There is a famous saying erroneously attributed to Mark Twain that says there are three kinds of lies: lies, damn lies, and statistics.
There is truth in that. But, there are some statistics worth noting, certain proven measurables and rules of the thumb that guide profitable and successful clubs. Of course, not every club is the same, yet the following are helpful in answering the question, “How is my club doing?”
1. Food and beverage should be making at least a 15% profit. That’s 40% for cost of goods sold, 35% for labor, and 10% for other expenses. Bobby Jones Links makes money at over 90% of our club F&B operations. There are exceptions to this rule for very high end private clubs where ala carte dining is frequent and high-end.
2. The profit from special events such as weddings should be 40% or more.
3. For a daily fee club or resort, the average green fee and cart fee per round (yield) should be 60% or greater of the highest rack rate. Any less and you are discounting too much.
4. How much can you charge for a green fee? A good rule of thumb for profitability is .0001 for your total golf course maintenance budget. So, a $1 million budget means your rack rate should around $100.
5. A club’s payroll should not exceed 50% of revenues.
6. Total benefits should not exceed 25% of payroll cost.
7. The pro shop should be making at least a 30% profit.
8. Golf course maintenance expense should not exceed 60% of total revenue. Ideally, it is 45% or less.
And what about overall profitability?
Again, not all clubs are the same, but a property’s EBITDA (earnings before interest, taxes, depreciation, and amortization) should be 15% to 25% of total revenue. There are some very efficient and busy daily fees clubs that often make 30% or more.
For non-profit private clubs, this margin is extremely important to fund capital improvements and repairs. For those clubs owned to make a profit, this margin is doubly important for the same capital reasons as well as for the return on equity. Financial performance and meeting certain key metrics really matter.
There you have it. Let’s not call them statistics, but key metrics and heuristics.
So, how’s your club doing?
The principals of Bobby Jones Links own the company - we are not driven by investor expectations and pressures. Our balance sheet is strong.
As a result, we don’t leverage our operational leadership across too many clubs. And unlike many companies in our business, we don’t require long term management agreements with large breakup fees. If you like what we do, you’ll keep us. For more than two decades our clients have renewed our management services more than any other company.