An article in Business Week a few weeks ago discussed what many of us who belong to private golf clubs know: Our clubs are hurting. Members are bailing out every week or changing the level of their memberships to save money. Membership rolls are the lifeblood of any club, and below a certain level of membership -- whether 200, 250 or 300 -- proper maintenance of the club and services to members cannot be supported. As membership rolls erode, funds to keep things shipshape dry up and the club starts to look like the public course down the street (or worse). Those clubs that can't stem the outflows go into a death spiral from which there is no escape without the pain of assessments or a drastic change in the club's status.
The problems with the private club industry are the same problems with the real estate industry. Supply and demand rule
Today we have way more private club supply than demand, and initiation fees are downward along with home prices, or vaporizing altogether. One thing clubs cannot reduce, however, are dues, because below a certain point, you can't maintain your golf course and services without a steady flow of cash. If membership rolls and, therefore, dues drop below a certain critical point, desperate measures are needed. For clubs with a few deep-pockets members, that can mean large assessments on top of dues. In other cases, private courses offer themselves for sale to an investor who pledges to keep things the way they are...at least for a few years. And in a few other cases, the once unthinkable occurs; the course opens for public play. Once club owners taste the fruit of a steady stream of green fees, it is hard to go private again.
It is in the natural selection of things that some clubs will go out of business in the next few years. Their members who can
I hope folks do a better job of research this next time around, and identify those private clubs that will be prepared for any future blips in the economy. In my many years of visiting and researching dozens of private golf clubs, I know of only two that have engaged in serious, corporate-style strategic planning. One is Champion Hills in Hendersonville, NC, and the other is Governor's Club in Chapel Hill. Governor's Club's strategic planning session included an offsite session with an outside facilitator. Club membership, according to a friend who lives there, "is off only slightly in the past couple of years." The best news, he wrote, "is that we have not had an operating assessment in the last few years," and they don't expect one this year.
I'm sure other clubs engaged in contingency planning, but Champion Hills and Governor's Club were proud and upfront about their efforts when I spoke with them. If you are considering buying a home in a golf community and adding club membership, ask about the club's contingency planning efforts. Their plans for the future may tell you a lot about what kind of club they are today
You can find the Business Week article by clicking here.