THE expectations are getting higher but budgetary constraints are getting tighter – people want more out of their golf course and yet we seem to be getting less resources to provide it.

That’s the lament from a long-time expert in the Australian golf industry. It cuts to the crux of the challenges facing golf clubs in the 21st Century.

Is it any wonder that slightly more than 50 per cent of Australian golf clubs are under financial stress, according to a Golf Australia report published in 2013?

That’s not necessarily failing to turn a profit each year. It means not making a profit at a level that allows the club to re-invest and improve existing facilities on an annual basis. For instance, $20,000 is a profit but it’s not enough to make the club/course materially better.

As we’ve begun to witness, the golf industry is undergoing substantial change. Increasingly, clubs are considering amalgamation to consolidate their financial security (Peninsula and Kingswood as well as The National and Long Island have already merged). Some clubs are relocating to the city outskirts to secure their future (Eastern Golf Club in the Yarra Valley).

But while there is evidence some of the bigger clubs are coming together, there are plenty of clubs who seem determined to hang onto what they’ve always had – for no other reason than that’s what they’ve always had.

“Those that aren’t planning properly are jeopardising the club’s long-term sustainability,” says Jeff Blunden, managing director of Golf Business Advisory Services, a Melbourne-based company that provides guidance to clients across the Australian golf industry. “The market has never been as challenging as it is right now. Good management with clear direction and good execution is required. And in some cases, hard thinking is required.”

In most instances, it is the club board (often with the approval of members) making decisions that affect a club’s future – decisions which may have far-reaching consequences and take time for the ramifications to be understood.

There are many different factors as to why golf clubs are under financial stress and face difficult challenges. With so much at stake, it begs the questions: Is your board jeopardising the golf club’s future?

Golf Club's Future

Problem #1: Democratic structure of clubs

The overwhelming majority of Australian golf clubs have a democratic system of governance where a board (or general committee in Victoria) makes decisions on behalf of the members. The board is usually elected annually or biennially through a vote of the membership.

As such, the Australian club system resembles the traditional British structure rather than an autocratic style of management that is more common in America. Sometimes the Australian golf industry is too democratic for its own good. For instance, to make a significant decision about a club’s future, a constitutional amendment may be required with 75 per cent member approval at an extraordinary general meeting.

“That is an awfully high hurdle to achieve in today’s environment when there’s often a what’s-in-it-for-me attitude. It’s harder and harder to put the club first before your own interests,” Blunden says.

Self-interest often arises with regard to issues such as disruptions from major course works, acceptance of a levy, selling off some land or taking on debt. It’s worth noting a board is comprised of directors of the club, whereas committees sometime contain seconded volunteers. Directors have financial and legal responsibilities whereas committee members can be interested bystanders with no legal responsibilities. So it’s easier to fire bullets if you’re not responsible for the consequences. Another negative of being too democratic lies in the constitutional foundation of many golf clubs. It’s been estimated 50 per cent of clubs have an annual election written into their constitution. That creates the possibility of changing direction every 12 months.

Good clubs, however, are those that have been consistent with their vision, processes and implementation over a three to five-year period. It’s all about a club’s willingness to understand the value of planning and executing. To flap in the wind every year at the whim of annual elections makes a club vulnerable.

Problem #2: Lack of expertise

At times, the skill set in the golf industry is sadly lacking. But we have to appreciate the club market has a volunteer basis and couldn’t operate without those volunteers.

Hence, a frequent mistake made by many clubs is not finding a balance of different talents on the board. They often elect people with similar qualifications instead of a diverse range of backgrounds. For example, one club had six accountants on its board of seven directors.

And just because a person has been successful in a certain field doesn’t guarantee they’ll be of any benefit on a board. Being a good solicitor, schoolteacher or a former club champion may look good on paper, but personality traits can interfere with judgement. If someone’s become accustomed to thinking they’re the smartest person in the room and is not prepared to listen, then in all likelihood they could be troublesome.

Many people who serve on committees are retired or semi-retired. So it stands to reason they may not be sufficiently aware of issues concerning younger members (such as affordable playing rights).

Furthermore, club directors should get off their backsides and look at other clubs. It’s worth asking if a director has ever visited Melbourne’s Sandbelt to appreciate world-class bunkering and turf quality? But not just golf clubs, board and committee members should visit bowling clubs, leagues clubs, sailing clubs and RSLs to understand why they’re successful (or unsuccessful).

Golf Club's Future

Problem #3: Loving the club to death

People stand on boards of golf courses for many different reasons. A lot of them get on there to make a mark for themselves. Some form the opinion something is horribly wrong and start out with a vendetta to change it. They perceive there are problems and they often throw the baby out with the bathwater.

People in positions of control at a golf club are often emotionally committed to it. For many of them, the golf club makes up one of the key things in their life. But it has to be kept in context with what’s happening in the wider market. Whilst you can love the club and all its traditions, the marketplace will determine what must be done to ensure long-term sustainability.

