By Steve Eubanks, Contributor, Golf Business
.ubanks
It was one of those face-palm moments, the kind every owner has had but few care to remember. Allison George, who operates the family-owned Toad Valley Golf Course in Iowa, noticed a lot of strange activity on her driving range. Toad Valley attracts beginners and juniors – George’s job title is “Wizard of Fun” to give you a sense of the vibe – but this group looked different. It didn’t take George long to identify the issue.
“A pastor was teaching golf lessons on my range and taking donations for his church in exchange for those lessons,” George explained. “That was a tough one, because it’s a wonderful fundraiser for the church. But imagine if I had 100 of those folks who thought buying a bucket of range balls gave them license to operate an instruction business on my driving range. The pastor’s intentions were pure, but from a liability and business standpoint, I couldn’t have that.”
George had to politely shut the pastor down, to the dismay and indignation of his parishioners. But she had no choice. In addition to the liability, George contracts with instructors to teach at Toad Valley. A pastor taking $20 donations for golf lessons undercut her pros and devalued her entire operation.
That incident, and countless others like it, raise some interesting questions. Who is allowed to teach at your facility? And what should an owner expect from those arrangements?
“One of my hangups is that we believe golf is so complicated that you can only learn it from PGA pros,” George said. “I don’t know how healthy that is. You learn other sports as kids in the backyard. My husband taught my son how to bat (in baseball), and he worked his way up to a batting coach. But golf is positioned so that you’re starting at the top. People think they need a teaching pro from the very beginning.”
That isn’t always true. No course owner begrudges a father teaching his daughter how to grip her first club. That’s not a commercial enterprise. But when a scratch player down the road brings out four or five of those kids and charges for an hour of lessons, there’s a problem.
For starters, every instructor either has been or will be hit with a ball or a club. One of the former instructors at TPC Sawgrass had to be hospitalized after leaning in to tee up a ball when the student recoiled at full speed and stuck the teacher in the temple with a titanium driver.
“Liability is a big deal,” George said. “The contracts we have with instructors, we make sure they are insured and bonded. That’s vital.”
Equally vital is the contract itself. George is amazed at the number of operators who let pros teach at their courses with no formal agreement.
“I’ve seen far too many operators give their range away and let the instructor keep 100% of the income,” she said. “It’s so illogical to me. There’s no other business that allows independent operators to use their facilities with no skin in the game. A dentist wouldn’t allow a hygienist to have a chair in the office and keep all the income. No one would do that. But in golf, we somehow think it’s okay to give pros free space to essentially run their own businesses.”
George’s instructors are independent contractors and she likes to diversify. But all of them have formal agreements.
“I like to provide one instructor who is affordable to a beginner golfer,” she said. “We have a couple of hundred juniors, and I have more than a hundred ladies. But you always need some kind of contract. I have some instructors who pay a monthly lease, and some who do a revenue share. I want to be a grower of the game, but as a business owner, I don’t want to be taken advantage of, either.
“Sometimes we’ll have a lease that escalates depending on the number of lessons. The deal depends on our needs and the needs of the instructors. If, for example, they want to be mentioned on our website, that has value. I’ve got 30,000 email addresses. That database has value. We have Toptracer and the software Toptracer Coach, which also has value. So, if they want to use that, we structure a different deal.
“I’m always thinking about two things. One: How do I make the lessons affordable for new golfers? I try to have at least one instructor who helps the beginners and isn’t charging $100. Secondly, I want someone who is tech-savvy, who can use the Toptracer technology.
“We structure our arrangements according to the instructors’ knowledge and skill level. Each contract is based on our needs and their needs.”
A family-owned course in Iowa can get away with that. But state laws can be tricky. In California, for example, you could be fined millions if your independent contractors don’t meet stringent (and often silly) standards. And each state is different.
Large management companies have a formalized structure while leaving room for entrepreneurship. Invited Clubs, for example, call their instructors Player Development Professionals or PDPs. They are employees paid an hourly rate, and they split their lesson fees with the clubs. However, PDPs may charge whatever they can command so long as they reach their budgets.
“I don’t like going with independent contractors,” said Tim Dunlap, who owns The Carolina Country Club in Spartanburg, SC, and Gulf Shores Golf Club in Gulf Shores, AL. “You don’t want that guy sitting on the other end of the range who is on his own island. You want him to be connected to the club. Our teacher at Carlina is an employee, and we balance him out so that he can thrive with his programming, but he is also part of the operation.”
Dunlap estimates that he has sold at least nine memberships because of his instructor, possibly more.
“When you find a pro with the cache to drive the business, you don’t want that person feeling like a freelancer who can leave you at the drop of a hat,” he said. “Think about the faith you are putting into a golf pro. So much of a golfer’s happiness depends on game improvement. If they’re happy with their instructor, it’s like being happy with a doctor. They’ll keep that relationship forever. But if you don’t have the right deal and that instructor leaves, you’ve just blown up countless relationships, because the golfer doesn’t blame his coach, he blames you.
“You can’t plug and play with an instructor. If one leaves, you can’t just drop in a new one and expect your customer base to stay.”
Dunlap is not pollyannish. He understands that cost is an issue.
“Look, I get it, the idea of making them employees is tough, because you can’t afford it,” he said. “However, you must make them part of the team somehow. When I think of all the things our teaching pro does with programming - PGA Junior Leagues, Op 36, and players of all skill levels - that’s invaluable. You don’t want an independent contractor who focuses on nothing but good players, or who doesn’t want to teach women or juniors. You want that person who embraces everybody.”
“After that, it’s how you structure a deal so that they aren’t completely independent. You want them incentivized properly, but you also want them to be part of the family, so you feel good about marketing them and using them to drive your business. “
“It’s tricky, because the instructor’s compensation needs to make sense, but it must be a two-way street. It’s one thing if you’re dealing with a relatively new instructor who is paying his dues, but ultimately, you want someone who is good and who has experience and can drive your business in other areas.”
“It’s not just about the lesson income,” he said. “You need to consider range balls, additional rounds, merchandise sales, club fittings, member retention and sales: all that must be factored into the deal you structure.”
“This is a relational business, not transactional,” Dunlap said, emphasizing the point. “Transactional deals are not sticky. When your teaching pro feels no connection to the club, he leaves. And that customer base leaves with him.”