By Kyle Olson
In a recession, everyone is looking to cut costs.
That’s bad news for your average country club, which stays in business by providing luxury to those willing to pay extra. Unsurprisingly, private clubs across the country are feeling an unfamiliar pinch.
Established clubs in the most affluent areas have weathered the storm, as they can count on the wealthiest percentage of the community to shoulder significant initiation fees, dues and extra perks.
But many other clubs have spent the last decade catering to the more-recently affluent, individuals who suddenly found themselves able to afford a more exclusive round of golf.
The recession has severely impacted this segment of the economic food chain, some of whom are possibly filing bankruptcy themselves, and business at many private clubs is drying up.
In the Birmingham, Alabama area, three courses are currently in the midst of or recently completed bankruptcy proceedings.
The Heatherwood Golf Club closed this Month, The Meadows is seeking liquidation under Chapter 11 and the Capstone Club of Alabama recently sold at auction.
The Birmingham News also reports that the Chace Lake Country Club, an institution with a 40-year history, has recently sold after incorrectly gambling on relocation to a new neighborhood that offered more growth potential.
Jerry Shelly, a past president of Chace Lake, says that an 18-hole golf course needs approximately 500 members paying $400 a month to break even.
When Chace folded, number of dues-paying members had dropped to 230.
In Alabama, the number of public golf courses doubled during the nineties, while private courses began to shutter.
Since 2000, public courses have held their presence as private courses continue to close, according to the National Golf Foundation.
The number of enthusiasts who play 25 rounds or more per year has fallen and the number playing just one to seven rounds has grown.
These “occasional” golfers do not easily fit the private club model: on average, they are busier, younger and less wealthy.
For a person with those characteristics, paying for regular dues at a private course might be too big an expenditure compared to a day at the public course.
Bob Barrett, CEO of Honours Golf Courses, a Birmingham-based company that runs 13 public courses in the Southeast, expects his business to hold steady this year after dropping 3.2 percent in 2008.
Barrett predicts approximately 500 courses around the country will close before the recession ends, and another 5 percent will go before the market returns.
Investors have gotten the picture: according to Barrett, construction of new courses halted five years ago. “Renovation work is about all that’s going on out there,” he says, “and that’s a good thing.”
To survive, clubs are taking the usual measures, including hiring freezes, belt-tightening and even layoffs.
To survive, clubs will have to attract new customers, likely with lower prices and then find a way to keep them.
Ironically, the courses that have fallen to bankruptcy liquidation give the survivors hope. “The industry will be much healthier,” Barrett says, “after we reduce the supply.”
Source: Birmingham News