New survey finds golf club costs are rising significantly

Alistair Dunsmuir
By Alistair Dunsmuir February 5, 2020 09:39

The latest annual survey of UK golf clubs has found that staff and course costs have risen significantly in the last year, and this has been matched by an increase to subscriptions, green fees and joining fees.

Hillier Hopkins surveyed 73 private members’ golf clubs and five proprietary clubs.

It found that the proportion of members’ clubs’ secretaries and general managers who have a typical remuneration package in excess of £40,000 rose from 57 per cent in 2018 to 66 per cent in 2019. There was also a notable increase in the proportion earning over £60,000, rising from 15 per cent in 2018 to 21 per cent in 2019.

Head greenkeeper remuneration packages in 2019 also rose, with 29 per cent earning over £50,000, compared to 24 per cent in 2018.

The proportion of members’ clubs paying in excess of £2,000 to their PGA professional has increased to 68 per cent, compared to 58 per cent in 2018. The percentage of members’ clubs paying commission to their professional has fallen below 50 per cent for the first time.

In 2019 there were a smaller proportion of members’ clubs with 100 to 500 playing members – 36 per cent, compared to 45 per cent in 2018, but there was an increase in the number of clubs with more than 600 members – 38 per cent in 2019, compared to 30 per cent in 2018.

The number of members’ clubs that offer flexible membership has remained stable, being offered now by 27 per cent of clubs, compared to 29 per cent in 2018.

As in previous years, the age distribution of members’ club shows fewer younger members and more older members. The distribution is similar to last year, with a slight increase in over 50 members.

The gender distribution of members’ club playing members shows fewer female and junior members, and more gentlemen members.

For the first time, the 2019 survey asked members’ clubs for numbers of joiners and leavers during the year. Most members’ clubs (73 per cent) had more joiners than leavers. The averages for all clubs against different member profiles shows that net membership levels increased in all areas except ladies.

In 2019 just nine per cent of members’ clubs reported fewer than 20,000 rounds played, compared to 17 per cent in 2018. Whilst there was also a drop in the proportion of members’ clubs with over 35,000 rounds played, in the middle tier of 20,000 – 35,000 rounds played, the proportion increased to 75 per cent in 2019 (68 per cent in 2018).

The proportion of members’ clubs with a waiting list has risen again, from 17 per cent in 2017 to 18 per cent in 2018 and 22 per cent in 2019. However, among these clubs, the average number of people waiting to join has reduced to 22.

Many members’ clubs still have no driving range, although the 40 per cent in 2019 that do is the highest number since 2016.

 

Membership fees for standard playing members in 2019 vary from £500 to £2,200+. Once again, in 2019, as in 2018, there are no subscription fees below £500. The proportion of members’ clubs charging over £1,500 continues to increase.

There has been a significant increase in the proportion of members’ clubs indicating that they are planning to increase their subscriptions in 2020 – 89 per cent, contrasting with just 59 per cent reported in 2019. The levels of planned increases range from 1.5 to eight per cent.

The percentage of members’ clubs charging entrance fees has continued to increase. The figure now stands at 60 per cent, the highest since 2016 (55 per cent in 2018).

An increasing number of members’ clubs allow their entrance fees to be paid in installments – 90 per cent in 2019, compared with 70 per cent in 2018.

A booking / tee time system was used by 51 per cent of members’ clubs in 2019.

The importance of bar usage as an income stream should not be underestimated. Bar income had fallen in 2018, but has now recovered, with 50 per cent of members’ clubs taking in excess of £150,000 in 2019.

Course wage costs increased in 2019 to an average of £192,717, compared to £183,531 in 2018. This has been offset by a drop in average course maintenance costs to £120,291 in 2019, compared to £131,545 in 2018 – though this is in the context of average course maintenance costs being £88,992 in 2017.

Forty-three per cent of members’ clubs indicated that they currently have fairway irrigation installed – a significant increase from the 36 per cent reported in 2018. For those members’ clubs that do not currently have fairway irrigation installed, 17 per cent are considering it. Greens and tees’ irrigation systems have been updated recently by 29 per cent of members’ clubs. There was a wide range in the costs of these updates, from £4,500 to £525,000, with an average cost of £165,000.

The number of members’ clubs reporting growth in 2019 was 53 per cent. The average level of growth was six per cent.

The percentage of members’ clubs that have a dress code increased from 87 per cent to 92 per cent in 2019. Sixty-three per cent of members’ clubs have a Sky Sports’ subscription – a slight decrease from 2018. There was also a decrease in the proportion of members’ clubs that subscribe to BT Sport, falling from 27 per cent in 2018 to 24 per cent in 2019. The average monthly cost of subscriptions has reduced, from £695 in 2018 to £577 in 2019.

The following changes over the next five years were anticipated by members’ clubs.

  • Addressing an ageing membership profile – recruiting and retaining younger members
  • Tackling gender inequality – recruiting more lady members
  • Ensuring membership has value to give it preference to casual play / nomadic / visitor golf
  • Tackling decreasing membership numbers, with older members leaving / volunteers reducing
  • Ensuring the availability of competitive / flexible membership options – including pay and play and no joining fees
  • Dealing with growing staffing, golf course maintenance and other costs
  • Adapting to club closures – with a positive spin in terms of increased golfer numbers
  • Investing / improving to revitalise /renovate / diversify facilities – keeping a place in the market
  • Generating additional income streams – including non-franchised food and effective usage of the whole facility including clubhouses, courses, bunkers, tees and pathways
  • Coping with reduced green fee income
  • Adapting to climate change – including extended periods of rain
  • Reconsidering environmental management
  • Green drainage and irrigation – due to bans on grass treatments, water shortages and so on
  • Handicapping – with a new, world handicapping system
  • Introducing nine-hole competitions
  • Providing more visitor and society golf
  • Reconsidering established traditions – reviewing dress codes, family friendliness, diversity
  • Reviewing and revising governance and recuiting, specifically skilled committee members.

