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GCM February 2008
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February 2008
A monthly business-to-business magazine for golf clubs, brought to you by
Volume 4 Issue 2Visit www.compleatgolfer.co.za
for back issues of GCM
Also in this issue• Setting the standards • Security • E-mail letters • Stressful times • Leasing • Tax on clubs • Discrimination
ParysRediscovering
The benefits of
Outsourcing
T u r f _ E q u i p _ L H P . p d f P a g e 1 7 / 2 5 / 0 7 , 2 : 4 8 P M
� February 2008 Golf Club Management
Outsourcing: a possible solution for the club industryIs outsourcing an opportunity for or a threat to the golf club industry? Ian Leach of Euphoria Golf Estate looks at the benefits and pitfalls of outsourcing, and identifies some of the things to consider before taking the plunge.In today’s business environment, strate-gies will be developed around the concept of outsourcing some of the club’s func-tions deemed “non-core”, or where trying to attract the appropriate skills is proving difficult. The process of outsourcing certain elements within the club has proved cost effective with the “outsource partners” con-tributing positively to the club’s operating skill’s base and membership satisfaction surveys. If you are considering outsourcing at your club, here are a few pointers learned in the school of “hard knocks.”
Being a club manager, or an involved and interested committee member, the chal-lenges facing you are significant. Increased competition too attract golfers, increase food and beverage sales, control labour costs, develop staff quality, keeping up with computer technology and managing limited capital resources; all have to be dealt with.
Today’s manager should focus on core member services. In many clubs conven-tional wisdom still prevails to maintain tightfisted control over all the functions of the club. The old model of the department store of the ‘60’s, where everything was under one roof, is being replaced by the concept of the club as a general contractor responsible for hiring the sub-contractors it needs to do defined jobs. This approach allows management to focus on its primary responsibility – serving the social and rec-reational needs of the membership.
A SWOT analysis should be conducted on all the functions of the club to consider their efficiency and productivity as well as their strategic value to the club. Those func-
A monthly business-to-
business magazine brought to you by
CONTENTS
LEAD STORYOutsourcing 4
COURSE MANAGEMENTStressful times on the golf course 7
MARKETINGE-mail Newsletter Marketing 8
CLUB PROFILEParys Golf and Country Estate 11
SECURITYIs there more to security than manned guarding? 13
CLUB PROFILEExpering leases: Threat or opportunity? 16
COURSE MANAGEMENTSetting the standards 17
TAxATIONTax on Reacreational clubs. Part 3 18
HR LEGALDiscrimination 21
BIRDIES AND BOGEYSSnippets 22
SECURITYRaising standards in the security industry 23
Cover picture by Peter van Onselen: Looking across the 14th green at Parys towards the Vaal River. See our club profile on page 11.
■ EditOrial ANDREW WILSON email: [email protected] cell: 082 575 3861
■ advErtisinG SImON TuRck (PUBLISHER) email: [email protected] cell: 083 252 8387
■ advErtisinG TYRON mARTIN (ADVERTISING EXECUTIVE) email: [email protected] cell: 083 235 7509
■ advErtisinG JAmES FERRANS (NATIONAL SALES MANAGER) email: [email protected] cell: 084 252 6373
■ sUBsCriBE tO GCM fOr r240 a yEar. COntaCt NATALIE ShEkLETON tel: 011 301 4448 email: [email protected]
visit our website www.compleatgolfer.co.za
OUTSOURCING
tions not integral to the club’s mission should be outsourced. In other words outsourcing is the procurement of a product or service once managed internally but now provided by a specialist from outside.
Outsourcing offers many benefits, the most important being the opportunity to obtain timely and expert quality services at lower costs. Outsource service compa-nies are still finding their direction in the club industry. Those that have, achieve a competitive advantage because they are spe-cialised and understand the requirements of the club.
The long-held notion that internal super-vision can provide the greatest amount of management control over the club’s opera-tions is now open to review and debate. Peter Drücker calls this structure a defective monopoly, as the department has little incen-
For more information on outsourcing contact Ian Leach on 08289286693
or at [email protected]
Golf Club Management February 2008 �
OUTSOURCING
tive to improve its efficiencies whilst an outsource company will attempt to ensure member satisfaction without adding to the cost. Outsourcing is indeed a powerful tool.
In essence, outsourcing involves dele-gating to a third party the responsibility and authority for managing an element of the club’s business at an agreed fee for a fixed period of time.
Many clubs have already introduced an “outsource partner” in the form of a security company, housekeeping services, golf course maintenenace, and/or landscape gardeners. However clubs will eventually start investi-gating the services of payroll administrators, HR management, membership accounts, food and beverage management, pro-shop management and golf cart management.
Let us consider some of the reasons for outsourcing:1. A reduction in, or a better control of,
operating costs are probably the most compelling reasons in the short term. With labour costs continuing to escalate, already a major cost centre, a carefully negotiated contract should yield signifi-cant savings in labour costs and head count alone.
2. Through outsourcing, a club is able to acquire resources not available internally.
3. Outsourcing improves club management focus. Outsourcing does not mean the abdication of management responsibili-ties. On the contrary, working with the club’s “outsource partners” gives the management of the club the opportunity to concentrate on problem areas while maintaining overall control of the club. It can be a revelation to all at the club just how easy it is for all parties to form a working relationship in the best interest of the club.
4. By choosing the right “outsource part-ners” you can gain access to best practice South African capabilities. Many out-source providers bring extensive top class resources to meet the needs of the club and its membership.
5. When a club outsources, the chances are that it will change its management style. It will become more flexible, dynamic and better able to take advantage of changing market forces.
As Tom Peters says, ‘Do what you do best and outsource the rest’. Most clubs have lim-ited resources, especially skills and finances. By outsourcing, a club is able to redirect resources, concentrating on those areas that require intense management focus.
How do you decide on an outsourcing option?
Be careful about going the outsourcing route when:• members and committees are involved
in all aspects of the club’s operations and have long term objectives to provide the function internally,
• there may not be qualified outside providers,
• staying in-house has a clear competitive cost advantage over outsourcing.
