I was looking back over some posts on Facebook from last year and one in particular generated a huge reach and some good feedback. With the subject continuing to be in the news, it got me thinking a little more about the subject and so thought I would develop my initial simple post into a more detailed article.
The original headline & post:
Golf club unveils plans to build homes on its land after 'haemorrhaging' members – an article in the Teeside based “Gazette Live” about Middlesborough Golf Club planning to build some executive homes on land it has to generate much needed income for the reportedly struggling golf club.
My post that generated so much interest was;
“Clubs looking to develop available land to generate funds and even clubs merging and selling one of the courses are becoming more common place. They are sensible measures to raise much needed cash for investment or security. But, separate from this, clubs must realise that if they do not solve the underlying issues that has led to their current situation, the money will run out in the future. Will they be left in the same situation in 5, 10 or 20 years’ time. I genuinely hope that such forward thinking clubs also look at their business, their management structure, are they appealing to the market, how do they market and sell themselves? Some of the funds they raise need to be invested in these areas and not just put a band aid over the underlying issues.”
What’s It All About?
This is not a new strategy by any means, with golf clubs having done this in the past for numerous reasons. However, in the last few years it would seem there have been a noticeable increase in golf clubs selling off available land, creating developable land through redesign, doing some form of land swap or deal with developers – both partial or in some cases full relocation of the club.
Examples of such developments include;
- A couple of weeks ago it was reported Preston Golf Club had lodged an outline planning application for 12 homes on land the club owns.
- Middlesbrough Golf Club (which the article above was about) join the likes of Meltham Golf Club in Yorkshire, who are looking to develop land or sell off available land to generate funds for the club without impacting the existing course. Our understanding is that the Middlesbrough application was blocked.
- Baberton GC, on the outskirts of Edinburgh, sold off the land where the old clubhouse was located and allowed them to build a new 950m2 clubhouse in a new location, which has been a success for the club to date.
- Westhill Golf Club, Aberdeenshire, sold land for the development of 7 homes which generated much needed investment for the golf club.
- Darlington Golf Club, have voted for a plan that will see them relocate to a new site, with the existing site set to be developed for housing.
- Royal Norwich, where the members voted overwhelmingly to sell their whole land to a housing developer and relocate to Weston Park Golf Club, creating an upgraded course (with 27 holes) and clubhouse that both clubs will share.
- Camberley Heath sold land for 4 homes and relocated their greenkeeping facility.
In some drastic cases, the golf course and clubs disappear altogether, such as Botley Park in Hampshire and Amington Golf Course in Tamworth. Sad as it may be, this may just need to happen to help the health of many clubs as we clearly have an over supply that will not be bridged, even with the best of participation growth schemes. Golf Club Management had reported in an article that “House Builders are Showing Huge Demand for Golf Courses”. They went on to state “the demand is both to replace the golf courses entirely with homes and to build housing on some of their land so that the golf courses can remain in existence”.
Is this a Good Thing?
We cannot comment on the pro’s and con’s of the decision by planning authorities to approve such plans. In some cases, such as Clober Golf Club near Glasgow, the golf club land is actually included by the local council in the Proposed Local Development Plan. In many cases, there is a local need to build more houses and golf clubs can be part of this, partly or wholly as evidenced above.
On the face of it, this should be a positive option for golf clubs. Such developments bring often much needed new facilities and funds for the re investment in the golf club and even some funds to improve the future security of the golf club. However, despite some positive noises from the industry, these are still not easy times for golf clubs, with various factors having an impact such as ageing facilities, falling (or static) participation rates, an oversupply of golf courses caused by overbuilding in the 1990’s and 2000’s.
But there is no doubt that the way golf clubs are managed has also been a contributing factor as to why some golf clubs find themselves in such a position.
