Mission Impossible? Low Cost Private Clubs

[Jason Topp]

It is interesting to me that the cost to join and maintain memberships at private clubs in countries other than the United States seem to be generally much lower than in the United States, particularly in bigger cities.

Given that a private club exists for the benefit of its members, it seems to me that there would be a significant group of people that would be interested in a private club that is operated for the purpose of low cost, quality golf with quality people.  In other words, eliminate the bells and whistles, create a good golf course, a modest clubhouse, then operate and maintain the club in a manner that focuses on keeping costs down.  The goal would be a low initiation fee and low monthly dues.  

It appears to me that most clubs in the US operate in the opposite manner.  The goal is to have the best conditioned course, the prettiest flowers, the nicest clubhouse and the best service possible.  I rarely, if ever, hear of any club focusing on lowering costs to its members.  Instead it seems to be a constant fight about whether to impose large assessments for the next big improvement, resulting in a fight between those that do not have to worry about the cost and those that do.  

It seems to me that typically a US club only focuses on holding down costs is when it is hurting for members.  Why not take this approach by choice rather than market forces?

[Kirk Gill]

What would you consider to be low cost initiation fees and monthly dues?

[Bob_Huntley]

The answer to this question could be found in an article written over thirty years ago in Golf Digest by Dan Jenkins. It was titled something like "Do shower slippers make the difference."

It went into some detail in comparing British golf clubs and their American counterparts. I do think the basic difference is that in most cases the British treat their clubs as golf clubs. Luncheon, a game, a pint and off. Here we seem to have elaborate dining rooms, card rooms, spas and all sorts of extras.

The cost of land for a new facility is, in the coastal and metropolitan areas, expensive. Few British clubs carry any debt service.

I believe there is a club in Palm Desert, could be The
Plantation, that serves lunch and that's it. I think it is Men Only. It still isn't cheap.

[Jason Topp]

Kirk:

I don't think the number is that relevant and it would vary by location.  To me, the question is one of focus - making affordability a fundamental goal of the club.

Incidentally, this is not personal gripe.  I have really enjoyed the advantages of being in a private club in this, my first year.  I have many friends that would also enjoy a private club and could afford to join, but choose to save money by playing public courses.  

To me it would seem ideal to have it both ways, affordability plus the camraderie, the events, and the familiarity of a private club.  Without having any idea about the finances involved, it seems possible to me to run a private club in a manner that would result in the total cost being roughly double public courses for someone that plays 40 times per year.  

[A_Clay_Man]

Jason, In the past, this area (market) has been covered by the municipality model. Low costs to the golfer. That leaves the limitless high end to frolic in follies that only Donald Trump can conceive. Or, The city of La Quinta, Ca.
But, If you did build a course that was in-expensive to it's members and a better quality golf course than traditional  CC's, you would either have too many members to really call it private, or, 2) soon the wealthier would crowd out the frugal through committee.

[Patrick_Mucci]

What would you consider to be low cost initiation fees and monthly dues?

Jason, Kirk Gill asked a legitimate question which you dodged.

Could you answer his question.
Feel free to make adjustments for locations.[/color]

[Jason Topp]

Patrick - I didn't dodge the question.  Look at my post.  I provided two responses:

1.  I would like affordability to be the goal, with the amount that one considers affordable to be determined by the founders of the club.

2.  As a rough guide, If one wants a number, I would suggest double the price of a decent daily fee course in the area for 40 rounds.  In my area, you can play a pretty good daily fee course for $40.  Thus, the total cost per member would be about $3200 annually, which I assume would be divided between an initiation fee sufficiently high to cause loyalty and sufficiently low to allow people to rationally make the decision to join the club.  Assume the pro shop and any food operations are designed to break even and 500 members, that leaves a budget of $1.6 million on which to operate.  I

I welcome input on whether those assumptions would be workable.  Ultimately, however, I don't want this to turn into a fight about the specific finances, unless one takes the position that it is simply not possible to conceive of any private club that has a goal of keeping costs low, rather than one that goes the opposite direction.  At any price, it seems possible to me to create a club with a fundamental principle of creating affordable golf for its members.

Adam:

You may be right that the politics of such a club would be challenging, but it seems possible to me to deal with them as having affordability a fundamental principle to which members agree at the time they join and by limiting membership to a number that allows one to still enjoy the benefits of a private club.    

[Patrick_Mucci]

Jason Topp,

Green Budgets run about 1,000,000 to 1,250,000 at most clubs in the Metro NY area.

I don't know of one club that makes money in their kitchen-dining facility.

The revenue you cite of 1,600,000 would be inadequate to maintain any operation.

Your number only deals with operational budget requirments.
And, doesn't include taxes, insurance, employee benefits and other operating expenses..

