Golf clubs nationwide are feeling the pinch from their enforced shutdown during the ongoing Movement Control Order (MCO).
With zero revenue from events, green fees and F&B for a month – and that’s providing the MCO is not extended beyond April 14 – most clubs are relying solely on members’ subscription fees for revenue. For public courses, income is non-existent.
Describing their projected revenue loss as ‘very substantial’ during the MCO, Gamuda Land’s director of club, township & property management Tang Meng Loon noted that operational costs remain more or less the same during the closure.
“There is no reduction in our operational cost during the MCO as a major part of our cost factors are fixed in nature, including salaries. On the contrary, we have incurred additional expenses in engaging professional services to carry out thorough disinfection and sanitisation exercises in our premises and all our facilities, including our buggies,” said Tang, who oversees Gamuda Land’s two golf properties, Kota Permai Golf & Country Club and Horizon Hills Golf & Country Club.
“Furthermore, a substantial amount has been allocated for Covid-19 screening for all our employees, especially our front-liners, operations staff, caddies and other workers,” he added.
“Also, the cost for continuous disinfection and sanitisation plus other precautionary measures such as the procurement of face masks, gloves, hand sanitisers and disinfectants over the next few months, after the MCO is lifted and the club resumes business, has been provisioned for and has given rise to existing expenses.
Kota Permai GCC
“Subscription fees make up our core revenue together with the income from our golf and F&B segments. It is very important that members continue paying their subscription fees during the MCO to keep the club afloat. We foresee a significant decrease in golf and F&B revenue after the MCO, plus costs stemming from full-scale maintenance and operations will need to be expended. Our club would not be able to weather the storm without subscription fees from members,” he stressed.
Nor Afendi Mohd Razlan, club manager of Glenmarie Golf & Country Club, noted: “Throughout the Movement Control Order, we have complied with government policies and regulations to ensure that our staff are taken care of by continuously providing them with their full allowances and salaries.
“Maintenance on our golf courses is still carried out to avoid any deterioration, with mowing and spraying of chemicals and fertilisers carried out regularly with minimal staff on rotation. Hence, operational costs have not reduced much as we still incur 90% of our expenditures,” he explained.
Glenmarie GCC
“We thoroughly understand our members’ grievances in paying their monthly subscription fees during the MCO, but the fees do partially cover the golf course maintenance cost and staff salaries. No money is made from the collection of subscription fees as our profit is made mostly from our daily golfing sales and F&B,” added Afendi.
Danau Golf Club manager Johan Fariz concurred, saying: “Our main concern is paying salary to the staff. The government is providing help but it’s not enough to pay the staff salaries, so we still need the subscription fees. Our salary costs are around RM200,000 a month and subscriptions are the second biggest income source for the club.”
Danau GC
With minimal or zero income during MCO and a projected drop in business even when clubs are allowed to reopen, there is a real danger that some will be forced to shut down. Afendi noted that the MCO could be the proverbial straw that breaks the camel’s back.
“Many smaller golf clubs may not have enough members or any members at all and cannot benefit from monthly subscription fees to assist them during the MCO. On average, a club would usually need at least 3,000 to 4,000 active members paying subscription fees to sustain comfortably, as the maintenance cost of a golf course is relatively high. Since smaller golf clubs depend on walk-in golfers and their daily golfing sales, the MCO on top of a declining golfing market could lead to serious financial damage and the possibility of their unfortunate closure down the line,” said Afendi.
Tang stressed that clubs are under extreme pressure whilst trying to pull through and find ways to recover their losses. “Generally speaking, all clubs are currently under tremendous pressure to find ways to recover losses whilst still being able to manage things as best we can during the MCO. The real danger on closure will be for those clubs without some form of cash reserve to keep them afloat,” he noted.
“The stimulus package for SMEs is a huge boon and will ease some of the financial burden experienced by this sector; however, there seems to be no incentive carved out for businesses such as ours, ie clubs. While we did not meet conditions for a 50% reduction in revenue, we hope the government would be able to review this and possibly remove the condition in order for clubs to qualify for wage subsidies,” Tang elaborated.
Dr Ronnie Yeo, president of the Golf Club Managers Association of Malaysia, painted a rather bleak picture for the golf industry.
“Looking at the business of golf even before the MCO, the rounds in most clubs had been low. Maybe it was the weather, with a lot of rain during December, January and February. With MCO, the business has come to a standstill. With golf courses’ maintenance needing daily attention at least minimally, together with the clubs being closed for any other activities, the financial burden is even greater,” said Yeo.
“I doubt that golf clubs would shut down immediately but there is a possibility that the smaller ones may in the near future, as it will take a considerably long time for the golf industry to recover from this pandemic. Low income in the future will not be able to support the recovery of the golf courses in a short time and some clubs may just fold.
“The SME stimulus package is a good move by the government but this has to be spread over a wide range and the assistance may just not be in time to save the industry. Our economy is not in any healthy state for small players to weather it out,” he concluded.