Consider outsourcing under the following circumstances:• members and the committee are con-
cerned with the quality of the end product and not the process of delivery,
• the capability to perform the functions are available to the club in the market place,
• companies specialising in functions that the club can use are clearly more competent,
• the club does not have the capital resources needed to implement the required function,
• the club management can clearly demon-strate that it will be introducing superior technical, management, production and financial capabilities,
• there is a close culture fit between the club and the proposed “outsource partners”.
Many club managers believe that cost savings are the prime motivation for out-sourcing. Whilst this fact will have a strong bearing on your decision consider carefully the following when choosing a vendor:• culture fit• commitment to quality• resources• reputation• acceptable contract terms• ability to add value• cost effectiveness.
A comment from Harry White, chief executive officer of Steenberg Golf Club in the Cape.
So often we hear the comment that golf clubs, and in particular the
administration of golf clubs has changed to such an extent, that this function now resembles that of a fully fledged busi-ness. In many of our clubs this is indeed the case and I personally believe that for clubs to be successful in the long term this transformation is imperative.
When we therefore consider busi-ness options, of which outsourcing is only one of many, we need to do so by weighing up the same factors that any other business would i.e. operating costs, specialized skills/services, resources, labour and business focus. Like in any other business the decision to outsource will differ depending on many factors and will rarely be the same for any two clubs.
What is important though, in the golf club industry, is that the club’s unique brand identity is upheld. Having subcon-tracted selected operational functions within the club, management’s biggest challenge is to project a unified brand identity that conforms to the clubs criteria.
Outsourcing is an option that deserves serious consideration, and in many cases is simply a “no brainer”, but I want to stress that it must be considered within the best business practice context for your specific club, and not chosen as an easy option to evade administrative responsibilities.
The Club Management Association of South Africa (CMASA) is a valuable source of data to clubs and can provide management with a variety of outsourcing options. Beryl Acres of the CMASA can be contacted on 011-482 7542 or by e-mail at [email protected]
Continued on page 15
Golf Club Management February 2008 �
With the demand for faster and faster green speeds, ever more stress is being put on our putting greens as well as the people whose job it is to try and keep the greens alive during the stressful times.
The greater the stress, the more the chance is that diseases will develop.
During warm periods the first signs of stress on your putting greens will be the change of the grass colour. Bent grass espe-cially starts to turn a slight purple colour. If the condition that is causing the stress is not corrected the greens may wilt and die. Generally the whole green does not stress all at once, but instead you have patches stressing at a time. Low cutting heights is not the only reason why greens start to stress. There are quite a few reasons.
Thatch layer build upIf regular cultural practices such as verti-cutting, topdressing and aerification are not carried out, a thatch layer will build up in the top layer of the greens. This thatch layer becomes like a sponge which holds onto any water that is applied to the green and does not let it move through the soil profile to the root zone where it is most needed. Quite often after heavy rains the greens start stressing and no one can understand why because the greens must be wet because of all the rain. A quick soil sample using a probe will show you that the green surface is wet but not the root zone.
Too often cultural processes are put on hold because the golf course is too busy. The consequences of missing these vital processes are seen in the form of stress on the greens and can only be rectified by more severe cultural practices.
It is therefore vitally important that everyone involved in decision making on a golf course understands the importance of regular aerification.
Compacted soilsIt stands to reason that greens which are overly compacted will not let water penetrate into the surface. A sure sign that the greens are becoming quite hard is the puddling of irrigation or rain water on them. The water is not absorbed by the green but instead flows over the surface. Irregular dry spots on the greens will be the result.
Regular tining of the greens will insure that there is always a way for water to move down to the root zone.
Hydrophobic soilsEspecially on sand based greens hydro-phobic patches may occur. These are patches on the green which don’t absorb water but instead repel it and are referred to as local-ized dry spots. The reason for the occurrence of these hydrophobic or localized dry spots
may be due to a number of things. One of the reasons is that a fatty layer coats the soil particles making it impossible for the water molecule to attach itself to the soil particle.
The use of a wetting agent is the primary tool used in the fight against localized dry spots caused by water-repellent soils. Studies have shown that it is better to initially treat the entire green with a wetting agent, than just targeting the dry spots. Once the entire green has been treated then the individual spots can be treated.
Irrigation coverageWhere possible, irrigation systems should be designed so that the sprinklers throw head to head. Localized dry spots may be the result of poor irrigation coverage which may be a result of poor design or even bad pressures.
It is a good idea to first check that the irri-gation coverage on a green is correct before trying to look for other reasons which may be causing the dry spots on the greens.
Growing Bent grass greens in our warm climates will always result in the greens stressing from time to time. The reason may be due to any one or more of the above fac-tors. One thing that is guaranteed is that the greenkeeper will also be experiencing stressful times at some time or other during the course of this summer.
COURSE MANAGEMENT
Stressful times on the golf courseGreens can also suffer stress after the busy festive period! Murray Veitch of Turftek identifies some of the causes of and solutions to stress on greens during the warm summer months.
If regular cultural practices such as
verticutting, topdressing and aerification are not
carried out, a thatch layer will build up in the top
layer of the greens.
For more information on turf-related issues, contact Murray Veitch of Turftek on 012 807 7282 or at [email protected]
8 February 2008 Golf Club Management
E-mail Newsletter Marketing – The modern communications and marketing toolGraham Starkey – channel manager at RetailTribe – identifies the key criteria to con-sider when developing e-mail newsletters as a marketing and communications solution.The use of the modern digital super highway, which now is not just the preserve of our European and American counterparts, is becoming more and more accessible here in South Africa and is a cost effective tool in modern golf club marketing. With the ‘Silver Surfers’ (the retired community) being the fastest adoptors of computers and the internet, this form of communication is no longer just for the larger clubs with a more youthful membership.
E-mail newsletters can come in a variety of forms such as plain text mails, simple generic e-mails or as a total solution. E-mails are designed to match and support your club’s current corporate identity, with access to e-commerce strategies and even personalised websites to aid retailing.
