Celebrating Client Success in Transaction Advisory

Handling complex club transactions can be challenging and, in many ways, celebrating the success of your clients can feel equally challenging and at times unnatural.

For all the right reasons, seldom do such celebrations recognize and truly appreciate each of the obstacles and challenges clients encounter along their path to success.

Indeed, during last year’s successful sale of The Clubs at St. James Plantation, the ownership group scrutinized several options which each brought forth a great deal of complexity. The ownership group was looking for a buyer with a focus on the members and on the long-term sustainability and success of The Clubs. In February of last year they found that in Troon, the largest golf management company in the world, who had managed The Clubs for the previous 12 years.

The transaction ranked among the biggest sales of 2018 and the largest in the private club sector according to Golf Inc. Magazine in their January/February 2019 edition.

For the ownership group, the sale was a tremendous accomplishment and an exemplar of visionary strategic leadership. For GGA, we were humbled by the opportunity to support such a dedicated ownership group during the process and were thrilled with the outcome as it aligned with the quantitative and qualitative aspirations of the owners.

Notably, GGA Partner Derek Johnston was recently recognized as an Adviser of the Year in Golf Inc.’s May/June 2019 magazine for his support on this transaction, the success of which was informed by the deep expertise of Craig Johnston, Director of GGA’s Transaction Advisory practice.

About GGA Transaction Advisory

At GGA we welcome every opportunity to assist our clients in maximizing return on capital and pride ourselves on deliberate consideration of both the quantitative and qualitative aspects of every transaction.

GGA’s core Transaction Advisory services include:

  • Buy and sell-side advisory
  • Investor exit strategy development
  • Business valuation and modelling
  • Due diligence (commercial, financial and operational)
  • Developer-to-member transition planning and facilitation

Follow these links to learn more about Derek Johnston, Craig Johnston, and GGA’s Transaction Advisory practice.

A special thank you to Jack Crittenden, Jim Trageser, and Keith Carter at Golf Inc. Magazine, the leading news source for golf course developers and owners worldwide.

Covering Isn’t Just For Music

The inimitable Elvis Presley’s version of Hound Dog sold 10 million copies and holds the 19th spot on Rolling Stone’s list of 500 Best Songs of All Time. But the King of Rock ‘N’ Roll can’t claim Hound Dog entirely as his own. Elvis was covering a version recorded three years earlier by Willie Mae “Big Mama” Thornton, an American rhythm and blues singer and songwriter.

Elvis has been accused of stealing or culturally appropriating Hound Dog. But the truth is that covering was even more popular in his day than now. The more important takeaway is that we should always be paying attention to the past, learning from others and developing our own plans for success. There are three distinct plans that club leaders should have within easy reach at all times.

Strategic Plan

A strategic plan should clarify two aspects of purpose: what we are and what do we intend to accomplish. An effective strategic plan builds on the knowledge of past experience and market understanding to describe the club’s goals and objectives.

All businesses benefit greatly from the discipline and clarity provided by sound strategy. Although many golf facilities lack formalized strategy, those that actively use their strategic plans hold a distinct competitive advantage. According to research completed by Global Golf Advisors, 73 percent of clubs that rely on a strategic plan to guide their operations outperform their competition.

Marketing Communications Plan

Most golf courses and private clubs do business in markets that are extremely oversupplied. Further, many of these facilities lack a current and actionable understanding of the people who are their customers, members and prospects. In highly competitive and crowded markets, the advantage goes to those who know whom they are looking for, where to find them and how to communicate with them effectively.

Effective and purposeful communication plans are target specific. Knowing how to communicate with your baby boomer audience is different than reaching millennials, for example. The best communications plans utilize multiple media and reinforce messaging on a disciplined schedule.

Most people find time only for trusted information sources. Thus, golf courses and private clubs have the advantage in most cases of being “known” to their active market segments. What tactics are working best?

  • Robust and engaging websites are the platform for any communications plan today. They must be inviting, engaging and functional.
  • Print communications – newsletters and postcards, for example – are sticky with many golfers, especially those over 50, and should not be disregarded even in a digital age.
  • Engaging social media help create conversations within your community of members and prospects.
  • Video that shows images of people enjoying the golf course and clubhouse activities help tell the club’s stories in authentic ways.
  • Person-to-person contact from key staff members remains a difference-maker. There is no substitute for a personal invitation.

