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Scots Golf Clubs in Financial Rough

8.38am 12th August 2008 - Management Topics

Scottish golf business experts predict as many as 20% of Scotland’s cash-strapped golf clubs are performing well below par, with some threatened with extinction.
By Mike J Wilson (This article was first published in ‘The Sunday Herald’)

Scottish golf business experts predict as many as 20% of Scotland’s cash-strapped golf clubs are performing well below par, with some threatened with extinction.

Haddington Golf Club in East Lothian was recently forced into a public denial that it was about to go bankrupt, The Glen Golf Club at North Berwick last month announced redundancies whilst the proprietor of Castle Park Golf Club committed suicide last year, reportedly as a result of business and personal problems.

Meanwhile, rumours abound about the plight of several high profile golf clubs in Ayrshire whilst Loch Lomond Golf Club itself, home to the showpiece Barclays Scottish Open is, according to its latest accounts lodged at Companies House, showing a 300% increase in annual losses to £19.2m with the Shareholder’s Deficit reported at £70m amid reports of crisis talks with its bankers, the troubled HBOS.

Nick Hunter of Niche Marketing & Training has worked directly with many golf clubs in Scotland and says, “There is no doubt that there are a lot of clubs out there having trouble on the business front.”

He explains, “The Scottish golf sector falls into three categories, namely the exclusive top-end private member’s clubs which are commercial ventures with exclusive, well-off memberships and are therefore largely insulated from the effects of the credit crunch, as are the hotel-led courses such as Turnberry, Fairmont St Andrews and Skibo Castle.

“At the other end of the spectrum are a number of well-run pay-to-play facilities, which appeal to the younger, more informal type of golfer for whom the formality of an older style golf club is unappealing,” adds Hunter.

“Then, in the middle is a raft of member’s clubs of varying standards with an aging membership and for the less prestigious of these there is the dual issue of replacing older members and, at the same time attracting valuable visitor-driven business.”

Hunter, a director of Golf Tourism Scotland and a prime-mover in golf’s Driving Change agenda adds, “There are a number of clubs out there in a perilous position and there will be some that go to the wall during this economic downturn, because golf revenues are all predicated upon disposable income, which is being squeezed all round at present.”

But as some clubs stare into the financial abyss, top-end development continues as Hunter explains. “There is the 18-hole Jack Nicklaus championship course at the Ury Estate with a hotel, shooting range, tennis courts and equestrian and fishing facilities, Blairs College, a signature championship golf course, designed by former Open champion Paul Lawrie and of course the Trump International proposal at the Menie Estate, so the top of the market is buoyant.”

He predicts, “At that lower end, there will inevitably be casualties.”

Another respected golf business consultant, Mike Williamson of Edinburgh-based MW Associates, who advises clubs, associations and public sector bodies, agrees the sport is in trouble but says, “Over the past 10-15 years there has been a 20% growth in supply but much slower growth in participation and golf tourism and, given the demands on people’s leisure time and disposable incomes, and changing social trends, it is not difficult to pinpoint why there are problems today.”

He warns, “As many as 20% of traditional mid-range members‘ clubs could be in financial difficulties, faced with the double-whammy of rising costs and falling revenues. Some may have to think the unthinkable of folding, amalgamation, or at least considering sharing clubhouse, management, or greenkeeping operations. Rationalization may be unpalatable but it may become inevitable if they are to survive.”

The winning bid for the 2014 Ryder Cup was supposed to provide a panacea for growth, but Williamson is sceptical, saying, “The 2006 Ryder Cup Ireland experience shows that the commercial reality did not measure up to the hype and there has even been a negative, the ‘Rip-off Ireland‘ effect, which Scotland must avoid.

“The reality is that some golf clubs may not be around when the Ryder Cup comes to Gleneagles unless they take radical action now.”

But Williamson insists there is no ‘silver bullet‘, explaining, “Housing might have been an option although some traditional clubs have turned down joint-ventures with developers and the current economic downturn has put such schemes on the back burner for the moment in any case.”

Hamish Grey, CEO of the Scottish Golf Union, which is largely responsible for club golf in Scotland accepts there are, “Pockets of difficulty such as East Lothian and Fife brought about by growth in supply allied to static demand and current problems over people’s discretionary expenditure,” but insists, “It is too early to speculate on foreclosures, although golf clubs, like any business need to find solutions to the challenges they are facing.”

The picture is not much brighter on the inward tourism front; Gary Wilkinson, managing director of golf tour operator Wilkinson Golf says, “Times are tough for everyone and when if the Old Course at St Andrews, previously considered recession-proof has vacancies, then other courses are in trouble and many of the prestigious hotel / golf course operators are offering deals that ensure only turnover and cash flow.”

       

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