What to consider If you and your committee are looking at using an e-mail newsletter to communicate with your members or as tool to keep in con-stant contact on a weekly basis these are the things to consider. • As an e-mail newsletter goes directly to
your customers each week, it is far more effective, let alone more professional, than the traditional paper newsletter that is still common place.
• A weekly newsletter allows you to drip feed information to your community and repeat key dates or events over a number of weeks. Any form of monthly news-letter reduces the flow of information and prevents you from responding to sudden local issues, or to post important notices.
• This form of e-mail communication also allows you to receive feedback from your community in the form of questions, statements, suggestions or responses
golfers that pay a green fee and play the course.
• Consider the marketing objectives that you and your club wish to achieve. Do you just want to have a ‘news’ letter or more of a marketing tool that will help drive sales?
• Do you want to view the mails as just a stand alone solution or do you want to offer more to your members in terms of e-commerce?
• Do you want to access or have the ability to generate advertising revenue from local sponsors that could ‘partner’ your mail and give you benefits of synergy?
Opportunities to generate revenue from the newsletterCorrectly written newsletters have been proven to help increase rounds and bar rev-enues, (just ask Dale Hayes – a pioneer of this form of e-mail communication).
Promoted on an on-going basis there is the real prospect of an increased use of club facilities.
If promoted weekly, instead of a notice placed on the club notice board and ignored by the vast majority of club members, an increased participation at club events is a real possibility.
If you are looking for increased sales through your pro shop, the addition of a shop section or golf product or pro specific articles within your mail is a must.
Advertising revenue generated through local small and larger companies that can provide services to your membership will give an added community feel.
If you have a shop run by the club how can you increase sales?With a weekly mail-shot you can react
MARKETING
to articles posted. This allows you to be seen as more open and transparent and enables you to nip any negative bar chatter as soon as it begins.
• Identify the club’s departments that could, should, or would like to con-tribute to the newsletter. From the club managers to the green’s staff and from the golf shop to the food and beverage sections, each can have their weekly say, monthly or as frequently as they/you wish in order to give more of a flavour of what the club as a whole has to offer.
• The database you will no doubt be col-lecting should be that of your total community and patrons. From the resi-dent local golf club membership to the international and local seasonal visitors, along with the frequent or infrequent
Graham qualified from University with a BA (Hons) degree in Leisure Management and has since then worked in golf for both the UK’s largest high street golf
retailer for 2 years and then UK’s big-gest on-course golf buying group for 8 years. At ‘American Golf’ Graham was development manager in charge of opening all new stores and at ‘Foremost Golf’ he assisted the group’s on-course professionals with their retailing, mer-chandising and business planning. In his final 2 years with Foremost he launched an e-mail newsletter solution to over 70 clubs. Graham arrived in South Africa in January 2007 and has been welcomed by both pros and club managers alike.
MARKETING
to new product arrivals, new offers, have product auctions and highlight demo and sales events. If you have a PGA profes-sional on site then highlighting how they can help your membership improve their game through course tips, swing thoughts and, of course, custom fitting will generate more engagement in what the club can offer from a golf retail perspective.
Golf as a product brings the golf club’s community together, so within your e-mail newsletter consider (when the opportunity arises) educating your golfers about golf and the latest trends in golf products. This can get golfers asking more questions of your shop staff/PGA professional, thus more time is spent at the club, leading to more rounds played and more food and beverage pur-chased before, during and after their game.
For more information on e-mail news- letters and solutions, contact Graham
Starkey at RetailTribe on 021 880 2693, e-mail him on grahamstarkey@
retailtribe.com or visit www.retailtribe.com
Who is RetailTribe?RetailTribe manage, on behalf of various golf pro-fessionals and golf clubs, 65 e-mail newsletters in South Africa and over 120 in the United Kingdom. Each week RetailTribe sends out more than 100 000 e-mails to golfers, members and patrons of these clubs. South African clubs consist of estate courses, Leopard Creek and Pearl Valley to name a couple, as well as members’ clubs such as George and Reading Country Club.
RetailTribe aims to close the gap between the club/Pro shop and the customer, by providing informative weekly content which is club spe-cific and carries strong community interest to the reader. The email also encourages the recipient to interact with the golf professional on a regular basis and in this way places the golf club in the forefront of the reader’s mind.
RetailTribe has successfully managed to gain substantial retail benefits for the club/Pro shop by leveraging the click-to-reserve or click-to-order hybrid commerce solution with the key factor being that the product is picked up at the golf club strengthening/cementing the club and member relationship further.
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G r e e n _ A d v e r t i s i n g . p d f P a g e 1 9 / 5 / 0 6 , 2 : 4 1 P M
Golf Club Management February 2008 11
It’s quaint, it’s quiet and there is a real sense of bushland about the newly-developed Parys Golf and Country Estate. On the land of the original Parys Golf Club, Parys Golf and Country Estate has transformed and remodelled their entire golf course. With a complete redesign by renowned golfer Cobie Le Grange and assisted by Douw van der Merwe, the course is soon to be a major attraction for residents and visitors to the area. Barely an hour from Johannesburg lies this almost forgotten piece of real estate, once frequented by travellers on the old road to quaint Free State towns en route to Cape Town.
Mark Truter has been appointed golf director and assigned with the task of reigniting the golf department and attracting the former members back to the club.
Closing an existing golf course down for complete reconstruction comes with many complications and drawbacks. Building up tradition in a golf club with a festive, friendly atmosphere does not happen overnight. Mark identifies for us some of the problems associ-ated with a course re-opening and possible solutions to these issues (see table below).
Making the experience memorable.One of the challenges facing any club man-agement is how to make the experience
memorable. So what has Parys done to achieve this? With spectacular views and a challenging design, the course offers a distinct experience to everyone who plays it. The 18-hole course winds its way unob-trusively through the estate and along the banks of the Vaal River. A unique character-istic of the estate is that it actually exists on an island surrounded by the river. The front nine has the river constantly down the right hand side and after you make the turn, the river remains down the right hand side. It’s remarkable how the kikuyu fairways and
bent grass greens have taken to the course in the mere six months the course has been open. If you tend to hit the ball with a vicious slice you will be donating many balls to the Vaal River.