Staffing Plan

Access to affordable labor is one of the most important operational challenges at most golf clubs. With labor costs now exceeding 55 percent of most clubs’ operational expenses, thoughtful planning is essential. Borrowing ideas from the past enables managers to create meaningful relationships with employees and keep them committed to their jobs. What’s more, clubs that encourage their best employees to recruit friends and relatives have an advantage in attracting top talent.

A reliable staffing plan identifies the utilization flow of the facility to ensure that the club is properly staffed at all times. The plan must calculate labor and payroll burden costs to enable dependable budget projections. The best staffing plans show the position title and description, number of employees required, allotted compensation and benefits, and options for flexing staff size and positions as conditions change.

Big Mama Thornton inspired Elvis to lay claim as the King of Rock ‘N’ Roll. Who’s your inspiration, and what’s your plan for success?

This article was authored by GGA Partner Henry DeLozier for Golf Course Industry Magazine.

2019 Millennial Golf Industry Survey Findings – Part 8

In ongoing research collaboration with Millennial golfer organization Nextgengolf, GGA recently updated its study of the habits, attitudes, and preferences of Millennial golfers.  The 2019 study brings forward survey findings from over 1,400 Millennial golfers and builds upon research conducted in 2017 and 2018.

This is the eighth and final installment of a multi-part series of infographics to feature the latest Millennial golfer feedback. Part 8, below, examines public course golf and the key habits, attributes, and fee tolerances of Millennials who play most of their golf at public facilities. Also included are observations about how this group decides which courses to play, how much they expect to play in the future, and key differences between this group of Millennials and those who play most of their golf at private facilities.

See previous individual installments here: Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, or view all eight parts here.

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Research Overview

In many clubs today, the long-held expectations and perceptions of existing, ageing members are at odds with the entirely different needs and expectations of a new wave of younger, more casual members.  The challenge for clubs?  To create an environment which not only appeals to the new wave, but where members of all types can coexist.

Research findings highlight how golf clubs can adapt and develop their offerings to meet the needs of the next generation of members and customers.  The goal is to provide valuable insights about Millennial golfers, the challenges they face, and the opportunities for clubs to help support the long-term sustainability of the game and the industry as a whole.

Background

As the leading entity for team-based golf in the United States, Nextgengolf connects Millennials to golf and supports the success of their game while GGA specializes in solution engineering and problem solving for golf-related businesses.  A fusion of GGA’s 27-year history of private club research and Nextgengolf’s connection to young golfers afforded the unique opportunity to study a highly valuable Millennial audience.

The survey sample focused exclusively on a sample audience of active, avid Millennial golfers with prior golf interest and experience in tournaments or golf events.  To date, more than 3,600 survey responses have been analyzed during the three-year research study.

Thank you to the Club Management Association of America (CMAA) for the support that makes this research possible.

Avoiding a Category Overload

When was the last time you conducted a thorough review into your membership categories?

GGA’s Bennett DeLozier explains how a streamlining process can help to slim down the number of categories and keep them relevant in today’s marketplace.


“Confusion and clutter are failures of design, not attributes of information” – Edward Tufte

Across North America and Europe a competitive landscape for membership has emerged, with more leisure pursuits competing with one another than ever.

Naturally, club leaders across the world are not sitting back and watching the evolution of customer needs and wants without acting. But while a great deal of this action is well-placed – from the introduction of intermediate and family memberships in North America to flexible membership schemes in Europe – in other instances it is leading to an uninformed inflation of membership categories, creating confusion for customers and an administrative headache for club leaders.

A trail of memberships

It is common for categories to emerge at a particular point in time, often as a reaction to an event, as an attempt to appease a vocal minority, or in an effort to attract a specific new member cohort.

Many clubs react to changes in the market by adding or creating a new membership category to appeal to specific segments. When structured properly, this can be an effective way to cast a wider net and appeal to different audiences. However, when this happens in an unstructured way over a number of years, a club may end up administering upwards of 15 to 20 categories at a time.

More categories mean more discounting, different access, and different privileges. Membership samples per category get smaller, and it becomes too much to administer and too confusing for existing and prospective members alike.

Top-performing clubs have fewer membership categories, largely because they enjoy demand such that members are attracted to them versus the other way around. For others, what should be a set of simple, straightforward membership categories becomes a patchwork quilt, absent of any tangible strategy or current solution to underpin its creation.

Naturally, tackling this issue has its challenges. How do you begin to evaluate and streamline so many categories? How do you negotiate shifting members from one category to another?

Streamlining your categories

Current market intelligence and supporting research is essential to guide this process. Once you understand the current market circumstances and positioning of your club, you can identify where membership categories may need to be realigned to attract future members.

