Surviving the race to the bottom

When Harold Macmillan addressed his fellow Conservatives in 1957, he told them: “Let us be frank about it: most of our people have never had it so good.”

Those who were suffering in post-war Britain might have taken his words with a grain of salt but if Supermac were to say the same about post-Celtic Tiger golf in Ireland, he’d probably find plenty of support.

The demise to the entrance fee is now a reality as we head into 2013, yet there is still a hardcore of well-established members clubs that continue to resist being drawn into what Castle’s John McCormack describes as “the race to the bottom.”

Luxury goods manufacturers do not slash their prices during an economic crisis. Standards must be maintained so that the product retains the qualities that made it special in the first place.

“The race to the bottom is a spiral downwards that’s scary,” says McCormack, who manages a hugely popular Dublin club that still charges an entrance fee to new members. “In that kind of race it’s the people with the deepest pockets are the ones that will survive.”

Far from elitism, Castle’s philosophy is based on sound business sense. Entrance fees are used to maintain the club to a high standard so that members do not slip away quietly into the night when tough economic times come along and harsh choices are made at home.

“Quality is remembered long after price is forgotten,” says Mr McCormack, paraphrasing Sir Henry Royce of Rolls Royce fame.

Of course, Castle and its other peer clubs such as Elm Park, Grange and Milltown, are in the fortunate position that they are situated in a built-up area of Dublin where demand for qualify golf club facilities outstrips supply.

But that is not to say that they are immune from the economic crisis that has seen the vast majority of clubs eliminate the entrance fee altogether in a time when golfers have never had it so good in terms of value for money.

Long gone are the €40,000 to €80,000 joining fees once charged by the big golf resorts that are now fighting tooth and claw to maintain standards, retain members and keep their heads above water.

Even Grange, one of the oldest and most popular golf clubs in south County Dublin, has cut its entrance fee from €20,000 to €12,000 recently and consigned the role of secretary manager to a committee of club volunteers.

“Times have changed and we are about building club and community,” says McCormack of Castle, where a fee of €14,800 is still in place for those seeking full membership. “We’re up against a lot of other leisure businesses.”

Charges of €20,000 at Milltown, €16,000 at Elm Park and €14,500 at Killiney are still par for the course but the trend is changing slowly in Dublin, as Woodbrook’s Jim Melody explains.

“We dropped our entrance fee from €17,000 to €10,000 and took in 20 new members,” he says of 2012. “At the height of the boom you couldn’t take in 20 new members because you wouldn’t have had the vacancies.

“People would ring about membership and you would say, ‘Ring me back in September and we will see what we can do.’ Now it’s, ‘Come and have a cup of coffee and we will get the application form sorted out.’”

Clubs such as Cork, Ballybunion and Lahinch still charge an entrances fee yet the days when resorts such as the Heritage near Portlaoise, Powerscourt of Druids Glen could command joining fees in the €40,000 range are long gone.

“In the greater south county Dublin, north Wicklow area we have some chance,” says Mr Melody, who is also an active member of the Irish Golf and Club Managers Association. “But then again, between drainage and bunkers and other maintenance, we have spent in excess of €500,000 on our course and just a little less on the clubhouse and there is more to go.

“When you are talking to people about joining a club, have to emphasise the club side of things. The golf is the meat in the sandwich or the jam on the bread. The club is the concept that you are trying to get people to buy in to.

“The prestige element only works to a certain point. The fellas who are spending money on entrance fees now are far more discerning. If the place isn’t right, if the condition of it isn’t right, if everything you are doing doesn’t tick all their boxes, well then they will go somewhere else.”

Club managers are well aware of clubs that took things for granted during the boom years and did not react until it was too late. One north Dublin club lost 20 members one year, 30 the next and 50 the next before they even considered abolishing the joining fee.

A major drive was suddenly required to find 100 members to replace those who had left as the downturn bit hard.

“The whole equilibrium of a club can be upset,” says Mr Melody. “A big influx of new members changes the whole dynamic of a place.”

Matt Sands of Cork Golf Club explains why they still have an entrance fee of €13,500 and no plans to reduce it or abolish it.

“It has remained the same for at least seven or eight years,” he says. “You can undersell a product as well and we would feel that we have a premium product here and that is why we continue to charge the entrance fee. We don’t want to sound eliteist but we don’t want to slip to the bottom either.

“We are just in the final phase of €500,000 redevelopment of the golf course and 10 years ago we spent over €2m on the clubhouse. Entrance fees are put into a sinking fund and are only used for capital projects. So they have enabled us to carry out these improvements we still have quite a bit of money in the fund. So the club is in a financially healthy position.”

The situation is only slightly different at Galway Golf Club, which has a joining fee of €10,000

“It is not really an entrance fee,” says secretary manager Padraic Fahy. “It is made up of the 2012 subscription and it is then that is broken down into various parts, which includes a charge for all the back levies that the members have paid over the years for development. That could come to about €5,000 and the balance of €4,000 would be the entrance fee.”

Galway’s neighbours, Galway Bay had an entrance fee of close to €15,000 but are now offering membership for less than €1,000 and not charging an entrance fee.

The new found freedom to shop around when it comes to golf club membership comes at a price, according to Fota Island Resort’s Seamus Leahy, which still charges an entrance fee of €5,000 - a far cry from
the €40,000 of the boom times when that charge was connected to a property purchase at the resort.

“We are facing a different economic reality and golfers can move from club to club with greater freedom, which is a good thing for golfers,” he says. “Whether it is good for a club ethos perspective is questionable. The ability to move so regularly probably undermines the whole purpose of clubs.

“It is always nice to see people being very loyal to their clubs. But why are entrance fees still in existence in certain places? I think that’s down to the commercial realities in each club and being pragmatic about what they need to do.

“For the likes of ourselves, we maintain a premium standard product and we are always very much open to new members and we are always striving to keep the standards to a level that people expect.

“Therefore this is part of our financing of that. We made a very firm decision to maintain our golf course quality and standard and the pragmatic realities of that is that it has to be funded.

“You have to put sand on the course, you have to fertilise, you have to have a certain number of people cutting and maintaining and to achieve the level expected of a place like the Fota Island resort.

“The level of the joining fee has dropped significantly in recent years. It’s €5,000 now and it got to a high of €40,000 and was restricted to people who were buying houses as well.

“But the people who are now members of golf clubs are now active golfers. So membership is now much stronger and more active from that perspective and people make sure they get value for money for their membership by playing golf and using the facilities.

“If there is an element of elitism in any of the clubs that maintain their entrance fees so high, it will most likely backfire on them over time. You have to be pragmatic and keep your membership vibrant.”

The message is simple. In the long run, you get what you pay for and as a wise man once said, “a poor man can only afford the best.”