4 Future Directions of Clubs

Tuesday, May 5, 2015

 

Have you ever thought about how the club industry may look in 5 to 10 years’ time? It won’t be the same as today. There will be fewer clubs, more centrally managed clubs and fewer management positions at the top.

 

I jotted down some ideas of where I see things heading. Of course there are risks as well as opportunities in each scenario. The point is that without robust strategy, your club has no way to plan for, or even to provide a catalyst for discussing any of these eventualities.

 

Robust Strategy

 

1. Single entity

Most clubs, today, are operating as an individual single entity. Most clubs boards seem to want to continue this way. I’m not sure if the market can support this option, and the information coming from the club associations often talks about ‘continuing industry rationalisation’.

 

The size of the club operation, its assets and the value of its core function to future markets will have a large impact on whether remaining a single entity will be possible moving into the future.

 

Think about the local independent store, whether it’s a bottle shop, coffee house, clothes boutique or consultancy. From the city to the bush, leverage to grow through attracting more customers is a big challenge. Particularly when faced with competition from significantly larger organisations who can leverage better deals, cheaper labour, and more marketing dollars. Leverage comes from such resources as capital, skill, affordable labour and time.

 

To survive as a single entity there are some aspects that may require consideration for the board and CEO;

  • A strong investment strategy which provides regular income and/or can be liquidated quickly if needed

  • Prepared plans of realising core and non-core property ahead of opportunities or disasters

  • A secure membership strategy that promotes engagement and belonging

  • A learned board who understand financial risk, investment, labour markets and all the Ps of marketing

  • A unique selling proposition and flexibility to change and adapt to opportunities

  • A strategic and well-networked CEO

  • A very strong community connection and ongoing public relations communication

  • Knowing how many disasters you’re away from receivership.

 

Without a doubt, to survive as a single entity requires a brave and innovative strategy, knowing your market and group board training beyond the mandatory baseline. Each club board must know how they are unique compared to the club down the road, which means a brave approach to design, food, bar, entertainment and marketing.

 

2. Management Group or Managed Property

For clubs that have a similar core function, such as golf or bowls, I foresee a time when a group will come together to appoint an administrational head office. For example, four golf clubs will appoint a single CEO, marketing and accounts team with each venue having a roster of frontline staff.

 

Head office would report to the board of each club with the same meeting and reporting standards. Directors would attend the same training and abide by the same policies. There would be expectations from board members to invest time and money into a group strategy including investment, marketing, development and governance standards.

 

Individual strategies including community, advocacy and development of their core function would ensure each club retains individual identity.

 

The same marketing program, accounting software, gaming systems, contracts, and so forth will cut a large percentage of fixed and variable costs while reaping the benefits of highly skilled individuals.

There was recently evidence of it being explored in a regional manner – different types of clubs from the same area. However, I think it could work best if all clubs were the same core function.

 

Another alternative is an outsourcing contract with a specialist firm who manages a number of clubs, yet each club is still responsible for their governance. There are a few companies on the market who will invest in and manage your catering, gaming and bar operations and clubs pay a fee for services.

 

3. Amalgamation

Lots has been written on amalgamation so I won’t talk about it here. Except to say that, while some amalgamations are extremely successful, other amalgamations has seen the parent club convert the amalgamated club into an asset strip and land sale.

 

Amalgamations will see the emergence of more super clubs. Although the distribution of public money through community funding will be centralised and probably more efficient, child clubs mostly lose their influence. The unique culture and suburban charm of the local club would be in danger of being lost. 

 

It pays to consider different options before you sign the club's constitution over to a parent.

 

4. Close-up Shop

The last future direction is to close. For struggling clubs, the board could consider closing the club’s on its own terms.

 

I had a similar chat with a director of a bowling club. The club was not financially healthy at all, and the board (including him) didn’t want to change. His comment was that they’ll just keep bowling until they all fall over. However, his attitude was 'too bad for the next lot who ran the place.' That's not leaving much of a legacy.

 

Shutting shop is OK if you plan it that way. Strategy should consider relocating staff, who will benefit from the assets like the sale of land, club house or equipment, relocating existing members to another club and gaining members’ support.

 

An unplanned closing of a club has significant negative impact on the community. A healthy closing may just pop up a new opportunity, create more jobs and allow others to create a new vision for the clubhouse.

 

 

Why not engage Integrated Governance for a discussion about your strategic health; we aren’t afraid of the old guard and will ask questions that challenge the status quo. Call 1300 76 22 38.

 

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