Nearly 500 clubs have seen sales slump

Alistair Dunsmuir
By Alistair Dunsmuir October 18, 2012 04:58

An economic survey of the golf industry has found that more than 440 clubs are struggling because they have lost their market share to just 117 other venues.

The market report warns that not only is this bad for the industry, but the rapid growth of the unnamed 117 courses could even result in them “spiralling out of control”.

A spokesman for Plimsoll, which conducted the Plimsoll Analysis – Golf Courses & Clubs, said: “These 117 companies are risking their long-term sustainability in order to increase sales, which have seen an upsurge. If they continue with their current business model they are in danger of spiralling out of control and heading for rocky ground. They need to be wary of their actions.”

The company’s David Pattison researched 929 golf course and club companies and found that over 440 of them have recently experienced a sharp drop in revenues – just as the 117 facilities have seen even bigger rises, meaning the overall market size has barely changed.

“It’s exciting to see these 117 companies increase their market share and invigorate the market, but all these extra sales could count for nothing,” he said.

“In a market that displays modest growth, it’s evident that these businesses are impacting on the rest. Of the other 883 companies analysed in the report, just over half have seen their sales dramatically decline. Due to the 117 companies surging ahead, the others in the industry are facing the consequences.

“The majority of the organisations are making solid and informed decisions, but there are some firms that need to think about their goals.”


Alistair Dunsmuir
By Alistair Dunsmuir October 18, 2012 04:58
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  1. Derek Howe December 10, 11:53

    there appears to be a conflict of opinion as to how our industry is fairing during the current period of financial gloom and doom.

    On the one hand, under the headings Decline in club memberships is slowing down and Bucking the trend, our outgoing CEO, Keith Lloyd, gives a sensible overview of what is now a slowing down of the decline in membership of golf clubs whilst at the same time praising one of our own in taking initiatives to stimulate membership at his club.

    To my mind, Keith makes the excellent point that sharing experiences and best practice with our fellow members will certainly breed success, which is exactly what our association is all about. Like many other regions, southern members have regular forums designed to give our members the opportunity to share ideas with their colleagues. This can only be good for everyone.

    On the other hand, however, under the heading of Nearly 500 clubs have seen a sales slump, we get the somewhat repetitious prophecy of disaster emanating from Plimsoll.

    Apart from this finding the article confusing and somewhat shrouded in a cloak and dagger approach to the ‘117 other venues’, I would like Plimsoll to expand on the manner in which they collate their information. I am not suggesting I am making any challenge to its accuracy, but there is little detail as to how the information has been gathered.

    In a career spanning 35 years in golf management, during which time I have worked as both a senior manager and a consultant in what I would like to think falls into Plimsoll’s category of some of the ‘929 of the largest golf clubs in the industry’, I have yet to be researched directly by Plimsoll. Maybe not that significant but when you add the number of other managers I have approached and they too have had no contact from Plimsoll, it does at least beg the question of where they get their information. Whilst I agree with their closing statement that ‘mangers have to understand, recognise and embrace these vital signs in their business’, I for one would like to know just how authentic their report actually is.

    As demonstrated in their article, there are many of us chasing the same market and I would immediately acknowledge that these mystical 117 courses may well be effectively operating a form of cartel which is dangerous for the industry. Equally, we must all be on our toes, but if there is a difference of opinion between the comments made by Keith and those opinions made by Plimsoll, the latter should give greater details of their report findings such as regional trends, the difference between member and proprietary clubs, the influence on the disparity over VAT and the impact made by the increasing number of nomadic golfers. Unless Plimsoll can convince me to the contrary I would tend to lean towards Keith’s synopsis.

    It would be interesting to learn of how many of our members have been researched by Plimsoll and if not if they agree with the conclusions of the report.

    Derek Howe
    Southern Region of the GCMA

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  2. Matthew Orwin October 25, 13:43

    I think you’re saying clubs that discount and reduce margin are at risk because they then, as a consequence of the increased business, increase outgoings in areas such as “staff numbers” and “new systems” etc etc.

    However, it largely costs the same to maintain the golf course whether you have 20,000 rounds of golf a year or 30,000 rounds of golf a year. This isn’t really a variable cost – it’s more or less fixed.

    Furthermore, there’s a significant fixed-cost element to keeping a golf shop or clubhouse bar open from 8am to 7pm. I would seriously imagine much of the increase in footfall would be absorbed by a staffing structure that had to exist anyway – just to keep the thing open.

    And we shouldn’t always jump to the conclusion that reducing your margin is a bad strategy. Our core product is golf, sold through tee times. And just like seats on an airplane, or rooms at a hotel, when that time has been and gone there’s nothing you can do to get it back. Tee times are the most perishable product we sell. So, to adopt a more flexible posture when it comes to pricing, if managed correctly, can be very productive – short, medium and long term. In simple terms, a percentage of something is better than a percentage of nothing.