How are you paying for capital budget requirements, like acquiring the land, building the golf course, building the maintainance facility and building the clubhouse ?

A decent maintainance facility will cost you $ 1,000,000.
Land acquisition ?
Club House        ?
Golf course       ?
Irrigation system  $ 1,000,000

Your fantasizing and your cost estimate of dues and intitiation fees totaling $ 3,200 to cover all capital and operating expenses is far off the mark.

Ask your club for a copy of their operating and capital budgets, anyalyze the numbers, then report back to us.

I think you'll be surprised and enlightened.

[Dan_Callahan]

There is a very good private course in western New England that charges roughly $2,000 annual dues for single golf and family pool membership. Initiation fee is in the $1,000 range, I think. It is a layout that I would greatly enjoy playing every day. The conditioning is outstanding. There is, of course, a waiting list.

[Patrick_Mucci]

Redanman,

Could you cite five (5) of them.

Dan Callahan,

Affordable golf clubs are a function of acquisition, construction and operating costs.

When the first two were paid for 50 years ago, the third one is easier to deal with.

But, when a new club is created and all three factors have to be accounted for presently, the survival math makes it difficult for them to offer low cost memberships.

In more remote areas, like Mullen, Nebraska, you could find great land for golf for $ 100 an acre, but, when you get closer to meaningful population centers, costs climb higher.

In a remote area, where one or a few employers account for a good deal of the economy, what happens when a substantive employer moves or goes out of business ?

Clubs that operate on the financial edge can't afford to have a drop in membership, especially if they are geographically unsuitable.

[Doug Sobieski]

Jason:

It can be done, and I don't think you are fantasizing. There is at least one such club here in Columbus, OH. In addition, I've spent some time with one of our frequent posters here, along with one of the GCA-most favored architects to discuss such a structure. It's certainly doable. Don't give up hope, despite the doomsday scenario outlined by Mr. Mucci.

All the best,

Doug

[Tim McManus]

Sean Arble,

There is a club on North Fork of Long Island, about 20 miles east of Friars Head called Island's End that operates in almost the exact same way you described.  I am not a member but the ones I know enjoy good golf in good company at a modest price.  It is a pretty small membership (my guess is 200) and they make enough off of the public daily fee of $65 to make it work.

[Jason Blasberg]

There are some relatively low cost options (understanding that this cost is still very high and prohibitive to most golfers) on Long Island, if you assume at least two family members play 50 rounds per year.  A total of 100 rounds brings anything with dues below 12,500 within the reasonable range considering that the high end daily fee courses are charging nearly that per round.  

Initiation fees should not be factored into the cost per round, IMO, because I look at that as the price of admission which is for the benefit of the club's capital expenditures budget.  At 300 family memberships a club with dues of of 12,500 would have roughly 3.75M of revenue, figure another 250k-500k of initiation fee revenue and you're slightly above 4M.  

IMO this should be enough to run any club, however, there remain many clubs with annual dues over 20k and budgets well over 4M.  

Outside the NY/Metro area I know personally there are fantastic options especially on the value for quality scale.  Go outside Wichita, KS for the best example to my knowledge.            

[JohnV]

My home course Hannastown (see the review under MHC) costs $1600 to join of which $800 is refunded when you leave and $1650 a year to play.  There are less expensive clubs around Pittsburgh and definitely less expensive ones in the rest of Western PA.

From our survey last year, the average dues for a club outside of Pittsburgh and Erie was $1,909 for a single with a low of $795.  Families averaged $2,775 and a low of $1,255.  Initation fees ranged from 0 to $3,000 with an average of $1,850.

[Jason Blasberg]

John, I think we're moving in your direction

[Jim_Kennedy]

Pat,
This part of the world (western NE) has quite a few good clubs that charge under, or close to, $2,000 per year. The economies are relatively stable and although several have had to lower initiation costs for a season or two or spread them out a bit, they do well.

Dan,
Wy not get your name on their list?

[Patrick_Mucci]

tmac,

Up until a short while ago, some of the greatest clubs in the United States had low cost dues.

The only problem was, you couldn't get into them.

You had to be a person of means, with the proper lineage.

Long ago, these courses disposed of their acquisition and construction costs, leaving only operation costs as an annual challenge.

But, to create a new golf course today that fits Jason's low cost criterion, is a conflict in terms.

It's not doom, it's reality.

[RE Blanks]

As a resident of Athens GA I can join the University of GA course for $2176 per year.  This includes range and unlimited golf.  That is a very good deal and I am sure there are other university courses with similar options.  

[Dan_Callahan]

Jim,

It's slightly too far away from me. A little more than an hour. But believe me, I'm still considering it!

