Summer 2014 www.GolfIncMagazine.com 27
the membership likes, he said.
That’s not to say food and beverage can’t
improve. In some clubs it has and that’s
helped the bottom line, he said. Some eateries are becoming trendier and offering
more bar seating and indoor-outdoor options. Simple steps — such as easing dress
codes — can help, he said.
And other revenue streams are help-
ing, such as from fitness centers and
tennis clubs. Part of the dues pay for the
additions, but user fees are sometimes
included and can help bolster revenue.
Newman is optimistic about the future of
private clubs, given the turmoil they have
survived. Indeed, instead of cutting costs
— which many had done to survive the
recession — they may soon find them-
selves with money to spend.
Ironically, that could pose a problem,
he said. That’s because many club managers have dealt primarily with recessionary
management via cost cutting.
“If you start having money to spend,
how do you spend it wisely,” he said.
“That’s a whole different challenge.”
Editor’s note: Golf Inc. will focus more
closely on food and beverage expenses in
our next issue.
There’s a growing awareness that dues
are the primary revenue engines and club
operations can be impacted for the worse
if that revenue stream is weakened, Newman said.
“You cannot not pay attention to dues,”
Transparency is vital when it comes to
explaining to membership the reason for
“When you get to the annual meeting
you say, ‘Here’s what we’re paying for,’” he
said. “And the money has to come from
Inflation impacts expenses, he noted.
As the economy improves and the labor
market gets healthier, competition for
top staff increases. You have to pay more
to retain the best employees, he said.
Health care costs are an issue.
“You are forced to do more with dues,”
In 2013, according to the annual report, 66 percent of the clubs raised dues.
Only 6 percent cut them.
Yes, there is a tendency for some members to think that food and beverage
could be better managed, he said. And
that’s because everybody “thinks they’re
an expert” because they frequent restaurants or know someone in the business,
As the report notes: “Dining opera-
tions are also the most discussed, ana-
lyzed, scrutinized, criticized, reanalyzed
and essentially controversial, while also
misunderstood, elements of the club’s
operations. Simply put, a club’s food and
beverage operation is not a restaurant.”
Newman said his firm likes to say clubs
do not lose money when it comes to food
and beverage. F&B should be viewed as a
key amenity — like the golf course — that
needs subsidizing — like the golf course
— because the economics of running it
Take a simple glass of wine. Go to a
BY PETER J. NANULA AND VAN A. TENGBERG
for-profit restaurant and you get a mea-
sured 4-ounce pour. At the club, you’ll
likely get a more liberal pour. You don’t
make money doing that, but it’s a perk
Membership in a private equity club
has historically been considered to be
one of the hallmarks of success. The
most prestigious golf clubs in America
were generally private equity clubs. It
was believed that there were significant
benefits to belonging to a private equity
club, including the ability to influence
management decisions through the
exercise of voting power, exclusivity
of membership and perceived social
status. Of course, there were trade-offs
as well, including the ability of the club
to assess its members each year for
capital improvements, members (who
often had no experience) becoming
involved in club management and the
necessity to have sufficient funds each
year (through dues, etc.) to balance
the budget. In some cases, it worked
well. In other cases, it was a recipe for
During the time period between
1990 and 2000, a new form of private
club emerged and became popular: the
private non-equity club. These clubs
were generally owned by a large golf
company, a wealthy entrepreneur or
a developer. Private non-equity clubs
ostensibly offered many of the benefits
of a private equity club, including a
membership cap, careful screening
of prospective applicants and all,
or substantially all, of the services
For private equity
clubs: choices, choices