To soften the pain for slicers, the babootie and rice with salad for R20 at the halfway house adds to the memorable experience and should keep people coming back for more. It’s little things like that, which don’t cost lots of money, that can leave a lasting impression in golfer’s minds.Some club stats:• There are 475 freehold stands on the estate.• There are 380 registered members• Green fees for affiliated golfers is R110• Membership fees are R2350 per annum• Entrance fees are R1500• Bar and pro shop prices are hugely com-
petitive in comparison to 'big city' golf courses and more established golf estates.
Mark sees the key ingredients for success as being:• ensuring a happy, supportive membership • ensuring visitors are made to feel as wel-
come as members Parys Golf and Country Estate are
certainly on the right track with a really entertaining layout and high level of play-ability backed up by top levels of service and excellent value for money.
For more information on Mark Truter see Birdies and Bogeys on page 22.
Rediscovering ParysCLUB PROFILE
Problems Solutions
• Getting the original Parys Golf Club mem-bers back to the course after the redesign and playing regularly.
• Retaining the original memberships.• Many of the old members have not even
seen the new course.• Educating players in ‘golf cart etiquette’
– people just seem to drive the golf carts anywhere they like!
• Outdated accounts and check-in systems. The system was operated manually until recently with an outdated database and old electronic equipment.
• Getting golfer’s heads around paying slightly more for a vastly improved golfing facility.
• Use the NS2 network system to inform the previous members of the club about the new improvements and upgrade.
• Ensuring the course is kept in the best possible condition – especially the putting surfaces.
• Make the club as cost effective as possible for members and visitors including bar prices and green fees.
• Upgrade equipment to ensure the smooth running of all departments in the club.
• Maintain a high level of discipline and enforcement of the rules in the club-house and on the course.
• Encourage mid-week corporate golf to promote the Parys experience.
Having closed a course down for complete reconstruction, how do you win back the support of previous members. Peter van Onselen of GCM went to Parys to find out.
Over 150 Courses Can’t Be Wrong
For a live demo visiti www.eluminaiberica.comor contact [email protected]
or telephone Carrie Teale 0829093118
EluminaAd.indd 1 11/25/07 9:40:11 PM
Golf Club Management February 2008 13
Whenever CCTV monitoring or camera surveillance is mentioned, there are many mixed reactions. Some people have implemented this type of technology very successfully while others have tried and failed.
The debate continues as to whether elec-tronic surveillance technology would one day replace manned guarding as the solu-tion of choice for protecting property and assets. It is obvious that this technology has improved and become more reliable but the biggest barrier to implementing a decent system is still cost.
The cost of manned guarding has risen dramatically over the past few years due to varying factors such as minimum wages, statutory memberships to provident funds, increased training etc. While all of these things are very positive, it has definitely contributed to the increased costs.
In addition to cost, there is the emotive issue of trust. Wherever manned guards are deployed, there is always the potential for deception. Human failures being what they are, temptation is often difficult to ignore. There is also the question of dependability. Understandably, guarding is not an easy job so it is not unheard of for security officers to fall asleep on the job, putting both them-selves and the premises they are protecting, at risk.
There are however a number of ben-efits to manned guarding. Having security officers on site offers a certain sense of security and it is generally more convenient for taking deliveries, for example, outside of office hours. Security officers also act as a deterrent as opportunistic crimes gener-ally happen when there is no one physically present.
Is there more to security than manned guarding?Is it a question of either/or when considering CCTV and manned guarding for your clubhouse and course? Jacqui Bothma, general manager of Peaceforce Security, gives some advice to GCM readers on the synergies that can be gained from both.
SECURITY
A remotely monitored CCTV solu-tion has a range of benefits over manned guarding. It is more reliable as it is always on duty and it is also more effective. Security officers can only be in one place at one time, whereas monitored cameras can view multiple incidents, respond to mul-tiple alarms, and direct resources to those alarms accordingly. Monitoring means having the ability to deal not only with an
event on site, but also, being able to liaise with and direct response officers or other emergency services without putting them at unnecessary risk.
A word of caution though; the use of technology is not a matter of simply replacing manned guarding with tech-nology. Manned guarding and CCTV monitoring can work effectively together. Technology can reduce the number of guards required on a site by helping make those that remain, more effective. It can direct them to incidents as they occur, for example, and perform random patrols elec-tronically, rather than physically. On a golf course, cameras can be strategically placed to monitor intrusions or breaches of secu-rity around the perimeter or where guards would normally be required to patrol. This offers the security of always having those vulnerable points covered. This should be complemented with manned guarding at the entrance and exit points. The moni-tored cameras can also provide a reliable eye on the security officers.
It may be worthwhile to ask a reputable company to do a complete risk assessment and provide recommendations to combine technology and manned guarding. While it could be costly initially, if it is managed correctly, it will be more economical, reli-able and effective in the long term.
Wherever manned guards are
deployed, there is always the
potential for deception.
Having uniformed officers on site offers a certain sense of security.
If you would like more information feel free to contact Jacqui Bothma on 0861 739 739 or visit www.peaceforce.co.za
Security tip of the monthBe extra vigilant when doing banking - especially when drawing and depositing large sums of money. Vary your routine and route as often as possible and do not let people know when you are going to the bank.
Over 150 Courses Can’t Be Wrong
For a live demo visiti www.eluminaiberica.comor contact [email protected]
or telephone Carrie Teale 0829093118
EluminaAd.indd 1 11/25/07 9:40:11 PM
R a i n B i r d _ C o mp l e a t . p d f P a g e 1 1 1 / 1 5 / 0 7 , 4 : 5 0 P M
OUTSOURCING
Continued from page 5
Why would vendors consider the club industry as a business opportunity?