[Kirk Gill]

The reason I posted my question as to what constitutes "affordable" is due to a situation at local club. The initiation fee currently stands at around $6500, with yearly dues around $3,600, plus a quarterly food and beverage minimum of $75. The course was originally built in the 70's with no bunkers. Over time, bunkering was added. Would this club be considered affordable? For my area I would have to say yes.

However, the facility was recently purchased, and the new ownership is going to rebuild and "modernize" the bunkers, perform some tree removal, and install a new irrigation system. They are also going to add a fitness facility, rebuild the clubhouse in a location that provides better scenery, and  re-do some of the existing tennis and swimming facilities.

It is no surprise, then, that initiation fees are going to triple, existing members are going to be paying an additional 10 grand or so to remain (which they can pay over time, if desired), and while I haven't heard the numbers for dues, it appears likely that they will increase proportionately.

Suddenly, the affordable is becoming much less so. Debt service on this course now has to be paid, and by the membership. Building a club would create even greater economic pressures, unless the land and construction costs could be offset by building expensive homes. And in that case, are the people buying those palaces going to want their golf club to be affordable enough to let the riff-raff in?

[Allan Hutton]

" They are also going to add a fitness facility, rebuild the clubhouse in a location that provides better scenery, and  re-do some of the existing tennis and swimming facilities. "

How much do these additional facilities add to the cost of running the club?

I'm at a club that has a swimming pool, yet for the whole year I have yet to see a single person use it.

Is affordability a function of the "country club" mentality as opposed to a club focused on golf?  I for one, would prefer to be a member of the latter.

[Jason Topp]

Kirk:

I think the situation at your club is common, possibly prevelant.  It seems like nearly every club I am aware of has either made the types of changes you discuss, is in the process of making them or has a yearly fight between factions that want to make them and factions that do not.  Part of the attraction to me of the club I joined is that it recently spent all that money and (hopefully) at least I know what I signed up for.

While I think any club has the right to go in the direction it chooses, I go to a golf club to play quality golf in 3-1/2 hours and have a beer with friends afterwards.  For me, you could strip away everything else and I would be happy.  I suspect others share the same view and it seems odd to me that you almost never see clubs in cities of any size taking the same approach.

Patrick - That is a good point about long established clubs.  It does seem that many of the most exclusive clubs seem to not have the same dynamic.  Perhaps the way to accomplish what I seek would be to take two existing clubs with capital cost battles taking place and redivide the memberships, sending the big spenders to one club and the cheapies (like me, I prefer "purist") to the other.

[Brian_Gracely]

Jason,

One of the ways to essentially create a golf course equivalent to Spanky & Alfalfa's Treehouse is to only allow members to be single men.  If you did that, you'd never have to worry about planting flowers, curtains in the clubhouse or swimming pools because no single guy cares about any of that.

Members get married, and they are either kicked out or they lose any voting powers and can't sit on any committees because they are bound to be influenced by their wife and kids to add the above stuff.  

[Jerry Kluger]

There have been a number of threads on the issue of over building of golf courses and this perhaps is the best source for new affordable private clubs.  The Washington, DC area has a large number of upscale public courses and the general understanding is that a number of them are struggling to stay afloat.  To my mind, they are prime candidates for going private at a reasonable rate.  

Private clubs in the area which are well established are in locations which cannot be duplicated so they can raise their initiation fees to cover the cost of improvements.  However, that being said, sometimes they can get in over their heads.  Lakewood CC brought in Rees Jones to do a complete makeover of the course and it cost them many millions of dollars which as I understand, they went into debt to cover.  They lost use of the course for nearly two years but they continued to pay dues, the dues went up, the intiation fee doubled, and they have approximately 525 members for one golf course.  

Four Streams was built around 7 or 8 years ago by one individual to try and create a Caves Valley type of course in the DC area.  It started out with an initiation fee of $17,500 and dues at about $375 per month.  The format was changed somewhat and eventually the owners wanted out and offered the club for sale.  The members bought it and have tried to build up the membership which I understand is stuck at around 200 while they need closer to 300 to survive.  The initiation is now $65,000 which is supposed to be refundable provided they reach a certain level of membership and the dues are around $500 per month.

Are these affordable, well, when Congressional is around a $100,000 initiation fee and at least a 10 year wait, then everything is relative.  

Pat: As you know my dad was a country club manager and the food and beverage operation could at least break even if the food was priced accordingly.  Some house chairmen felt that the food should be a bargain and any losses would be covered by assessments or higher dues, while others felt that those who ate at the club should pay high enough prices to cover the costs of the food and beverage operation.    

[RE Blanks]

Sandbox, you are 100% on the money.  We have a Christmas decoration budget.