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VOL. 127 | NO. 175 | Friday, September 07, 2012

Staying on Course

Recession puts a crimp on private golf clubs

By Andy Meek

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A few days ago, trade publication “The Bond Buyer” reported that Phoenix, Ariz., is facing a $14.8 million deficit to operate its six golf courses and is mulling whether to sell or shutter them.

Ricardo Contreras works on the 11th green at TPC Southwind. The par-70, 7,244-yard layout was designed by architect Ron Prichard with PGA Tour players Hubert Green and Fuzzy Zoeller serving as consultants.  

(Photos: Lance Murphey)

The city is reportedly considering those possibilities in light of factors that include a glut of courses, growing competition for golfers’ attention and a decline in the sport’s popularity. Blane Merritt, general manager of the TPC Southwind private golf club in Memphis’ Southwind community, can empathize with what Phoenix is wrestling with.

That’s because the lingering economic slump has altered the mathematical dynamics of owning and operating a private club, according to Merritt. And it’s forced clubs like Southwind to change their focus somewhat. TPC Southwind, the PGA Tour’s only private golf club in Tennessee, plays host to the tour’s FedEx St. Jude Classic every June.

“I’ve been in this business about 25 years, and this is the first time I have seen the economic climate in our country impact private clubs,” he said. “One of the tough bridges we crossed in our industry was 15 to 20 years ago, when it was almost unheard of for private clubs to advertise. To actively seek new members. It was just something you didn’t do, and didn’t have to do, because the curve of the number of people coming in the game was so steep.

“Back in the late ’90s, a lot of golf courses were getting built, so I also think most golf course operators would agree we probably built too many golf courses in each city.”

Throw a recession into the mix, and the math gets simple. An abundance of courses plus declining demand means attrition is higher than usual.

“Our business historically has seen somewhere around a 6 or 7 percent attrition rate,” Merritt said. “This club has 400 members. You’re going to lose about 28 to 30 members a year just through normal attrition, from things like death, relocation or a change in life status. But now, because of the economic climate, that percentage is up to 8 to 10 percent.

“I think everybody has accepted their membership levels being a little lower than they were 10 years ago. So adding 30 members or so a year just keeps you flat. And these days it’s tough to add new clients.”

Ricardo Contreras levels the 12th green at TPC Southwind with a speed roller. The par-70, 7,244-yard layout was designed by architect Ron Prichard.

According to figures from the National Golf Foundation cited by “The Bond Buyer,” more than 358 golf courses have closed since 2006 – most of those being public courses. The foundation predicts 500 to 1,000 public golf courses nationwide will close within the next five years.

For TPC Southwind, which opened in the late 1980s, the name of the game is to add new members where possible and cater extensively to the ones it already has.

During the club’s peak season, it will have about 125 employees. It completed a major renovation in 2004.

“Our first goal is to retain the members we have, and one way we do that is by trying to make sure there’s ways for families to participate in the club,” Merritt said. “Whether it’s through wine dinners or other things. And we’re also constantly creating new programs and ways to bring in new members.

“What’s also important is the quality of the product. We want the golf course to always be in excellent condition and make sure the food and service is good. It’s a several pronged approach. In the future, we want to continue to promote our brand, obviously add at least a few more members than attrition takes away and continue to keep things updated.”

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 74 312 10,190
MORTGAGES 103 400 13,275
FORECLOSURE NOTICES 16 76 2,614
BUILDING PERMITS 221 783 24,307
BANKRUPTCIES 72 299 9,832
BUSINESS LICENSES 39 110 3,713
UTILITY CONNECTIONS 129 519 14,482
MARRIAGE LICENSES 13 81 3,144

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