The key is to study internal membership utilization rigorously so you can understand where your club has the capacity to grow. The adjustment of existing categories or development of new ones should be based on creating access and privileges in areas where the club has room to grow, not necessarily where prospective members desire it.

To illustrate the importance of proportionate categories, think about one which has emerged in recent years particularly: the intermediate or young professional category.

Typically offered to those between the ages of 25-35 (with a great deal of variance depending on the club and location), its origins are rooted in the issue of affordability both in dues and initiation fees. This has given way to lower dues, waived initiation fees, or a tiered system based on a particular age bracket.

While the introduction of such a category has been, in most cases, an appropriate tactic, it is one in need of constant analysis. As young intermediate members age into their mid-thirties their lifestyles begin to evolve, so does what they need, want and expect from their club experience.

This poses a challenge to clubs: do you change the existing intermediate category or create a new one to meet evolving demands?

The answer comes back to robust intelligence – intelligence which enables club leaders to get ahead of this challenge long before it makes its way to the doorstep. Intelligence allows you to measure and monitor utilization, enabling category adjustments which match lifestyle changes and market trends.

Moving members

Whether you’re dealing with category overload, wrangling legacy categories that you are looking to streamline, or have members moving up an age category where there are implications to their dues or privileges, at a certain point in time it is necessary to change.

But it’s difficult to change members from one category to another.

Legacy categories can be contentious, as members are unlikely to welcome category change – especially if this means an increase in dues. Club leaders should enter the process with the primary aim of growing where the club has the capacity to grow and a secondary aim of establishing a fair playing field across the membership base.

The best practice approach is to identify categories that have become irrelevant and essentially ‘grandfather’ those members into new categories which fit the room-to-grow bill, allowing them the opportunity to transition into new categories under advantageous terms.

If we look back to our young professional categories, when the time comes for them to move up the ranks to full membership, invest time and attention into the process. Why? Because these members have reached a pinch point, a ‘fight or flight’ moment in their membership tenure. If they decide to progress through to full membership now, the likelihood that they will stay for the long-term increases substantially.

Communicating your product

Before communicating your streamlined categories, club leaders should have answers to the following: Are the current categories relevant? Are they performing financially? Are category offerings causing issues with facility accessibility or compaction of activities? How do they situate within the local market and relative to competitor offerings? What benefits will category changes provide existing members? What benefits will they provide the club?

Once in position to communicate the changes internally, preempt what members will think. The primary concern for them will be, naturally, “How does this impact me?”. But the club’s agenda should also form part of the equation. Communicate how the changes will make the club more attractive to future generations and how they will support the club’s financial sustainability. Although it may feel self-serving, it will help to mitigate any ill-feeling among members by giving clarity and a sense of purpose to the changes.

For the change itself, successful clubs provide the option to transition into a new category that has similar access under favorable terms (such as a lateral move into a new category at no cost; or, upgrading to a higher privilege category at a lower incremental entrance fee compared to that of a new member off the street).

Externally, the focus should be on competitive advantage through value. It’s easy to compete with local competitors on price, but it’s not necessarily advantageous to the club. The best clubs look at ways to establish their competitive advantages by adding new programming and subtle category elements that make the value proposition more attractive. Injecting value is preferable to cutting costs.

Clarity over confusion

A proactive and streamlined approach to membership categories has much to offer: an easy-to-manage administrative process and clarity for existing members, prospective members and the Board.

A review of your membership categories also offers the opportunity to view each through the lens of the future and under the guidance of current research. With membership dues representing a hugely significant revenue component for any club, this process is time well spent.

For guidance on how to revise your club’s membership categories, connect with
Bennett DeLozier.

The Club for Millennials

On the back of GGA’s largest piece of millennial research to date, Michael Gregory answers your questions, revealing how the findings paint a clear picture of who clubs need to target in order to build the next generation of members and customers.

For 3 years GGA and Nextgengolf have analyzed the behavior and attitudes of golfing millennials. Armed with the findings of this research, GGA have engaged with clubs and resorts on how to connect with this audience. Unfortunately, for many clubs, this generation still proves elusive. However, with the latest round of research now complete, we have the clearest ever picture of the untapped potential of millennials.

Below is a selection of questions that have been posed to me in recent months from managers and board members across North America. The answers may help you dispel millennial myths, consider your club’s actions in appealing to this generation, and, in some small way, future-proof the core of your membership.

What do you know now that you didn’t know before about millennials?

