Golf Canada completed their annual meeting this past month and celebrated a surplus of $99,384.00 compared to a deficit of $915,495 last year and the first surplus since 2013. Congratulations. Roland Deveau, President of Golf Canada said “2016 was a year in which we made great strides in improving the longterm health of the Association and we look forward to continuing those efforts in the future as we recognize the importance of Golf Canada’s role as a leader in the industry”.
Some of the highlights from 2016 included:
• An increase in total revenue by $1,789,785
• Core professional championships recognized a surplus
• RBC extended their sponsorship of the RBC Canadian Open for another six years
• Funding was committed from Own the Podium for the first time
• The World Junior Girls Championship has grown its legacy fund
• The revised membership model achieved close to 1% increase in total Golf Canada and Provincial Golf Association member golfers to 306,650.
• The investment portfolio balance has grown to $23, 946,416 ensuring that our Financial Mandate is intact as of October 31, 2106.
As we start our analysis of the current annual report and review past years, we have made some observations and would like to ask Golf Canada for an explanation. Perhaps we don’t have all the information so it will be beneficial to receive an explanation.
The following list of questions has been sent to Golf Canada and hopefully they can explain some sections and provide additional insight into some of the number numbers stated in their Annual Report.
Golf Canada has provided answers to our questions and their response is under each questions.
Questions and Answers
Q. In the 2016 report you state that your membership has increased to 306,650 members. Is this number rounded-off, an approximation or is this the actual number of members?
A. It is an exact number representing 22,230 Gold members, either unaffiliated or at facilities operating in the new model, 20,757 Bronze and 263,663 paid members at traditional clubs (legacy members).
Q. In the past few annual reports you state in each that you have approximately 1,400 member clubs. Is this number real or an approximation as it seems odd the same number of member clubs is stated each year? If the number is an approximation why can’t you state the exact number of member clubs?
A. We currently have 1419 green grass facilities, 118 groups, some affiliated with a facility, some not. In 2015 we added 25 new courses. We lost a few to membership and we lost a few to closures. In 2016 we added 16 facilities to membership. Again 4 facilities were closed. We generally prefer a round number to reflect that this is an ever-changing landscape and to select a specific number is tied to a moment in time. This reflects that status of the industry, not just for the association membership but for all elements of the industry.
Q. When you launched the new membership program there were three levels: Bronze, Silver and Gold. Now you have two: Bronze and Gold. When was this change made and why?
A. When we launched the new membership program, there was only Bronze and Gold with the anticipation that Silver would be introduced in the future. We did a limited implementation of Silver in 2016 – it was well received but we agreed that we only have the resources at this time to focus on the two levels. It is possible that we will re-introduce a Silver (mid-tier) membership product in the future.
Q. During the Annual meeting, Golf Canada President Roland Deveau said he was pleased with the new membership program and the approximate 1% growth. From a business perspective are you actually pleased with an approximate 1% growth rate? How many new clubs did you actually sign up and how many new members?
A. We are absolutely pleased with that and we are excited to see it grow going forward. Prior to implementation of the new membership program, national attrition in the legacy membership model was significant, declining over by over 100,000 members between 2004 and 2014. The annual attrition, on average, has been 3.4% since 2009 which we believe reflects a movement toward public play.
It is important to understand that Bronze (free) members are included in the 306,500 Bronze members are a tenet to future success in membership growth (both quantum and revenue). The introduction of this tier led to 20,757 players both registering and actively accessing the benefits of Bronze during 2016. These players primarily came from the green fee play sector. This is a significant element of growing the relevance of the association and supporting facilities. Toward the revenue, we saw a significant conversion of 14% from the Bronze players that registered to Gold.
Q. With a 1% growth rate and increase in members one would assume your membership revenue would also increase. However, reviewing your “Membership Program Revenues and Expense” section in the financial statement, your revenue for 2016 was $3,627,762 and in 2015 the membership revenue was $3,659,911. A drop of $31,855.00. How can membership increase and revenue fall?
A. As previously noted, a significant effort has been put forth to grow the environment of Bronze members and the value proposition of our paying members.
Note: In 2013 Golf Canada membership revenue was stated at $3,750,962. This means in three years membership revenue has decreased by $123,200.
For membership expenses; 2016 expenses are stated at $1,437,964. An increase of $156,203 from 2015 expenses stated at $1,281,761.
Q. Can you please explain why Golf Canada is happy with a 1% membership increase when revenue declines and expenses increase by approximately 12%?
A. No business can reinvent itself without investment. We have listened to our members and stakeholders and have focused efforts and resources to make the value proposition more enticing. Under the new membership model, we are providing a suite of new benefits that have a direct cost of services which is recovered in each sale of membership. We are very proud of the new benefits, including coverage for lost or damaged clubs, carts and window replacement, club labels, rules of golf education, and rewards.
We are also adding new benefits for facilities through technology and data platforms. We have enhanced the Score Centre and will be offering tournament management software for facilities as well as access to green-reading technology in the future. We have added rebates for running Future Links junior programs and for registering new Gold members.
To maintain fiscal sustainability, it was necessary to adjust our pricing under the new model and once the initial investment is complete, we expect the net contribution on membership to grow in the future.
Q. In the 2016 Annual Report Golf Canada states they have 306,650 members and membership revenue at $3,627,762. Membership dues as are $49.95. In checking with some provincial associations they say approximately $20.00 from this membership fee goes back to Golf Canada.
With some simple math, 306,650 members should generate $6,133,000 in revenue. Or with membership revenue of $3,627,762 and receiving approximately $20.00 per member, your total membership should be approximately 181,388.
We are sure there must be more to these numbers and assume there are special membership deals with clubs like Clublink etc. Possibly the $20.00 received is not all attributed to membership revenue and maybe less money is received for juniors?
A. Some of your assertions are inaccurate.
We confirm that there are no special membership deals for multi-club operators that participate in our membership programs.
We receive $20 on direct purchases of Gold, either through unaffiliated or at facilities that drive membership directly online, accounting for only 6 % of our total membership.
The amount we collect on a Gold member sale to a club, varies based on collective agreements we have with each Provincial Association partner, but in all instances, it is much less than $20.
Most of our membership sales remain in the legacy membership model which is $12 per adult and $7.50 for juniors. There were 263,663 members of legacy clubs (19,459 juniors, 244,204 adults); 22,320 Gold members (including the public unaffiliated players); and 20,757 Bronze as of October 31, 2016.