There are several factors. A shift in thinking is taking place amongst developers in the golf estate industry. These developers have changed conventional club manage-ment thinking and vendors now see the opportunity to modify their product offering to meet the requirements of club manage-ment. After a slow start, when both sides were re-engineering their business models, there is now a growing acceptance of the many benefits that outsourcing has to offer. Many clubs and estates have outsourced their golf course maintenance, housekeeping, club house maintenance, security and land-scaping with success. Other products are now starting to come on to the market. Our American colleagues have additional prod-ucts to choose from including:• human resource management• payroll processing• membership billing
Interestingly, whilst some South African clubs are outsourcing their pro shops, our American friends consider pro shop sales as a lucrative and an important element in the club’s cash flow
It is important to realise that to outsource means outsourcing the right things and not outsourcing everything.
Club managers and club committees must look for growth based on specialisation, on expertise and overall course and club excel-lence. It is growth based on three things:1. focusing on those areas that most directly
contribute to the club’s success, 2. distinguishing itself in its local market
place and 3. excelling in the eyes of its membership.
How will management react to the notion of outsourcing? It requires a significant change in mindset. Managers fear the loss of control and some feel very threatened. One can understand these conflicts – I had spent years building up a team that was now going to be disbanded or so I thought. I was not a happy camper until I started to understand
the benefits to the club in the long term. I stopped being a spoiler – ensured that I knew more about the process than anyone else and became totally involved with our “outsource partners”. The club has never looked back. ■
Comment from GCM:Under certain circumstances outsourcing has distinct advantages, as outlined in Ian Leach’s article and supported by Harry White’s comments (see pages 4 and 5). Readers need to be aware however that there are a number of legal requirements that have to be fulfilled when embarking on an outsourcing process. For example, it is not just a case of transferring your current cleaning team to an outside con-tractor, ensuring that they are no worse off than before, and then continuing to use them as if nothing had happened. There have been a number of Labour Court cases that have set precedent in this regard. GCM will bring you legal com-ment on outsourcing in our March issue.
Expiring leases; threat or opportunity?Hermanus Golf Club (HGC) turned the threat of an expiring lease into a huge opportunity. GCM spoke to Hein Papenfus, who was general manager at the time, to find out how they did it.A considerable number of clubs are facing expiring leases in the next few years. If your club is one of them, you can take a leaf out of HGC’s book. In 2004 they still had ten years to go on their lease and decided not to wait until it was too late, but to rather secure their future while they still had time.
As a result of their efforts, HGC has achieved the following:• Originally they had hoped to secure a
99 year lease from the local council who were the current owners. Now they own their land free-hold providing it continues to be used only for golf.
• They have been able to re-build their orig-inal 18 hole golf course and add a further nine holes.
• The whole project has cost HGC nothing and they are now in a stronger financial position than at any time in their history.How did they manage to achieve this so-
called miracle? This is what Hein Papenfus had to say.
The success of the process depended on a number of factors. In 2003, the club set up a development committee chaired by Hannes Kleynhans, now President of HGC. They established a memorandum of understanding (MOU) with the proposed developers Rabcav. It was then necessary to approach the council with a view to renewing their lease. It was at this point that
the development committee became aware of The Alienation of Sports Fields Act.
The Act allowed HGC to apply to the council for the purchase of the 120 ha of land that the golf course was on. Once the application was submitted, the council had to value the land in terms of the purpose for which it was to be used, namely golf. The applicant was then given an opportunity to buy the land at half of the valuation. There had to be an extensive public participation process undertaken however, before the sale could be completed.
The proposed sale had to be advertised and objections listened to, evaluated and dealt with. Every bit of water, above and below ground belongs to the Dept of Water Affairs. Their approval of the scheme had to be obtained. They had to identify every municipal service and servitudes had to be issued. They had to set up an environmental
liaison committee focusing particularly on the wetlands and the free movement of ani-mals. The list was almost endless.
The key to the success of the whole process was the nurturing of the relation-ship between the three main players, HGC, the local council and the developer Rabcav. Communication was critical not only with the three main players but also with the members of HGC. As a result of the devel-opment, 330 new residential stands became available and 100 were made available to HGC members on a “lotto” style draw. Two hundred and forty HGC members and 610 members of the public applied for stands, so interest was high and those lucky ones that were successful have already seen signifi-cant appreciation in their investment.
The end result has been a win-win-win situation for all the three main players. HGC now owns the land, at no cost to themselves, which they once leased from the local council. The council is receiving rates and taxes from an additional 330 homeowners and the developers, Rabcav, have completed a very profitable property development.
For more information on Hermanus Golf Club contact either Sharon Schwulst their
club manager, or Julian Shaw their golf director on 028 312 1954 or go to their
website www.hgc.co.za
CLUB PROFILE
Club stats:Total number of members 1600Full members 800Length off Championship tees 6500mLength off club tees 5800mNumber of annual rounds pre development 55 000Number of annual rounds during development 34 000
16 February 2008 Golf Club Management
Golf Club Management February 2008 1�
COURSE MANAGEMENT
Setting the StandardLooking for consistency in your maintenance programme? Darren Berry of Golf Data believes that committing a well thought out programme to paper is the first step towards maintaining standards and ensuring consistency.The required or desired maintenance standards vary on every golf course and are dependant on many factors. These factors include, but are not limited to, member or golfer expectations, available resources, turf variety, water availability and local weather conditions.
For a modern golf course to be successful it must be managed and operated like a busi-ness. As in any business, a sound business plan is a fundamental part of any potential success.
This same idea should therefore be applied to the golf course maintenance oper-ation, where the drafting of a maintenance standard guideline document will replace the above mentioned business plan.
The golf course superintendent will very often be the only one who knows what the overall maintenance plan is and this plan is, very often, only a vague outline. A well structured, well written maintenance plan is an extremely valuable tool to help improve the overall maintenance standards of the golf course. The maintenance plan should contain a guideline for both the day-to-day activities and the long-term goals for the golf course.
Input for these guidelines should be sought from all stakeholders including the golf course superintendent, greens committee, club members and golfers, club professionals and club management. Producing a golf course which provides the desired playing conditions, while maintaining healthy turf-grass should provide the core theme for any maintenance plan. Superintendents should always remember that a golf course is pro-duced and maintained to be played on and that golfer input is therefore a vital part of the planning process.