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  3. Chris Glancey October 25, 10:48

    Hi MfP, thanks for your comment.

    To answer your first question: The study examined the largest golf clubs within the industry and we examined their financial well-being and health.

    Secondly: There is no doubt that the market is very competitive and it is clear that some, not all, companies are coming under increasing pressure.

    A typical example of a company who might meet the profile (thriving clubs, but could hit a brick wall as you put it)

    Company A: – In an attempt to maintain or increase sales and business, they change strategy and start offering discounts and promotions.

    In doing so, they increase sales and become very busy. The investment then starts to kick in, staff numbers increase, new systems, new clients and generally an up-turn in business.

    Yet, the profits are low, reducing or are even making a loss. As this continues the company is forced to incur debts, which further reduces the profitability, through interest payments.

    It also brings great risk to shareholders/owners who find themselves with more and more of the company owned by the banks. If process is allowed to continue their can be only two outcomes, the business fails or it is sold off to a competitor.

    And therefore our analysis will allow owners and managers to understand, recognise and embrace these vital signs in their business. Crucially, it will allow management/owners to take actions to avoid these potential problems in the future.

    I hope this clears a few things up. If you have any other questions please do not hesitate to ask!!

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  4. Chris Glancey October 24, 15:17


    My name is Chris Glancey and I work for Plimsoll Publishing. I see you have a few comments regarding the article. If you would like to direct some questions at me then I can try by best to answer them. So please, fire away!!

    Reply to this comment
    • mfp October 24, 15:53

      were these all golf clubs that were surveyed or companies that supply to golf clubs?

      what are the thriving clubs doing that’s making them thrive but making you worried that they will hit a wall?

      Reply to this comment
  5. Alan Walker October 22, 07:55

    If my maths are correct this survey (883 clubs) represents roughly a third of the clubs in the UK (2,500 in total) which then tells us that the 117 that ‘are gaining market share’ represent around 13% of that sample. Again simple maths tells us that 87% aren’t doing that well (or are static) and for me that’s the frightening message here. It would be interesting to know of the 117 gaining market share how many of them are ‘for profit’ companies or how many hide under the ‘not for profit’ banner saving a whopping 20% VAT ? I really don’t know any other market sector where business ‘status’ has so much impact. I predict more golf club business casualties going forward as overheads continue to increase and prices continue to decrease to attract custom. Breaking even will become the new ‘doing very well’.

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  6. john mundy October 18, 18:22

    Very confusing report.

    In simple terms there’s a “modestly growing” market out there and 117 clubs are stealing the share from 440 other clubs. So 117 clubs are doing something right, and the others aren’t.

    I suspect, from the few golf clubs I’ve talked to, that 117 clubs are approaching the marketplace with well analysed, well thought-out offers that attract an ever increasingly transient ,diverse and demanding audience, while the other 440 clubs have their heads stuck in the sand (or somewhere else), incapable of making even the most basic decisions.

    As for the 117 clubs risking their long-term sustainability the Plimsoll spokesman said “If they continue with their current business model they are in danger of spiralling out of control and heading for rocky ground. They need to be wary of their actions.”

    Well they’ve got it right so far, so one assumes most of them are intelligent enough to already be aware of their actions and are taking the appropriate steps, possibly including changes to their current business models, if that’s what they need to do.

    Good luck to them.

    Reply to this comment
  7. Sean Mysel October 18, 15:14

    Matthew hammers a great point home. Here in the US, the first instinct of a golf club when it’s struggling is to drop prices. Problem is that it sends a signal to customers that some sort of “death spiral” is in place. I can say the first thing these clubs should do is exactly what Matthew suggests, take a look at why those clubs are getting ahead. Second, talk to your own customers, what types of things could the club do to add value and finally inventory your own club. What are its strengths, how can you use those strengths to find the right customers.

    Great read!

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  8. Gary Denham October 18, 10:54

    I couldn’t agree more with Matthew Orwin. Proprietary owned golf businesses have always been the innovators of the industry, whilst Private clubs usually rely on decaying minds to manage and protect the immediate interest of its members. The best condition club at the lowest possible cost to its members- daft!
    Times have changed but the golf industry has failed to manage the path of change. I applaud those 117 Clubs.

    Reply to this comment
  9. Alistair Dunsmuir October 18, 10:11

    Thanks Matthew – we’re going to pass these comments on to Plimsoll and hopefully will get a response

    Reply to this comment
  10. Matthew Orwin October 18, 08:43

    Am I missing something here? 117 clubs have taken market-share from other clubs and it’s these 117 clubs who need to be careful? Surely the clubs seeing a decline in their market-share should look at the 117 clubs and learn some lessons.

    And why is it so bad for the industry? The innovative & progressive operators take the customers from the staid & old-fashioned others. And the staid & old-fashioned clubs have to raise their game to compete again. Sounds like a perfectly acceptable model to me.

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