In some cases, if the way clubs are managed and operated are not addressed, the injection of funds could just be a “sticking plaster” to cover over the issues for a period. Golf Clubs must look at what they are offering, how they are managed and how good they are at promoting themselves. In today’s market, golf has to compete not just against other golf clubs, but against other activities that vie for our valuable disposable income and even more valuable time.
What Should Clubs be Doing?
There is no doubt clubs that seem to be doing the best, are those that have looked at themselves as a business and have invested in their future. This could be;
- Looking at how they are managed and investing in a more commercial and professional business-like approach.
- Re investing in their facilities, including the golf course but also clubhouse, practice facilities and services they offer to clients.
- Looking at their products and services and how they sell to clients i.e. membership structures, target markets etc.
For some clubs, they may have the funds to do this, but for others they may not and having to look at other means of raising capital, such as looking at land development opportunities. In some cases, it is a necessity for clubs for financial purposes, but in all cases, it is key to optimise such moves and then utilise the gains correctly, to put the club on the right footing for the future. The golf clubs land is a finite resource and any redevelopment needs to be carefully considered with professional advice, as for most this will be a once in a lifetime opportunity.
Maximise Your Land Potential
From a Golf Course point of view, if this is something that a club is going to do, out of necessity or not, then key is looking at all options to maximise the opportunity in terms of the resulting product, financial gain and balancing disruption with benefits.
A good golf course architect will help you to look at how to maximise your opportunity from the land you have. Clubs should be looking slightly “out of the box” and not just going with what seems the obvious / easiest option. A club on the outskirts of Edinburgh has recently sold it's practice facility to a developer, with the funds likely to be invested in a new clubhouse. Whilst losing a practice range may not be ideal, the club is located next to a well established driving range, so the loss of the facilities could be mitigated with the right collaboration.
As well as looking “outside the box” It is also worth looking at land “outside your boundaries”. Check who owns adjacent lands, which may have little development potential / value, but could allow the golf club to sell parcels of valuable land and have the funds generated pay for replacement holes and facilities. Clober Golf Club in Scotland, if plans proceed, is a perfect example of this. In this case the adjacent land was owned by the housing developer allowing for an appropriate plan to be drawn up for consideration. Maybe your neighbours will work with the golf club to mutual benefit.? Developers are looking for land, why not investigate such opportunities that could work for all parties?
Engaging a good golf course architect and importantly a local land agent (or both) will help the club ensure they look at all possibilities and vitally understand the true valuation of the land involved for any negotiations.
Is This Just a “Sticking Plaster”?
Well, it could be if the club is having operating problems or cannot sustain itself. The key is to utilise such opportunities (although even without such an opportunity it is imperative as well) to invest in both the infrastructure of the club (the course and clubhouse) and the way the business is managed for the longer term.In a press release from last year, Durham Golf Union reported a significant upswing in members. The reported reasons, unsurprisingly, included;
- Improved marketing
- More innovative membership products
The industry is changing but many clubs are still not structured or managed to compete commercially. Golf clubs are competing for individual and family’s disposable income and even more valuable time. They are not just competing against the golf clubs in the area (well they are but not only them) but against gym’s, other leisure pursuits, restaurants, function venues etc. We are in the entertainment and hospitality business as well as the sports business and to succeed, you have to have a good product, good service but you also have to be really good at communicating, promoting and ultimately selling your club.
To achieve this needs;
- The right management / governance structure
- Strategic Planning for the long term future that committees / board will work towards – not deviate from!
- The right people doing the right jobs
- Results and accountability
So, as well as thinking the windfall from selling developable land will help pay for that leaking roof, that much needed facelift to the clubhouse, that bunker renovation programme and new fleet of machinery, think also about investing in how you will manage your golf business in the future. Your well earned funds should be a platform to future success, not just a sticking plaster for the next 5, 10 or 20 years!
If you think your club could benefit from this type of development, or would like to get a professional assessment of your golf club’s land use or discuss if your club could be performing better commercially, then please contact Keith Haslam at email@example.com or call +44 (0)1334 478578.