One of the best arguments for the imple-mentation of a written maintenance plan is the provision of continuity. Committees or club management may change on a regular
basis and there may even be individuals who have their own agenda in mind with regard to golf course maintenance. These regular changes or disruptions caused by the above mentioned situation can be avoided through the implementation of a sound maintenance plan.
A written maintenance plan can be uti-lized to help identify areas within the golf course operation which require improve-ment. The plan will also help to quantify the necessary resources required to implement the improvements. The maintenance plan also has the potential to influence the clubs bottom line as it can be used to identify areas within the budget where resources are either being under or over utilized.
A time/motion study of the maintenance operation should be undertaken in conjunc-tion with the maintenance plan, as it will
assist with the budgetary adjustment and the allocation of resources. The maintenance plan need not be a complicated document. Start with the rudimentary cultural prac-tices and a description of the desired quality level.
A rough guide for any maintenance plan may be to include the following: • Cover page• List of Contents• Introduction• Mission Statement• (List of each section) • Greens • Tees • Fairways etc• Environmental issues • Long-term improvement
An addendum can later be added which includes the workshop maintenance stand-ards and expectations. The inclusion of pictures as examples of desired standards or justification for suggested improvements will help to communicate the ideas to the club membership. Always be sure to dif-ferentiate between different times of the year or different seasons, when drafting the plan, as maintenance practices will vary considerably.
A written golf course maintenance plan is vital to allow the club to be run as a business. It maintains proper levels of expectation, helps to allocate resources effectively and provides consistency in standards from one year to the next.
Darren Berry of Golf Data can be contacted on 083 671 9399 or (044) 384 0680/3 or at [email protected]
Quality implementation on the golf course starts with a well written maintenance plan.
18 February 2008 Golf Club Management
Jackie Arendse of Eagle Tax gives GCM readers a case study on how the partial tax provisions and capital gains tax on recreational clubs will be applied in practice.
This is the third article in a three-part series dealing with the new tax rules for recreational clubs. In the first article I discussed the admin-istrative requirements and in the second, I explained the new “partial tax” provisions in terms of which some, but not necessarily all, of a club’s income may be exempt from tax. In this article I will work through a case study to illustrate how the partial tax provisions will be applied in practice and I will then discuss the capital gains tax implications for clubs under the new rules.
ExampleOur case study is based on a hypothetical club that charges annual subscriptions to its members and also derives other income in the form of playing fees (from both mem-bers and visitors), food and beverage sales (to members and visitors), rental income from billboards and a cell-phone mast and interest income from various bank deposits. The club’s total income is made up as fol-lows: (See Table 1).
The club incurs expenditure on main-taining its sports and social facilities and also has various overhead expenses relating to the general running of the club.
The accounting system of the club has identified the expenses that relate directly to
TAX LEGISLATION
Tax on recreational clubsPART 3
Members subscriptions
Playing fees
Food and beverage
Rental income
Interest income
TOTAL
Income R400 000 R550 000 R300 000 R70 000 R60 000 R1 380 000
Income statement
Members subscriptions
Playing fees
Food and beverage
Rental income
Interest income
TOTAL
Income R400 000 R550 000 R300 000 R70 000 R60 000 R1 380 000
Direct costs -195 000 -100 000 -4 000 0 -299 000
Overhead expenses
-256 000 -352 000 -192 000 0 0 -800 000
Net profit R144 000 R3 000 R8 000 R66 000 R60 000 R281 000
certain types of income (for example, golf course maintenance costs relating directly to green fees, costs incurred directly in respect of food and beverage sales and expenses incurred directly in respect of the rental income). Other overhead expenses are allocated to the various types of income on a suitable basis. In practice, this allocation may be done on a Rand-for-Rand basis, on the basis of time spent by employees on the various activities, according to the amount of space taken up by each activity carried on by the club or on some other basis that is appropriate to the spe-cific club. In our example, overhead expenses have been allocated to income from subscrip-tions, playing fees and food and beverage on a Rand-for-Rand basis. No expenses have been allocated to rental and interest income as none of the overhead expenses were incurred in order to earn this income.
The net profit of the club is made up as follows (based on the club’s accounting records): (See Table 2).
The next step is to calculate the club’s taxable income, which will exclude income that is exempt and take into account income which is taxable. Expenses incurred in earning income that is taxable may be deducted for tax purposes, provided various requirements are met. It is assumed here
that all the direct costs (R4 000) incurred in earning the rental income will qualify for tax deduction. However, as part of the rental income is exempt from tax (see note 3 below), only the expenses relating to the taxable amount of the income (calculated as a pro rata share – see note 4 below) may be deducted for tax purposes. The taxable income calculation will therefore appear as follows: (See Table 3 opposite).
1. Membership fees or subscriptions are fully tax-exempt.
2. Playing fees and food and beverage income is exempt from tax because these activities are integral and directly related to the core objectives of the club, they are carried out substantially on a cost-recovery basis (no significant profit is made) and the club is not competing unfairly with taxable entities.
3. Rental and interest income is not specifi-cally exempt and the general exemption, being the greater of R50 000 or 5% of the total membership fees and subscrip-tions (5% x R400 000 = R20 000) is used against this income. The exemption of R50 000 is shared pro rata between the two types of income. Therefore, the exemption for rental income is R26 923 (R70 000/R130 000 x R50 000) and the exemption for interest income is R23 077 (R60 000/R130 000 x R50 000).
4. Of the R70 000 total rental income, R43 077 remains taxable after taking into account the general exemption (see note 3 above). The direct expenses of R4 000 relating to rental income are apportioned between the taxable and exempt portions of rental income, with the result that only R2 462 (R43 077/70 000 x R4 000) of these expenses are allowed as a tax deduction.
The taxable income of R77 538 is taxed at a rate 29%, with the result that the final tax liability is R22 486.
