and importantly, this figure of 20% is constantly mention. One big issue that is not mentioned is the fact that member owned courses can no longer claim back any VAT on course purchases, whereas before they could. Unlike proprietary club, which can. Some member owned club will actually now be in a worse position than prior to the ECJ ruling.

        If Vivienne Saunders and her ilk were that worried about golf, and the closing of courses and offering a service to members, they would simply become member owned clubs…funny that.

        Reply to this comment
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