Outside the United States, it is only in recent years that golf has begun seriously to think of itself as a business. In the UK, Europe and Australasia, until the 1980s, most golf courses were owned and run by members, and although they were businesses in the literal sense of the word, they were rarely run with an especially businesslike mindset.

Now, all that is starting to change. Even before the recent deterioration of the global economic picture, golf courses in most parts of the world were facing a challenging situation – oversupply of courses and low growth of player numbers amid concern over the time needed to play golf. Add to that an economic environment in which consumers everywhere are looking closely at their spending for ways to cut back, and the level of concern around the business is hardly surprising.

Nor is the problem just one facing privately owned, profit-seeking courses. Older, member-owned clubs have one key advantage, that the costs of land acquisition and course construction are long paid for, but they still need to make ends meet. Club memberships are likely to be high on the list of optional extras that get cut out of family budgets, especially in countries like the US, where membership costs are typically high. The fact that a club is member-owned doesn't preclude it from going to the wall.

Improving one's competitive position, therefore, is vitally important for golf course operators of every kind. Golfers, like buyers in every market, appreciate the chance to get more for their money – so the key for course operators is to find a way to deliver more perceived value to their customers. One way of doing this is to upgrade the course, but course changes necessarily cost money. Finding a way to deliver more value to players at a relatively low cost is central to giving players a better experience.

American architect Kyle Phillips has, along with his acclaimed new builds at Kingsbarns and The Grove, worked on a number of course improvement projects. He says that the key is knowing what is possible on a particular site, and not trying to do too much.

"It's about making a golf course a better business proposition," he says. "You have to look at the business within the particular market it's in, to forget about the position that club has today and work out what it could achieve if it was at the top of its particular market."

Phillips, who is based in California, cites three localities within the state in which he has worked. "Redding, in northern California, is an example of a fairly low value market," he says. "There, the value of membership is zero or near to it – if you made the best golf course in the world you be able to raise your joining fee to US$5000. That's not much of an uplift, but you should still consider what you could be at your peak. I call it maximising your asset."

Phillips' second example is the local market around his home town of Sacramento, where he rebuilt the historic Del Paso course. "Sacramento is a classic American golf landscape with several older courses and a ton of new ones," he says. "The new courses are beating down the old ones, and the general level of quality is quite good. But the private clubs, in general, were not good enough to justify the US$50-60k entrance fee plus annual membership fees – golfers would be better off just sticking with public courses and playing the privates with friends who were already members. And so Del Paso was hurting, and struggling for new members."

At any club with a long history, making significant changes to the golf course is going to be a tough decision for the membership. "The club was willing to dream," says Phillips. "It doesn't cost much money to have an architect do a review of what is possible on a particular piece of land, and we helped the club realise that instead of a 6,300 yard par 72 course, they could have 7,100 yards, par 71. We and they both wanted to keep some of the classic holes, such as the short par four ninths, but the design as a whole didn't have any real identity, so that changed the approach – the routing wasn't so sacred, and the question became how can we maximise the asset? And it has paid off – they have recruited 100 new members, worth seven million dollars of joining fees."

The third kind of market, according to Phillips, is the very top end club with a storied history and an important heritage of design. His work at the Alister MacKenzie-designed California Club of San Francisco (Cal Club), which recently reopened after a major renovation, is an interesting example of this kind. "In San Francisco, clubs can charge up to US$200,000 for memberships," he says. "Cal Club was in the middle of that. It had a great past, but in the 60s the creek along the north border was filled and the state built an expressway on top, taking away several holes. They called in Trent Jones, who did the best he could to compress the existing golf course. And they eliminated most of MacKenzie bunkers. They put in full length cart paths, planted trees, and the course became closed in. We told them 'You have 13 holes that can be restored to what MacKenzie built, but five that never can. We can restore the style but not the holes themselves. There was a ridge of land available, so we concluded that we could restore 12 of the 13 possible holes, move the range to near the ninth tee and build a new Cape style par four on the ridge and a new par three. We took the five hole loop at the start of the course and made four holes out of it, returning the feel and sequence closer to the original."

History, says Phillips, is a valuable asset for a course. But it has to work to the club's advantage. "Maybe sometimes we should restore in spirit, but not in fact," he asks? "At Cal Club, I think we've been able to get the best of both worlds, and it's paying off – they are way ahead of their plans in terms of people coming in. What really creates value in a club is what people outside think of you. Just because you think you're beautiful doesn't mean you are."

Phillips' American fellow designer Forrest Richardson agrees with this assessment. Richardson, who has recently completed a major upgrade of the Peacock Gap municipal course in San Francisco, says the key to transforming the business prospects of a course is changing the way it is perceived by potential players. "A golf course architect can often find a new sense of place for a course – a new purpose, a new story or a new angle on marketing," he says. "Even a bunker remodel can dramatically change the face of a club; and with a few terrific photos of the new work it is possible to effectively change the rate structure of fees and membership; a whole new reputation can emerge. At Peacock Gap we took a tired 1960s layout by William F. Bell and, bit by bit, we put back the hallmarks of the design philosophy of his father, William P. Bell. We did this because we felt the classic era of the elder Bell was more in line with the site and surrounding hills. In reality, we created a Bell-inspired course, one designed by the younger Bell but now somewhat reborn as a tribute to the father and son duo. The owner now has a course with a story instead of a course that was just about falling apart at the seams, a course built in a swampy valley with virtually no drainage, and a course that had no foreseeable future. The economics at Peacock Gap are fairly easy: take an average green fee of US$30 and quadruple it. Now they are charging US$100 or more each time someone tees it up. Somewhere in that extra green fee, together with potential new memberships and the increased use by groups and daily golfers, is a revenue increase that exceeds the investment of the course and the improvements. When you have that equation you have done well."

British architect Howard Swan stresses the sustainability angle. "A golf course that is losing members or not getting much green fee play is not sustainable," he says. "Sooner or later, it will go out of business." Swan, whose work at Goodwood in the UK, transformed James Braid's course and put it in the top 100 British courses for the first time, agrees with Kyle Phillips – history alone is not enough. "Nowadays, we are simply better at jobs like drainage design, irrigation and the like. Improving conditions of play is probably the most important part of any renovation job. Golfers hate playing wet courses more than anything else, and a course that is closed for long periods is not going to be financially sustainable."

Forrest Richardson says: "Golfers are smart consumers. They are looking for smart remodels, exciting results and new experiences in the courses they play. While they might like subtle changes or a few bunkers remodelled, these are rarely the results that will fire them up to pay more annual dues or suddenly get them to be happy with the club sandwich being priced twice as high. A good remodel is one that is financially responsible, but also one that goes far enough. I can replace the handle on my refrigerator, but it will hardly impress my wife and it will certainly not allow us to get a premium for our home when we go to sell it. The first worst decision in a remodel is not looking far enough and thinking big enough. The second is failing to know your limits and spending too much. Ideally you add two plus two and get five, six or seven. That is a good goal."

This article first appeared in issue 14 of Golf Course Architecture, published in October 2008.