Board members need to be informed and take the emotive aspect out of play when making decisions. Yet the people who typically stand for office love what they do. That can mean they can’t see the reality as others would through a different set of eyes.

Problem #4: Not listening to the in-house experts

Bad governance at board level can have a dramatic effect on staff morale. In the case of the general manager/club professional/course superintendent (or any person within a senior role at the club), poor leadership at board level will have a flow-on effect throughout the club.

GMs, in particular, can lose their job with a change of board. From time to time, they get smacked down and became a bit “punch drunk” – tired of fighting the good fight with board members who don’t listen to their concerns. Rather than challenge the board over an issue, they lose the willingness to stick their head out. In the end, they fall into line and just do what they’re told.

“The biggest mistake [directors] make is not allowing the professional to voice his opinion more often than not,” says a veteran course superintendent. “The only qualified person in the room is usually the superintendent and there has been many, many instances where he gets howled down, ignored or treated with contempt. Then they go on to make mistakes and often he’s the bloke that is made the scapegoat at the end of the debacle.”

Why does that happen?

“They often will listen to themselves rather than the person who has got the qualifications,” says the superintendent. “The key problem is that people perceive they know more because they can Google things these days and they can read articles from the USGA and whatever.”

Problem #5: Not knowing when/when not to outsource

One of the more consequential decisions is to make golf-course operations an internal responsibility when the financials don’t stack up. The golf industry is rife with stories about clubs that take over the ‘pro shop’, getting rid of the club professional based on the assumption they can deliver better profits.

A board convinces itself the club can do a better job of running golf operations – with scant regard for the 60-hour week the pro puts in as an independent contractor.

You mightn’t like your pro. But that doesn’t mean moving golf operations in-house is the solution. The same goes for internal versus external management of catering operations.

However, clubs need to be very wary about outsourcing course maintenance. Contractors may say they can do the job for half the price. And the club might see savings in machinery and wages.

But it’s risky to rely upon contractors rather than an in-house superintendent under the control of the club. It may be a suitable practice at bowling clubs, but the golf course is constantly evolving from day to day.

Decisions need to be made by a club representative on the spot rather than a contractor whose primary objective is to complete jobs strictly to a budget.

“Each course has got its own idiosyncrasies. If they want to save money, often the superintendent who has been there for a long time is the best person to tell them how to do it and explain to them what the ramifications are,” says the superintendent.

“Whether you want to reduce the size or the number of your bunkers, for example, to save labour and maintenance costs.

“Instead of that, they get a contractor in who just does it to a very poor standard – which impacts on the reputation of the club. And then players’ enjoyment and memberships drop. It’s a downward spiral if you go to the lowest denominator.”

Golf Club's Future

Problem #6: Blind faith

Investing in new clubhouse amenities without understanding the marketplace is a risk. We all know of clubs that have poured money into refurbishing interior facilities because they think there’s an opportunity to increase revenue from wedding receptions and other functions.

But is there a market? How big is it? Who are the competitors? And how much profit can be realised? Is it the best expenditure of cash reserves? And is it worth being saddled with debt for the foreseeable future?

Mistakes can be avoided on the strength of good planning. Three questions that Blunden poses to clients are: “Who are we? What do we want to be? And how do we get there?” That involves taking members on a journey and getting staff to deliver results. “Hope is not a strategy,” he adds.

Problem #7: Unable to prioritise

Too often, the heart of the business – the actual golf course – gets neglected. Clubs will persist with old, push-up greens with poor drainage on which the superintendent is struggling to grow grass. Meanwhile, new carpet is laid out in the clubhouse along with other furnishings. This actually happens more often than you could imagine.

In another example, a golf club in western Sydney had a director who owned a concrete pumping plant. The board decided to put concrete paths around the course while the irrigation system was totally inoperable. Apparently, it thought cart paths were more important than having a working irrigation system to water fairways and greens.

Problem #8: Unrealistic sense of the club’s destiny

A large number of Australian courses are located on public land and pay rent to a landlord such as a local council or government body. Yet it appears some golf clubs – directors and members – have an unshakable belief there will always be a golf facility on the land they occupy. They’re oblivious to the possibility that land could be reclaimed for any number of other recreational activities. Rip out a golf course and replace it with X number of football fields (AFL, league, union or soccer).

With less and less green space for public use, golf should be cognisant that other sports will compete for available land. Eastlake Golf Club in Sydney’s east is a case in point. As one of three golf courses (along with The Lakes and Bonnie Doon) situated on land owned by Sydney Water, it is facing mounting pressure from Botany Bay Council to justify why it should retain sole usage of its land.

That said, there’s a lot to appreciate about the democratic structure of Australian golf clubs. Having travelled extensively throughout Asia, it never ceases to amaze how developers spend an inordinate amount of money on extravagant courses and magnificent clubhouses – hopelessly oversized to the point of being dysfunctional.

They’re a reminder that a lot of the traditional processes in Australian golf are worth persisting. But there’s a whole lot we can learn from Asia, America and the rest of the golf world when it comes to embracing modernity.