Rockford, Ill., like many medium-sized cities in the Midwest, has been buffeted by economic forces that have generally dimmed prospects for growth, employment and overall prosperity. Once the second largest city in Illinois after Chicago, Rockford’s manufacturing economy has not fared as well as other cities with a more diversified focus in growing sectors like high tech, professional services and finance. The price to be paid for this reliance on more traditional industries was especially steep in the recent Great Recession as Rockford proved that old adage about industrial cities in a severe downturn: first in, last out.
Not surprisingly, this has been a significant stressor on Rockford’s private clubs, which have included three full-service country clubs serving a community with a total population of nearly 150,000. Such recessions typically hit clubs—especially those built on a smaller scale—where they are most vulnerable: membership levels and operating expenses.
If current members exit and new members are not forthcoming then the collision of expense and revenue lines is almost inevitable. The cost of maintaining a golf course, running a kitchen and keeping the lights on in the clubhouse are largely fixed and increasingly difficult to cover in the face of a declining membership base. Thus a potential fiscal crisis loomed … and a remedy must be found.
Often, clubs resort to initiatives designed to bolster the membership rolls: trial memberships, discounted dues, waived initiation fees. However, Rockford Country Club decided to avoid this price promotional gambit as they sought to navigate the shoals of the post-recession economy. Their focus was instead on the operational side and it represented a significant shift away from what had once been the status quo for many private clubs. The members chose to cede day-to-day operations to a professional management company.
Management Company Solutions
There is an undeniable market for “bundled expertise.” The economic logic standing behind it can be powerful in its own way. Management companies often bring a wealth of experience in hospitality and golf operations. This, in turn, can offer the prospect of stronger internal controls and improved financial reporting, which are often supported by back office systems and software licenses that integrate into a distinctive and replicable management system.
Management companies can also offer the prospect of system-wide benefits with respect to human resources and personnel practices. There may be a diverse and rich talent pool from which to draw people as well as training practices that elevate service levels and promote a consistent member experience. Scale can also yield cost savings in procurement and managing the many vendors and transactions that represent the diverse and complicated club supply chain.
Such improvements in management and operational practices are often welcome. Rockford Country Club enjoyed these types of benefits in its 30-month relationship with a professional management company. However these improvements in operational efficiency and effectiveness did not fully meet the strategic challenges that faced Rockford Country Club, so the club returned to a self-management model.
Creating Value
Although management companies are mindful of the ever-present requirement to develop club membership, the tools and philosophies they bring to this task are more likely to focus on the programmatic aspects of membership building and less on the strategic aspects related to value creation.
Thus management companies are prone to replicate membership plans, referral programs and promotional offers that may stir interest and attract the proverbial fence sitter. But for many clubs, membership solutions are best found by a thorough assessment of market potential, a reappraisal of the club’s primary purpose, and the necessity of updating facilities and raising the capital to do so. These are largely strategic determinations that require thoughtful analysis and careful deliberation with the participation of club leaders and the engagement of members. In other words, a club needs a strategy of its own.
Rockford Country Club has taken this path with remarkable results. With golf rounds at the club essentially plateauing, the leadership undertook efforts to provide more family programming and create an environment in which families enjoy “hanging-out” with one another. Such efforts have had a real impact on attitudes toward the benefits of membership.
Brian Jason, the club’s manager, recounts a recent conversation with a member, who indicated that he was considering resigning from the club because he felt he wasn’t using the club enough. The next day he checked back in with Jason and reversed himself: “My wife and kids won’t let me.”
The benefits of membership at Rockford Country Club are definitely broadening, and it’s gaining traction in its market. Over the past four years the club has attracted 90 new members—34 alone in the last fiscal year. The average age of membership has declined from 68 to 54. Older members, Jason notes, are clearly enjoying the new energetic vibe as well.
When a club gains clarity on its strategic intent, it also gains a certain resolve to make necessary changes and improvements. Just a few years ago, Rockford Country Club sought to dramatically improve its outdoor dining experience. Capacity was doubled, fire pits added and all this with a spectacular view of the rambling Rock River. “Pretty much nobody is inside during the summer,” Jason said. “Everyone wants to be on the water.”
Success begets success, and now Rockford has developed a facilities master plan and is eyeing other amenities and programs that will enhance its strategic vision. Ideas are steadily percolating up from the membership ranks. This is a club mapping its own future.
Club Trends Fall 2018