By Tom Monaghan, PGA of Canada and President of Monaghan Golf Group
The Changing Business of Golf
The golf industry has changed dramatically over the past 50 years. Private golf courses were predominant for the first 50-60 years of golf in North America. Golf professionals were the proprietors at the local golf course and sold their services and inventory to a membership who had few options in the marketplace. Golf Courses were run by a Board of Directors who’s members were typically local businessmen who came together for the singular purpose of having a place to pursue their passion - golf.
The business of golf has changed. Today public or daily-fee golf facilities outnumber private facilities and clubs have steadily taken back their golf shops, instead hiring salaried PGA professionals to oversee services. Gone are the days of excess and clubs being fast and loose with their purse strings; now it’s about a tight and transparent bottom line. Golf facility owners are seeking more creative and fiscally prudent ways of making their operations profitable while still providing an exceptional customer experience. And a growing industry trend is hiring a golf management firm to make this happen.
Why a management company? In a word: efficiency. Starting in the early 1990’s - when golf course management companies emerged - more owners are now relying upon the expertise of arm’s length companies to help make their properties more profitable. There are a number of reasons owners might consider this option.
Expertise - Golf management companies are very specialized. Unlike hospitality management groups, their sole focus is on the operation of golf facilities. Typically, the teams are composed of PGA golf professionals, professional golf retailers, industry-savvy financial and human resource professionals, and food and beverage teams with experience in the golf business. And as golf differs from the hotel and restaurant industry, having a group of experts familiar with the nuances of the business will prove beneficial to both the company’s bottom line and their customer experience.
Economies of scale - A third-party golf management company with contracts at a number of facilities can provide owners with buying power. Whether it is getting a more attractive price from vendors and wholesalers for retail offerings, bulk-buying insurance, using a single accounting or human resource company for consistency or getting the best price on a fleet of power carts, a management company has the clout to work these economies of scale in the favour of the owner. Who gets the better price on a fleet of carts, a single owner who wants to buy 20 carts or a company who is looking to procure 150 carts?
Support - Behind the facility’s General Manager (GM) and his/her onsite staff, a management company provides a dedicated network of professionals working to provide support to the team. If issues arise at a facility that the onsite team cannot resolve, the management company’s larger web of golf-specific resources are there to help. With a broader array of experienced employees from which to draw upon, most issues can be effectively resolved.
Less headaches - Owners who seek to mitigate stress and anxiety about the intricacies of daily operations are increasingly turning to management companies. Typically, a third party management company will meet monthly with owners to review financial statements, problem-solve anticipated issues, and celebrate successes. The company may also work with the owners to provide a strategic plan and/or capital improvement plans so the club is able to grow in tandem with future industry changes.
The golf business has had its ups and downs. With a future of changing player demographics, emerging environmental challenges and new technologies, owners benefit from the help of third party golf management companies and will find new ways to make their facilities more profitable and keep their customers returning. The future looks bright!