Table 1
Table 2
TAX LEGISLATION
Capital gains taxThe removal of the blanket tax exemption for clubs has resulted in clubs now being exposed to capital gains tax on the disposal of their assets. Whenever a club disposes of an asset it must calculate the resulting cap-ital gain or loss as the difference between the proceeds on disposal and the base cost of the asset. The base cost of the asset is generally the purchase price of the asset but there are specific rules dealing with aspects such as depreciation, costs relating to the acquisition and sale of the asset and the determination of the base cost of an asset that was acquired before the new legislation became effec-tive. Unfortunately space does not permit a detailed discussion of these provisions here. It is important to mention, though, that clubs have been given special roll-over relief, which means that they may defer the taxa-tion of a capital gain on the sale of an asset if the following requirements are met:
1. The asset must have been used mainly (more than 50%) for the purposes of pro-viding social and recreational facilities of the club;
2. the proceeds from disposal of the asset must be reinvested by the club in acquiring another asset (or more than one asset) that will again be used mainly for the purposes of providing social and recreational facilities of the club;
3. the replacement asset/s must be acquired within 12 months from the date of disposal
Tax calculation Members subscriptions
Playing fees
Food and beverage
Rental income
Interest income
TOTAL
Gross income R400 000 R550 000 R300 000 R70 000 R60 000 R1 380 000
Less exempt income (refer notes below)
(1) -400 000 -400 000
(2) -550 000 -300 000 0 0 -850 000
(3) -26 923 -23 077 -50 000
0 0 0 R43 077 R36 923 R80 000
Less deductions (4)
No deductions against exempt income -2 462 0 -2 462
Taxable income 0 0 0 R40 615 R36 923 R77 538
of the first asset and brought into use within three years from that date of disposal.
If a capital gain does not qualify for this roll-over relief, it will be taxed at a rate of 14,5%.
It is emphasised that all the new tax rules outlined in these articles apply only to clubs that are approved by SARS as “recreational clubs”.
Readers will no doubt agree that the new tax rules for clubs are anything but simple. It is hoped that SARS will release some guidance soon to assist clubs with meeting their legal obligations in terms of these new provisions.
Jackie assisted the CMASA in com-piling and presenting their submission to
Parliament last year on the new tax legisla-tion pertaining to recreational clubs and
has interacted closely with both the CMASA and SARS over the last year as the new
amendments have been implemented.
Five things to do now1. Identify the different types of income
earned by your club.2. Analyse your club’s expenses between
direct expenses and overheads.3. Work out a suitable method of allo-
cating overhead expenses to the various types of income.
4. Identify which income will be exempt from tax.
5. Prepare an estimate of your tax lia-bility for the end of your next financial year.
Table 3
Cobie Legrange has won 23 international tournaments, including the Australian Masters and two British Masters titles. Once ranked 15th in the world, he now applies a lifetime of knowledge and experience to: • Design of golf courses & golf estates to international construction specifications • Redesign, reconstruction, and consultancy across the board,
including par-three golf courses, driving ranges, golf studios and academies, golf estate residential layouts and feasibility studies• Liaising with top international golf stars for signature designs.
...it could be
Is your golf course exceptional, exciting and enjoyable?
Direct personal service line+27 83 375 2098
PO Box 4531 Dainfern Valley 2055 Johannesburg, South Africa
Tel/Fax +27 11 469-3345e-mail: [email protected]
My team has over two decades of experience in golf course design and construction!
Cobi_L_Ad_0707.indd 1 6/5/07 3:50:03 PM
HR LEGAL
You can discriminate but beware! Andrew Wilson of GCM explains why.
Is it ever fair to discriminate?It is almost impossible these days to avoid discrimination as we are all brought up with prejudices and belief systems that in turn influence the way we view the world and the people we come into contact with. Whatever experiences have influenced our thinking with regard to others, we can’t allow those beliefs to manifest themselves in the work environment.
The law specifically identifies any unfair act or omission that arises between an employer and an employee, or prospective employee, involving unfair discrimination, whether directly or indirectly, against an employee, as an unfair labour practice.
The law goes on to specify examples of where employers are not allowed to show favour, either for or against an employee. The list includes but is not limited to race, gender, sex, pregnancy, marital status, family responsibility, ethnic or social origin, colour, sexual orientation, age, disability, religion, HIV status, conscience, belief, political opinion, culture, language and birth.
Unfair discrimination can take on two forms:1. Direct discrimination2. Indirect discrimination
Direct discriminationThis is easy to detect as an employer will overtly favour a particular type of employee, or prospective employee, to the detriment of others.
Indirect discriminationThis is more difficult to identify. On the sur-face, the policies of the company or club can be neutral but the practices indicate that, in reality, certain catagories of employee are being discriminated against.
Taking all of the above into consideration is it ever possible to discriminate fairly? In the eyes of the law it certainly is. There are four grounds on which discrimination could be deemed to be fair. These are:
Affirmative actionThe main aim of the Employment Equity Act is to ensure that previously disadvan-taged groups are fairly represented in the workplace and to this end, employers can favour designated groups (blacks, women and disabled persons) when recruiting, developing, promoting etc. If a person or applicant from a designated group has the capacity to satisfactorily fulfill a function within a reasonable period of time, that person or applicant should be given prefer-ence over someone from a non-designated group (white male).
Inherent job requirementsIf a job requires certain skills for the work to be performed then discrimination under these circumstances would not be deemed to be unfair. For example, a golf club recruiting a head greenkeeper would be quite within their rights to stipulate as minimum job requirements that the successful applicant should have certain relevant qualifications as well as appropriate experience.
Requirements of lawTwo examples are that you are not allowed by law to employ children under the age of 15 years, nor are you allowed to employ pregnant women four weeks before confine-ment and six weeks after giving birth.
ProductivityProviding your criteria for assessment are deemed to be fair, employers may discrimi-nate on the basis of productivity and/or results when considering merit increases and bonuses.
The bottom line of all this is check your thinking and beliefs before you open your mouth, commit anything to writing or act!