“Spending on irrigation improvements and new systems following the drought of 2018 has been followed by a relatively wet summer in 2019 and an even wetter autumn,” said Robert Twydle, principal of Hillier Hopkins.

“Staffing costs and in fact all costs seem to be on the increase including the amounts paid to PGA professionals. This has resulted in a number of clubs reviewing whether to bring the services provided by them in-house, including the pro shop.

“Our survey shows increasing playing member numbers though we suspect that this is in part due to closures of clubs rather than an increase in demand. Sadly, the age profile remains consistently high with the over 50 age bracket remaining at 63 per cent and disappointingly the previous trend of increasing lady and junior members seems to have come to a halt.

“It is clear that running costs continue to rise every year and out of necessity this is now being reflected in increased charges.

“Additionally, after many years of reducing entrance fees these now seem to be either returning or at least on the agenda for many clubs again, as we predicted last year.

“The survey also shows significantly increased green fee charges, though anecdotal evidence is that there are many deals done at lower prices. At the same time as perhaps an encouragement for more usage of the clubhouse, fees to members for room hire have dropped considerably which hopefully will lead to more member usage. It does appear that clubs are being far more focused on how to increase revenue and this is reflected in higher bar income and margins.

“As we have previously indicated expenditure on the course is essential in maintaining the future for most clubs but other golf related capital expenditure such as swing studios, practice facilities and water storage are still high on the agenda.

“Staff costs appear to also be on the increase so, as indicated above, this will undoubtedly result in increased income requirements going forwards though the increase to the living wage seems to have more impact on proprietary clubs.

“The anticipated changes over the next five and ten year give a good insight into where the golf industry is heading and is a useful list for reflection.”

 

Alistair Dunsmuir
By Alistair Dunsmuir February 5, 2020 09:39
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10 Comments

  1. Sue February 3, 12:35

    Interesting research and report. Lots to ponder for the golf industry. Age profile is one that is key in my opinion if courses and clubs are to thrive into the future.

    I can understand why it’s difficult to recruit volunteers for roles within clubs. We’re all frantic with our personal and working lives and to face lengthy committee meetings is a step too far for many of us. In clubs I am familiar with recruitment for committee roles are already being shared out amongst those good souls who are prepared to volunteer for a second stint on committee. Is it time to rethink the traditional ‘club’ model?

    Oh and here’s a moan alert. Please can we refer to gender as men and women ie not men and lady/ladies. Personal beef of mine but the word ‘lady’ in my opinion smacks of the old style club where women were a second thought and consisted of those who met for a social round, weren’t terribly interested in playing the sport of golf, drank tea before going home to cook dinner for their husbands. These days are gone. Women golfers wish to be recognised as equals to male golfers, they are competitive and enjoy mixed social golf. Oh and yes we do have husbands who play golf too but they’re just as likely to cook dinner as we are!

    Reply to this comment
    • Robert T February 6, 13:10

      HI Sue

      Moan understood and noted we will amend next year

      many clubs are now offering discounted membership prices for younger age groups and by that I now mean up to 40 but the age profile still remains stubbornly high.

      There are a number of clubs that now offer free social membership to spouses which is seen as a good way of increasing revenue .

      Reply to this comment
  2. PeterT February 3, 07:47

    And meanwhile some clubs will still keep discounting their green fees to unsustainable levels despite the cost of providing the course going up. Go figure!!

    Reply to this comment
    • Lee D April 13, 23:00

      Now is the time that golf clubs should resist the urge to discount. Be steadfast in knowledge that they have a good product worth the green fee they are charging. It does however need ALL golf clubs to resist the urge.

      Reply to this comment
  3. JayCeeBee February 3, 06:52

    Great report, just what we have been looking for to assist Clubs with future trends

    Reply to this comment
  4. Chris January 31, 13:09

    Interesting times in golf clubs these days

    Reply to this comment
  5. James January 31, 12:29

    A fascinating read, and in general some great statistics for the golf industry.

    Reply to this comment
  6. Peter January 31, 12:22

    No new news here ! Great article and insights though ! Thanks Alistair ! Inflated costs continue to ravage many a club, leadership and management ! Few are equipped, confident and contrarian enough to deal with these issues. While many are “going broke” others are looking for new revenue sources and very different avenues of business. Many will panic, cut hours, services and offerings and cut labor. Others will thrive because they took contrarian advice and suggestions. We love that route !

    Reply to this comment
  7. Charles January 31, 10:37

    Looking at these stats there must be some significant regional variations an example

    “The percentage of members’ clubs charging entrance fees has continued to increase. The figure now stands at 60 per cent, the highest since 2016 (55 per cent in 2018).”

    In the Midlands there are not many clubs which charge a joining fee.

    If that is the case averaging all the results does not make much sense.

    Reply to this comment
    • Robert T February 6, 13:06

      Hi Charles

      We try to make the report as relevant as possible but it does rely on getting respondents to the survey from all areas. The full report give a regional breakdown

      We are seeing a trend of clubs looking at ways of encouraging “stickiness of membership” by reintroducing small entrance fees or higher bar levies in the first two years as or spreading any fee over longer periods to try to maintain membership numbers going forwards

      Reply to this comment
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