How to prepare for your upcoming contract negotiation

As the end of the golf season approaches, the contract negation season begins for those pros who’s contracts are up for renewal.

This does not have to be a nerve-racking experience. If you know your stuff, you can speak confidently and convincingly, rather than playing defense in your discussions with your GM, club president or golf chairman. You should enter into contract discussions armed with quantitative hard data. It’s hard to argue with facts. We recommend the following:

Financial Info - Accurate information about your earnings.
Performance Metrics – Stats on the golf program (number of rounds, lessons, tournament play, clinic attendees, etc.).
Comparables – Get pro compensation surveys from your local PGA section office. Review what pro’s at comparable clubs in your area are getting. This can be effective ammo if your compensation does not stack up to your peers.
Goal - A strategy for what you want to achieve. This could be a higher salary, a deal for a certain number of years, a greater share of outing revenue, etc.

Why Do I need Financials?

Your club’s management should have a clear picture of your total compensation. If you own the golf shop, this includes whatever the club pays you plus income generated through your outside entity (LLC, S-Corp, etc.). We have found that often club management does not know how much money you really make. And often they think you make more than you actually do. They may not appreciate the expenses you have to incur in running your golf operation.

Your job is to educate them with facts. But your financials must be credible. I can’t emphasize this enough. If your club management doesn’t believe the numbers, you will be at a severe disadvantage.

How to Prepare Your Financials?

You should be using a bookkeeping software, such as QuickBooks. If you do, you probably already have much of the information you need. The challenge is to put the information into a format that your club management can understand and digest and that supports your case.

Prepare a spreadsheet that covers four to five years (if you have that much history) and reflects the relevant income and expense categories.

Your financial statement should:

Be complete and accurate.
Cover multiple years.
Clearly illustrate trends. Trends should be easy to identify and can be very persuasive.
Tie to your tax returns.
Provide a sufficient but not overwhelming amount of detail.

We recommend a one-page spreadsheet with an appropriate amount of detail. Make it easy to read. Color code the statement to highlight totals and trends. Be sure that you can reconcile the total taxable income in each year to each year’s tax return.

The Client Illustration

We recently helped a pro summarize his financial data for discussions with his golf committee. This pro’s pre-tax profit dropped 8% over the four-year period but his income over the last 2 years increased.

This a very important distinction. Trends are key as opposed to a snapshot of a short period.

Financial Statement Components

Here is an overview of the components of his spreadsheet.

Merchandise Gross Profit – Gross profit (revenue less cost of goods) from the golf shop.
Bag/Range/Other – Primarily driving range fees and bag storage fees.
Payroll – Salary payments to him and his assistants less lesson fee reimbursement.
Other Expenses – Operating expenses he/she pays to support the golf program.
ABC Golf, Inc. Salary – The salary he/she pays himself/herself out of shop revenues.
Club Salary – The salary received from the Club directly.

Make Your Case with Facts and you will stand a great chance of getting what you’re asking for!

Our pro got a great reception from his golf committee because he made a strong argument with his financial presentation. There was no pushback. It’s hard to dispute the facts.

As former New York Mayor Michael Bloomberg used to say “In God we trust. Everyone else brings data.”