Golfdom Files Extended: New bonanza in ’66
In the November Golfdom we published this excerpt from the October-November 1965 issue about how golf courses planned on utilizing the unexpected funds they would receive when the Federal Excise Tax, a tax added in to products or services before sales tax, was discarded.
Now we present the entire 3-page story, uncut. We hope you enjoy further insight into the priorities of the responding golf courses and think about what you would do with an unexpected $246,959.63 in annual revenue.
Golfdom’s exclusive survey reveals that the majority of clubs will use the excise tax savings for major improvements
America’s golf clubs are pre- paring for an all-time spend- ing spree in 1966, and the new year should mark the beginning of one of the most prosperous eras the game has ever known. These factors were clearly indicated in a recent survey conducted by Golfdom among club officials and managers to determine how the repeal of the 20 percent Federal Excise Tax on club dues has influenced future planning.
The results of the nation-wide inquiry reveal that a majority of clubs are preparing their treasuries for a new bonanza on Jan. 1, when the tax bite is officially lifted, and the bulk of this money will be appropriated for expansion, renovation and new purchases. Other clubs indicate that the tax repeal will enable them to put their books in the black for the first time in years without levying a special assessment on the membership.
Shortly after President Lyndon B. Johnson put his signature on the massive $4.8 billion reduction in excise taxes last June, Golfdom began to receive a flood of inquiries from club officials and course operators for advice on how to proceed with the collection of club dues. The 20 percent tax on club dues and initi- ation fees had been borne by club members for 22 years, and the total repeal came with startling suddenness. The most optimistic of those who had waged the campaign for its reduction had predicted that the Congress would, at best, cut it in half. Since the six-months interim period gave officials a chance to prepare for an orderly adjustment, Golfdom set out to take a sampling of reaction to the potential windfall.
Questionnaires were distributed to some 800 club presidents, managers and course operators on a basis that considered geographical location and the size and type of club.
Of the club officials responding, 64.1 percent indicated they will raise their dues to include the money formerly paid as tax; 22.2 percent will keep dues at the same level; and 13.7 percent had not reached a decision on the matter at the time of the survey. Numerous respondents in the last category, however, revealed that they were thinking in the direction of a 20 percent increase in dues although a final verdict had not been reached. Based on these actual survey figures and voluntary marginal notes, it appeared likely that nearly 75 percent of clubs participating in the poll would utilize the former tax money for the club treasury.
Many officials indicated on their returns that they did not feel they were violating the spirit of the excise tax repeal by depriving the members of a tax savings. (In signing the excise tax repeal, President Johnson had asked for cooperation in passing the tax relief along to the consumer.) These poll participants pointed out that an increase in club dues for 1966— or some kind of assessment — would have been necessary if the tax money had not been available.
Of the officials taking part in the survey, 63.4 percent represented private clubs, the remainder (36.6 percent) semi-private layouts. Municipal and military courses were not subject to the excise tax. Standard-size (18 holes) courses accounted for 59 per cent of the replies; 28 percent represent 9-hole courses; and the balance (13 percent) were 27 holes or more. Other characteristics of the participants: average membership of 393 members paying an average of $396.50 in annual dues, and anticipating an 8 percent increase in memberships in 1966.
A projection of the survey figures indicates that about $137.4 million in new money from present members will become available to the clubs changing the dues structure. Considering the anticipated 8 percent increase in members and the fact that the former 20 percent on initiation dues will also go into club coffers, another $35 million to $40 million could be added to the pot. On due increases alone, the clubs will realize an average increase of $33,700 each in annual revenue.
With such a yearly gain anticipated club officials are embarking on ambitious building and refurbishing programs — many of which have been needed for some time. other obligations are not being overlooked, however. Club employees, for instance, stand to profit from the new golf economy, since 29 percent of clubs polled in the Golfdom survey revealed they were planning to raise salaries, and 26 percent indicated they will increase the size of their staffs. Reducing club debt is the concern of 37 percent, but the highest figures are compiled by those planning improvements and purchases. Capital improvements will be made by 76 percent of those queried, while 43 percent will purchase equipment.
As the total of these percentage figures will show, many clubs will spend the bonanza in more than one direction. Indeed, some respondents disclosed that they are planning to invest in such projects as retirement and insurance programs for their employees.
Club pros who have long been singing the blues over lack of space for pro shop operations, will find cause for considerable glee in the survey report on club improvements. New or improved pro shop facilities are in store for 33 percent of the clubs raising dues— the highest figure in all categories of construction or improvement of clubhouses ranks next with 31 percent, and the average expenditure anticipated is a very impressive $52,500.
Two other survey factors that rate very high should warm the hearts of the golfers. Twenty-one percent of the clubs plan to enlarge or improve the golf course, and 29 percent will install or expand irrigation system. The drought in the eastern states over the past several years, which has kept many fairways burned-out for the bulk of the playing season, must be considered an important factor in this high figure for eating systems.
Two other trends in the development of facilities are supported in the survey. Recent demands for more and more non-golf activities is reflected in the plans of 20 percent of the clubs to install or expand tennis courts. And the tremendous increase in the use of golf cars is shown in the fact that 23 percent will procure (either by outright purchase or fleet rental) new vehicles. Anticipated average expenditure for the golf car category is $13,675, which indicates order will be placed for substantial numbers.
All in all, the repeal of the Excise Tax, brought about by the effective campaigning of many people — including Arnold E. Abramson, publisher of Golfdom’s pioneers—should put the game and all its allied industries and interests on the threshold of the happiest state in years.