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Board hikes premier, basic golf membership fees

Directors rescind initiation fee, accept staff recommendation
for lower afternoon, weekend rates

By TOM STAUSS/Publisher 1/14/2006

Some golfers will be paying more and others less for the privilege of playing on the Ocean Pines 18-hole golf course this coming season, and last year’s experimental $1,000 initiation fee, an acknowledged marketing flop, has been rescinded.

The Ocean Pines Association Board of Directors, during fiscal year 2007 budget deliberations Jan. 10, voted 3-2 to adopt a series of golf fee recommendations urged by OPA General Manager Dave Ferguson and Golf Pro Bob Beckelman.

Endorsing a five percent increase in the premier and basic fees, along with other staff recommendations, were directors Dan Stachurski and Reid Sterrett and OPA President Glenn Duffy, with directors Mark Venit and Heather Cook opposed. Two directors were absent. George Colburn was on duty as an orphan’s court judge, and Janet Kelley was away on a family emergency.

Stachurski, Sterrett and Duffy also declined to adopt a proposal by Cook to mandate golf carts during morning play and to eliminate the basic golf tier while retaining the premier, afternoon and weekend membership tiers. Venit endorsed the merger of the premier and basic tiers.

The golf budget adopted by the 3-2 vote anticipates that golf operations will still lose about $30,000, along with an additional $31,460 in depreciation expense related to golf carts. But Ferguson forecasts that golf losses should shrink to zero by the 2008 fiscal year.

If the rate increases are ratified by the board when the budget is formally approved in February, premier rates will rise to $1260 and the basic rates to $840. Cart fees will also be increased to $18, from the present rate of $17 for basic members and $15 for premier members. Regular guest rates were set at $66, and the non-member resident rates at $46, with carts extra. Coupon books will be sold for $225 for five rounds, or $45 per round.

Ferguson told the board he would expect a five percent erosion in the number of premier members from the increase in fees, while basic memberships should hold steady.

One of the differences between premier and basic memberships is preferential early morning tee times available to premier members, with basic members generally playing later in the morning.

The board is trying to ratchet up the value of a premier membership by offering a number of new incentives, including a new $1,200 unlimited cart round package. Another option is 20 cart rounds for $325, a $35 reduction off next season’s regular $360 cost at $18 per round. 

Other incentives for premier members include an advanced guarantee of five tee times, discounted greens fees for their guests of $40, three free rounds for their guests (cart fees would still be imposed), and the option of making membership payments in three monthly installments.

As part of the staff-recommended package, Stachurski, Sterrett and Duffy voted to decrease the afternoon and weekend memberships from $600 to $525, an action designed to restore some of the memberships lost last year when these rates were increased from $500 to $600.

The approved package will rescind last year’s initiation fee that brought in a total of two new golf members this past year. The fees paid last year will be returned to these golfers. Both Ferguson and Beckelman said the initiation fee was a deterrent to membership growth and works against the goal of staunching the erosion of membership in recent years.

Cook unsuccessfully attempted to persuade her colleagues to accept a proposal to eliminate the basic membership tier and a related proposal to force morning golfers to pay cart fees. Venit endorsed what was in effect a proposed merger of the two tiers at a rate roughly in the middle between them.

Stachurski and Duffy said the board, given the directors’ acknowledged mistakes in adjusting the tiered membership structure last year, should avoid trying to second-guess the staff’s recommendations this year. Last year, Ferguson predicted the erosion of memberships and revenues when certain fees were sharply increased, resulting in membership slippage, or the dropping down from higher priced memberships to less expensive tiers.

Premier memberships took a substantial hit, while basic memberships met budget projections.

As a result of last year’s tinkering, and some hard hits from adverse weather this past fall, golf operations will be in deficit by about $110,000 in the current fiscal year, Ferguson said. Previously, he estimated the losses at up to $150,000, but that was the worst-case scenario. He said during the Jan. 10 budget meeting that $110,000 is probably the better number, about the same loss as the year before.

The budget this year called for break-even operations, but revenues were substantially off projections, in both memberships and play by non-members or outside package play.

Both Stachurski and Duffy spoke in opposition to Cook’s proposal for eliminating the basic tier. Sterrett refrained from direct criticism, offering instead a suggestion to adopt a family membership tier, similar to that which was in effect before the board adopted the premier-basic-weekend-afternoon tiered structure two years ago.

Sterrett’s idea won no converts during board discussion, however.

After the budget session concluded, Cook described herself as disheartened that her proposal had failed. Earlier, she had argued that by failing to take dramatic action, including both the basic tier elimination and mandatory morning carts, the board would perpetuate the recent history of golf operational deficits.

“Non-golfers won’t continue to put up with this,” she said.

With respect to the ill-fated initiation fee, Ferguson said in a memo to the board that, while “basically sound” in concept, it had been applied only to the premier membership “and had the effect of discouraging members from joining as premier members.”

Ferguson wrote that members avoided the fee by signing up as basic members.

“And, the fee would continue to work as a disincentive in the future for members moving up from a basic to a premier membership,’ the memo said.

Regarding the reduction in afternoon and weekend membership rates, Ferguson predicted that it would produce a slight increase in weekend memberships and would “recapture” some of the sales success in afternoon memberships during 2005.

He said the increase from $500 to $600 last year resulted in a large number of afternoon members dropping their memberships altogether.

Regarding Cook’s proposal for mandatory cart fees, Ferguson said it would have a negative impact on retaining current members, especially the 30 percent or so of morning golfers who prefer to walk.

In his memo to the board, he said there are an insufficient number of golf carts to meet the morning demand, and that the cart barn would have to be expanded for the additional ten carts that Beckelman said would be needed to accommodate Cook’s proposal. Cook had questioned that number, but Beckelman said a few golf carts are being repaired at any given time, reducing the number in the fleet available for use.

Additional golf carts and cart barn expansion would cost about $60,000, according to staff estimates.

“We feel that the potential membership revenue loss and the required capital costs would more than outweigh the potential increase in revenues were carts to be required for all morning rounds,” Ferguson wrote in his memo to the board.

Uploaded: 1/17/2006