This centers around 3 areas: the trigger point for deciding to join a private club, the influence of family in decision-making, and interest in non-golf amenities.

Trigger point: 72% of millennials move to private club membership as the result of a new job or promotion, making way for more disposable income and leisure dollars.

We already know millennials are a highly cost-conscious group. However, an event relating to their work status which sees them earning more is the most powerful trigger point or motivation for them to decide to join a private club. When does this happen? Last year’s research indicated the ‘sweet spot’ for joining a private club was 33 years of age, and this remains the case.

Family: findings suggest a millennial audience is highly influenced by benefits for the whole family and gaining spousal approval when joining.

Millennials increasingly assess the value of club membership not just in individual terms, but in how their loved ones will benefit too. If club membership becomes a gateway to spending more time with those close to them, this will be key to influencing their decision to join.

Non-golf amenities: interest in non-golf amenities is on the increase, with 76% of respondents stating a desire for fitness pursuits and 71% looking for pool facilities.

This increased desire for non-golfing amenities is significant. More and more, millennials are viewing the value proposition offered by private club membership as a lifestyle choice. They may well have gym or health club memberships elsewhere, but if a private club offers those facilities too along with its numerous other attributes, it is more effectively positioned to win out in the millennial mind.

Do I need to create a millennial membership or reduce the cost of membership to appeal to this group?

2019’s findings reaffirm the issue of cost for millennials. Both dues and initiation fees continue to be barriers, and it is a reality that clubs will need to compete on price to appeal to this group (how much depends on the club’s location and market position).

But there’s also a bigger picture at play. While price is (and likely always will be) important, the best performing clubs are focused on creating an experience that enhances millennials lifestyles and develops a sense of emotional connection and belonging. An experience that also enhances the lifestyles of their family strengthens this connection, elevates the value proposition and paves the way for greater price elasticity.

Are there clubs out there who are successful in attracting and retaining millennial members? What can I learn from them?

Most definitely. We’re witnessing clubs roll out a number of effective initiatives to attract and integrate millennial members.

My advice?

  • Welcome millennials into the governance structure. They want a voice and the overall membership benefits from fresh, younger ideas at the committee level.
  • Encourage them to get involved with events. Some older members may be reluctant at first, but, actually, most will love the injection of youth into events.
  • Find ways to get the family involved, even if you only offer golf. Socialization is key, as is spousal approval. Need some inspiration?
    • Offer periodic child care (for a fee) so couples can enjoy time together at the club
    • Host live music outdoors where young couples can socialize
    • Increase service levels when spouses are on property (call them by name, remember their drink, be ready for them)

Any interesting developments or emerging trends from this year’s findings?

We know that millennials are a time-strapped generation. Between work and family life they don’t have a great deal of time left to dedicate to leisure interests. It’s for that reason, in recent years, we’ve witnessed the convergence of leisure and family, with more and more clubs becoming family-friendly and a place for families to spend time together.

Now, we’re starting to see work come into the equation, which is no great surprise as 74% of respondents stated work commitments prevent them from playing more. Clubs are capitalizing on the trend by creating an environment that makes the transition from work to golf and club easier. This could involve investing in modern business facilities with shared workstations, calling booths and private meeting rooms to accommodate their needs.

As there appears to be no letup in time pressures on this generation, we’d expect to see an increasingly closer union between work, family and leisure time.

 

Is your club in need of a shift in focus to appeal to a wider and younger audience of prospective members?

Connect with Michael Gregory to see how GGA’s expertise and insights
in this area can help your club.

Useful links:

Millennial Golf Industry Survey 2019
The Truth About Millennial Golfers 2018
The Truth About Millennial Golfers 2017

Being Flexible for the Future

“Forecasting is very difficult,
especially with regard to the future.”
Yogi Berra?

Preparing for the Future

Even if the late Yogi Berra didn’t utter this statement, it’s an easy attribution. Like so many of Yogi’s statements, it tucks a truth inside a pithy, if nonsensical saying. We can speculate on the future, guess at trends, or engage a soothsayer, but we can never be certain of our forecast.

Yet as club leaders we are called upon to plan, invest, and adapt. Despite our inability to predict the future, we know the risks of sticking to the status quo. So how do we prepare for the new law, the gathering trend, the abrupt change in the economy, or other externalities – especially those that are unforeseen?

There are two issues relating to a club’s preparations for the future: recognizing the need to change, and taking the appropriate action

A club is best prepared to recognize the need to change by developing a well-constructed strategic plan and maintaining it as a dynamic document (i.e. revising it as new information becomes available). The more considered and current the strategic plan, the better prepared the club will be to respond to evolving conditions.