For more information on Human Resource matters contact Andrew Wilson on
082 575 3861 or at [email protected]
22 February 2008 Golf Club Management
BIRDIES AND BOGEYS
L-R: Shawn Wewege, Ryan Goosen, David Carmichael, Koos Pansegrauw (ViceChairman) and Dave Sherwood (Chariman)
Establishing standards through educationThe South African Turf Equipment Technicians Association or SATETA was established in January 2007 as an association for Technicians in the turf industry. On 22 November, SATETA was formally constituted and a committee put in place at a meeting held at Bryanston Country Club. The Association is closely affiliated with the GCMGA (Golf Course Managers and Greenkeeper’s Association) and operates in the Gauteng Region.
SATETA offers a forum for the technical side of the turf industry, which will provide a training ground and knowledge base to its members. The membership is made up of turf technicians and trade representatives. Meetings will be held from January to November, usually on the last Wednesday of the month. As the focus is on education, motivation and networking there will always be an educational or motivational presentation followed by a light lunch during which members will have the opportunity to discuss issues relevant to their day to day activities.
Club managers are urged to encourage their technicians to join SATETA in a bid to uplift the profession and improve standards within their work environment.
For further information or sponsorship opportunities please contact Dave Sherwood on 082 441 1654 or [email protected].
See our club profile article on Parys on page 11 of this issue.Mark Truter turned pro-fessional in 1994 where he initially worked out of Kyalami Golf Club. He then
made the move to Kwa-Zulu Natal where he spent eight years at Victoria Country Club in Pietermartizburg. Through con-tacts in the industry, Mark made the move to Parys Golf and Country Estate where he has been since the opening of the course in May this year. He is an avid fly fisherman which played a major role in helping his decision to move to the Vaal. He is in heaven playing golf on the Vaal and throwing a line out after hours – an ideal place for any fishing enthusiasts.
The law is an A..Two recent judgments are cause for major concern amongst golfers and golf clubs. In Gauteng a golfer was found liable for causing damage/injury when he hooked his ball out of bounds. The judge found that he was prone to “hooking” (in the golfing sense of the word) and therefore should have made allowances for this when lining up his drive.
In the second case at Milnerton in the Cape, a resident on the golf course com-plained that he and his house were in danger from sliced drives. The appeal judge found in favour of the home owner, stating that the hole “was badly designed”, and that the inci-dents of wayward drives were excessive.
Golfers and golf clubs will have to seri-ously rethink their insurance strategies!
PS: Mind you, I suppose now I can always blame the hole for being badly designed when I either slice or hook the ball off the tee; which I do frequently! – Ed.
Bushman Sands, in Alicedale was the venue for the CMASA Executive Committee’s strategic planning retreat. This was an extremely positive and successful meeting, where strategies with goals and timeframes for the next three years and beyond were agreed. The CMASA “ship” has a clearly plotted course and all readers will be advised of the strategies in a future issue of GCM.
Back Row L-R: Michael Edy, Peter Hanley, Dereck Hirson, Harry White, Paul Leishman, Herman MullerFront Row L-R: Beryl Acres, Sue Nortje, Bill TaylorAbsent: David Nicholas.
CONGRATULATIONSCongratulations go to General Manager Christoph Leinberger and Director of Golf John Bumpsteed at the Arabella Western Cape Hotel & Spa which has been named the Golf Resort of the Year for 2008 in the Rest of the World category at the annual conference of the International Association of Golf Tour Operators (IAGTO) held recently in Cancun, Mexico.
New CMASA executive committee
SECURITY
The Security Association of South Africa (SASA) is raising private security service standards by several levels thanks to the introduction of an entirely new Gold Class membership aimed at radically improving service delivery of members to their clients.
The SASA national committee considers it essential that a new class of membership be created which focuses on legislated com-pliance within the South African security industry. As a part of a new strategic plan to keep abreast of changes and challenges, security industry members of SASA now have to enrole as Gold Class members.
Gold Membership aims to exert a posi-tive influence on the entire security industry by promoting the importance of legal com-pliance. Even more important are warnings about the risks and dangers of non-compli-ance to both security service providers and the end-user clients of security services.
Few prospective clients know that it is a criminal offence to contract a security serv-ices provider which does not comply with the law. Pitfalls like that and others need to be brought to the attention of clients. Only when consumers insist on compliance and drive home their demands will the entire security industry be forced to become more profes-sional and improve its public image.
Currently only a fraction of installers / security professionals are SASA members. Pressure by potential clients asking whether a security provider is a member of SASA would help to persuade that entity to become a member.
SASA considers it essential for security companies and consumers to self-regulate the security industry and stop relying on the Private Security Industry Regulation Authority (PSIRA) to bring the non-com-
pliant and illegal security operators to book. Essentially SASA’s new Gold Membership
aims at:• Assuring end user clients that their security
services provider complies with the law; • Protecting the clients against the Private
Security Industry Regulation Act of 2001, known as the PSIRA Act, by assuring due diligence and good corporate governance is being applied;
• Protecting clients from possible severe prosecution which could mean a stiff fine or imprisonment of up to two years – or both. To shoulder responsibilities like that, any
security company seeking the SASA Gold Class certification would have to comply with several stringent demands and issues which will be audited and verified by SASA.
SASA will request compliance certificates with proof of compliance annually. In return Gold Class members will enjoy numerous benefits and have major advantages over non-compliant security outsiders. The new thinking is that there should be a quantum leap in the significance of SASA member-ship. The SASA do not want to change what they stand for but rather ensure that they start delivering on more of the principles they stand for. The basic auditing of their members’ compliance with industry funda-mentals will give relevance to the SASA playing a meaningful role in professional-izing the security industry.
Article byJenny Reid. Jenny is managing director of GriffithsReid, and immediate
past president of The South African Security Association. For more information on your security requirements contact Jenny on 082 600 8225 or at [email protected]
or check out their website www.griffithsonline.co.za
Raising standards in the security industryThe security industry is raising the bar in terms of standards. Jenny Reid, immediate past president of the Security Association of South Africa (SASA), explains.
