26 Golf Inc. Summer 2014
marking uses for what is essentially the
gross profit of the club for different revenue streams.
Food and beverage is not an available
cash driver. Far from it, according to a
Club Benchmarking finding noted in an
article it produced, “The Club Business
Model: Revenue versus Available Cash”:
“The longstanding debate over F&B
profitability is cast in a new light when
you consider that, while F&B produces
about 30 percent of the revenue in the av-
erage club, in 70% of clubs F&B generates
no Available Cash. At the average club 3%
of the Available Cash is used to subsidize
the loss in F&B.”
That’s right: The average club uses 3 per-
cent of its profit subsidizing a deficit.
The biggest driver of available cash?
Well, that would be dues. Dues fees are
gold. While they make up 50 percent of
the revenue stream, they provides nearly
80 percent of the available cash, Club
Benchmarking data shows.
And food and beverage doesn’t do as
well when it comes to providing available
cash as other revenue sources — such as
golf operations — even though they are
smaller overall revenue sources. Golf op-
erations, for instance, generates around
14 percent of the revenue but 15 percent
of available cash. So a club would have a
better chance of improving available cash
if it concentrated on that area of the club’s
Club Benchmarking is an online benchmarking platform that crunches numbers
for individual private clubs, allowing
them to compare themselves with the industry as a whole or selected peer groups.
Its various filters and reporting tools give
clubs ideas on how to make adjustments
and plan strategically. For instance, the
median revenue from dues for clubs with
golf is $3.14 million. If your club is at the
25th percentile — $2.16 million — a dues
hike may be something to consider.
Or maybe not. It actually depends on
a host of variables. (As said, it’s a quirky
“Rather than looking at any one data
point — like dues or F&B revenue — in
isolation, our goal is to put the informa-
tion in the context of its relationship to
the overall business model,” said Russ
Conde, COO and co-founder of Club
“We believe the place any club —
healthy or not — should start is to look
closely at how their club is balanced finan-
cially — sources and uses of available cash
— and understand which factors are ac-
tually affecting that balance,” Conde said.
“If they are out of balance, meaning their
business model is not sustainable, it isn’t
typically related to an isolated issue like
dues. Typically, there is a combination of
factors causing the problem.”
That’s important for a club to realize, he
said. Many, particularly during the reces-
sion, cut dues to increase flailing mem-
berships, only to see the club unable to
invest back into operations and/or make
capital improvements. As the club experi-
ence suffered, more members left, so dues
were cut again. It created a death spiral
for some clubs — one that may have been
avoided if the clubs had a better grasp on
their business models. Other companies
that do similar work find similar results.
Philip Newman, a partner with McGladrey, which advises private clubs, said
clubs are likely to be run like businesses
today, with management and members
having a better idea of the fiscal realities
and how they relate to long-term strategies.
McGladrey produces an annual report
on trends at Florida’s private clubs by auditing more than 200 of them. As is the
case with Club Benchmarking data, clubs
use the information for strategic planning.
And, as is the case with Club Benchmarking, the annual report gets down to
the nitty-gritty, analyzing everything from
the ratio of employees to members, to delinquent accounts receivable balances.
According to Newman, the percentage of revenue from dues for the Florida
clubs (which are member-owned, private
ones) is 62 percent — an increase from 52
percent from 14 years ago. And that climb
came even though some clubs either held
the line or decreased dues during the
worst of the recession.
Private club restaurants are
normally not cash cows