Next, in order to take the appropriate action, the club needs a Board that is three things: thoughtful, decisive, and nimble.

Thoughtfulness and decisiveness are features of the Board’s character and competence, and are best achieved by sound election processes to recruit Board members based on their merits (i.e. their ability to serve professionally in a culture of cooperation and respect).

Nimbleness, on the other hand, has to do with the flexibility afforded the Board via the club’s governing documents – its bylaws and Board policies. The Board’s agility is based less on the quality of its members than on its documented processes.

When the Future Arrives

Good doctors do two things well: make accurate diagnoses, and prescribe effective treatments. Similarly, effective club Boards do two things well: assess the impact of new laws, growing trends or shifting styles, and then take the action appropriate to address the impact.

So, what can a Board do in the present that will equip it to respond to the future when it arrives?

For years we at Global Golf Advisors have strongly recommended that club Boards develop and maintain a Board Policies Manual (BPM), which contains all of the Board’s standing policies in a succinct, well-organized document. We also recommend that bylaws be amended to afford flexibility for the Board to carry out its fiduciary responsibilities in a professional, transparent manner. The two actions must go hand in hand.

A club’s bylaws are actually “member policies” – instructions from the members to the Board. Members will be reluctant to cede authority to the Board without knowing how that authority will be used, and that’s where the BPM comes in. If the bylaws instruct the Board to maintain a publicly available BPM that clearly lays out how it will govern, then the members can be well informed as to how their Board is serving them.

Our advice is simple: include in the bylaws only the basic requirements, and let the Board formulate and publish in a BPM those policies it believes will allow it to govern effectively. Why? Because when the future arrives – say, a new law is passed, a new trend is affecting the club, or new amenities are being demanded by the members – a Board needs the flexibility of responding without having to go back to the members for a vote.

Of course, there are limits to ceding authority from the bylaws to the BPM. We are not advocating a carte blanche transfer. But in our experience, most club bylaws can be streamlined so they contain only the basics, thereby leaving plenty of room within which the Board can operate. The BPM is the centerpiece to the Club Governance Model*, which is the standard for excellence among the club community. There are many reasons for a club Board to develop and maintain a BPM. Preparing for the arrival of the future is just one of them.

For further advice on creating and maintaining a Board Policy Manual (BPM) for your Club, connect with GGA Director, Fred Laughlin.

*GGA’s Guide to Implementing the Club Governance Model is available to club leaders and Board members on request.

2019 Millennial Golf Industry Survey Findings – Part 7

In ongoing research collaboration with Millennial golfer organization Nextgengolf, GGA recently updated its study of the habits, attitudes, and preferences of Millennial golfers.  The 2019 study brings forward survey findings from over 1,400 Millennial golfers and builds upon research conducted in 2017 and 2018.

This is the seventh installment of a multi-part series of infographics to feature the latest Millennial golfer feedback. Part 7, below, explores the importance of non-golf amenities and social components Millennials look for in club offerings. Also included are observations about how their outlook is evolving over time and several takeaways on how the golf industry is responding to Millennial interests.

See previous installments here: Part 1, Part 2, Part 3, Part 4, Part 5, Part 6 and look for the final installment of this series to be released shortly.

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Research Overview

In many clubs today, the long-held expectations and perceptions of existing, ageing members are at odds with the entirely different needs and expectations of a new wave of younger, more casual members.  The challenge for clubs?  To create an environment which not only appeals to the new wave, but where members of all types can coexist.

Research findings highlight how golf clubs can adapt and develop their offerings to meet the needs of the next generation of members and customers.  The goal is to provide valuable insights about Millennial golfers, the challenges they face, and the opportunities for clubs to help support the long-term sustainability of the game and the industry as a whole.

Background

As the leading entity for team-based golf in the United States, Nextgengolf connects Millennials to golf and supports the success of their game while GGA specializes in solution engineering and problem solving for golf-related businesses.  A fusion of GGA’s 27-year history of private club research and Nextgengolf’s connection to young golfers afforded the unique opportunity to study a highly valuable Millennial audience.

The survey sample focused exclusively on a sample audience of active, avid Millennial golfers with prior golf interest and experience in tournaments or golf events.  To date, more than 3,600 survey responses have been analyzed during the three-year research study.

Thank you to the Club Management Association of America (CMAA) for the support that makes this research possible.

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