One of the economic realties of the now passing recession is that the last cycle could be aptly described as the Tiffany/Coach era; the era of consumer discretionary spending on luxury goods. Golf’s symbol of the Tiffany/Coach era is membership in a country club. It is hard to argue the point that as a purely economic construction, private membership versus public golf is a pretty poor deal. The number of private clubs today is approximately the same as it was in The Great Depression. The difference is clear that at that time in history, those wishing to enjoy a premium golf experience had almost no choice but to be a member of a private club. As late as the 1950’s, private clubs encompassed almost three quarters of that which could be described as a premium golf experience. Because of the vast number of public daily fee courses constructed in the 1980’s through the early 2000’s, that ratio has swung hard in the opposite direction. An avid golfer who plays 30 rounds per year at a daily fee facility can enjoy a premium golf experience without the cost of private membership for about $3000 per year. Very few private facilities can match this cost. The competition for the consumer golfing dollar has become far more price sensitive as a result.

We all know that there are more reasons to evaluate private membership beyond cost, but in economic times such as these, cost becomes a much higher priority in the consumer calculation. Many private facilities are going to find that they need to make several structural long term changes to their economic model or risk insolvency. Some of these changes may include: 1. Ala Carte Memberships – Weekday, Weekend only, and Full Membership categories with ala carte pricing for each. 2. Opening certain facilities to the public – Almost every club known to man has lost money in the dining room, yet they propose to offer a premium dining experience. They should open the dining room for business lunches, etc. and reduce the dependency on members to fund the food operation. Also, offering the public limited availability of a driving range during non-peak hours could defray certain costs. This could also give exposure to the facility for potential new members. 3. Membership Referral Fees – Members may complain about reduced initiation fees for new members, but they could reduce their own sunk cost if they could earn a referral fee for the successful introduction of new members.

I still have high hopes for the potential success of the “Get Ready for Golf in 5 Days” program that emerged from the 2009 Golf 20/20 summit. But I also recognize that the first and best beneficiary of any success from this grow the game program will also be the public facility, not the private club. Adults who are new to the game almost universally begin their experience at public facilities. It takes a few years for any of those new entrants to matriculate to private club membership.

So the private clubs hopefully will benefit from the effort, but it will take a few years for that benefit to manifest itself in terms of initiation fees and incremental revenues to the private facilities.

This is Darwinism at its best. The top 200 clubs in the U.S. are going to be fine – forever. For the rest, adapt, evolve, or face potential extinction as a private facility.