Oakmont benchmarked

Spare a thought this week for the club's employees...

Golf Digest recently published its updated “America's 100 Greatest Golf Courses” ranking.

Around half of the courses on this ranking are 501(c) entities with annual form 990 filings….including Oakmont Country Club, the venue for this week’s US Open Championship. This seemed a timely opportunity to dive into the detail and benchmark Oakmont against other top courses on the ranking. Money in Sport analysed the financials for the 25 clubs in the top 50 which are 501(c) entities:

Winged Foot GC has two courses in Golf Digest’s ranking both of which are in the top 50 surveyed by Money in Sport

Benchmark #1 is the latest annual revenue:

Augusta National would almost certainly be #1 in revenue if the club published its financials.

Oakmont has the 15th largest revenue in the sample of clubs surveyed.

Most of the clubs in the top half of the revenue chart are located in California or the Northeast where the cost of living is higher. These clubs tend to have more than one course allowing bigger memberships. The Olympic Club is by far the largest in this sample with two Championship courses, the Lake course and the Ocean course, and the Cliffs, a 9 hole par 3 course.

Benchmark #2 is compensation costs including wages and salaries, pension contributions, employee benefits and payroll taxes. This chart expresses compensation costs as a percentage of revenue:

The compensation ratios in the sample range from 37% to 57%. Oakmont’s ratio of 47.0% is just below the average of 47.5% for the 25 clubs.

Benchmark #3 is the number of employees.

Oakmont employs 288 staff which is the sixth highest in the sample, more than expected given its 15th rank in revenue.

Benchmark #4 is revenue per employee:

Oakmont’s revenue per employee is low, confirming the previous observation that the number of its employees is higher than expected.

Benchmark #5 is compensation costs per employee, including wages and salaries, pension contributions, employee benefits and payroll taxes:

This chart is concerning. Oakmont has the second lowest average employee compensation of $16,574.

If an adjustment is made for the compensation of the five key managers detailed in Schedule J, the average income for regular employees is even lower at $11,606 per annum:

The minimum wage in Pennsylvania is $7.25 per hour for a 40 hour week which works out at $290 per week which is higher than the $223 per week earned by Oakmont’s regular employees. Based on this analysis of the form 990 data it appears that the club is employing a significant number of staff at minimum wage. It’s also likely than many of the staff are employed on a part-time basis.

Benchmark #6 is net assets, computed as total assets less total liabilities.

Oakmont is a wealthy club with net assets of $23.2 million at 31 March 2024, the tenth largest in the sample.

Benchmark #7 is the gain or loss incurred in the most recent year reported on form 990:

Oakmont incurred a loss of $870,000 in the year to 31 March 2024 compared to a profit of $2.28 million in the prior year. This resulted from a 20% reduction in revenue in the year to 31 March 2024:

The club seemed to have been hit hard by the pandemic and lost a considerable amount of program services revenue in the year to 31 March 2021 which is gradually being rebuilt. Revenue disclosures in form 990 were changed for 2021 reporting, reducing the amount of detail provided…never a good sign!

The 2024 variance arose on a different revenue line: ‘Net income or (loss) from sales of inventory’ - the light blue line in the second chart. It’s unclear why such a steep reduction arose…possibly something to do with pro shop sales.

The poor 2024 result hurt the club’s liquidity and forced it to borrow $4.5 million. Presumably the club needed the borrowings to fund preparatory costs for this week’s US Open.

Major Championship hosting revenue

2016 was the last time Oakmont hosted the US Open which generated revenue of $5.9 million for the club and a profit of $1.9 million.

This chart shows the revenues earned by clubs hosting Majors since 2016 from their form 990s:

Oak Hill reports its net income, after expenses. The other clubs report gross revenues and related expenses separately. Bellerive’s revenue in 2018 is estimated as the club didn’t disclose its PGA Championship income.

It is not known at this stage if the significant jump in the revenue earned by Los Angeles Country Club in 2023 is specific to LACC or an indication that other major championship venues will earn significantly more hosting income in future.