[JMEvensky]

JM;  That is precisely the issue.  The initiation fee evidences commitment and helps tie a person to his club.  Members who come in on "special deals" often exit as soon as the time comes to invest in the club.  I am not talking about massive clubhouse projects.  Even investment in equipment for course maintenance can become a problem.

Agree with all.Outside of the largest cities,I worry that the $0 initiation will cascade to each/every club save for the one old-line club.If this happens,it might even be worse than immediate closings.For country clubs and their "way of life",this might be death from a thousand cuts.

[Sean_A]

I want to believe that despite all the grass, acid, and alcohol we've consumed, my generation still has a conscience which requires that we leave something to our kids besides the huge aftermath of the debt-financed consumptive mess we've created.  If I am right, the old bumper sticker "Out spending my children's inheritance" will give way to an era of austerity and, just maybe, a little bit of personal responsibility.

Lou

I am sure you are right that folks want to leave something to their kids, but consumerism behaviour may suggest otherwise.  Didn't I read somewhere that for the first time in I don't know how long that on average folks in the US owe more than they own?  Granted, this may not be true of Baby Boomers, but I suspect that they aren't in great financial shape as a group.  I think Baby Boomers were the first group to really let rip with debt, though my group (just after the Baby Boomers) probably took debt to new heights.  I honestly don't know how the 25-40 year old crowd are doing with debt, but again, I suspect they have been a bit loose as a group - perhaps counting on Baby Boomer inheritance handouts to carry them through in old age? 

Ciao

[Lou_Duran]

Sean,

I think most of us, baby boomers and otherwise, hope that our children will have a better life than we've had.  It has always been my intention to leave this world with some equity in my balance sheet for my kids to enjoy, and I've conducted my life accordingly.  I want to believe that I am not that unusual in terms of my intentions, living within my means, and being prudent with debt, but, based on what I am reading in the paper and hearing from our political leaders, perhaps I am.

Many of us baby boomers had the benefit of first person accounts- our parents- who lived through the Great Depression.  Some of us took these lessons to heart and learned a few things first hand during the school of hard knocks in the 1970's era of "malaise".  Not many of us did a very good job of passing on this knowledge effectively to our children.  In fact, by immediately indulging our latest wants and desires as well as theirs, we've taught them that delaying gratification is unnecessary as long as we have plastic.

So, yes, I do expect that our young people are expecting a significant transfer of wealth upon our demise.  Have we prepared them for the realities of $50 to $100 trillion in unfunded entitlement liabilities?  I dare say that the viability of the American private club model as important as it might be to a relatively few million people is but a trivial concern going forward.  If the best lessons are learned during the most difficult times, we are about to become a very learned people.

[Bradley Anderson]

Its an interesting dilemma for the clubs who are considering lowering initiation fees.  Obtaining the dues income is extremely important but the clubs must be careful to admit only those individuals who are likely to be the types of long term members they desire.  That is why clubs used to give special deals to younger members but were selective in their admissions policies.  If clubs jettison selection committees or reduce their influence they may be solvent in the short run but they may end up with a membership that has nothing in common. That result may eventually destroy the club.  Alternatively, if the members who came in "on the cheap" have virtually nothing invested in the club, when the time comes to pay for necessary improvements (even in better times) those without the committment evidenced by a financial stake may vote against the improvements, thus weakening the club, and , failing to defeat the assessments, they may have a higher propensity to leave.  In my experience, a well run club doesn't need the initiation fees to fund the club (although they help) but uses them as a measure of committment.

These may be some of the wisest words ever written on this site.

[Sean_A]

Sean,

I think most of us, baby boomers and otherwise, hope that our children will have a better life than we've had.  It has always been my intention to leave this world with some equity in my balance sheet for my kids to enjoy, and I've conducted my life accordingly.  I want to believe that I am not that unusual in terms of my intentions, living within my means, and being prudent with debt, but, based on what I am reading in the paper and hearing from our political leaders, perhaps I am.

Many of us baby boomers had the benefit of first person accounts- our parents- who lived through the Great Depression.  Some of us took these lessons to heart and learned a few things first hand during the school of hard knocks in the 1970's era of "malaise".  Not many of us did a very good job of passing on this knowledge effectively to our children.  In fact, by immediately indulging our latest wants and desires as well as theirs, we've taught them that delaying gratification is unnecessary as long as we have plastic.

So, yes, I do expect that our young people are expecting a significant transfer of wealth upon our demise.  Have we prepared them for the realities of $50 to $100 trillion in unfunded entitlement liabilities?  I dare say that the viability of the American private club model as important as it might be to a relatively few million people is but a trivial concern going forward.  If the best lessons are learned during the most difficult times, we are about to become a very learned people.

Lou

You know what they say, the road to hell is paved with good intentions.

Ciao

[Kalen Braley]

Lou,

I would certainly agree in principle with your last post.  I read this on CNN today and though it captured the spirit of how troublesome these bailouts could potentionally be going down the line.

http://www.cnn.com/2009/POLITICS/02/10/stimulus.package.debate/index.html

Seems to me we're a nation that is gravely addicted to credit and over-extending ourselves to maintain our lifestyles even as massive corrections are needed. These bailouts seem to be no more than getting another "fix" and further pushing out the suffering of withdrawl and rehabilition that much further down the road.

[Steve_ Shaffer]

I think "measures of committment" as a euphemism for "initiation fees" will become a thing of the past at most second and third tier member owned clubs as they are gobbled up in the future by golf management companies. They will be replaced by " refundable membership deposits" or nothing at all (just annual dues) as these clubs operate as non-equity private clubs. There is a need for these types of clubs as many golfers just want to play golf in 4 hours with other golfers,not the duffers that can be found on public courses, eat and leave. As a former member of such a club, there were many who joined from member owned private clubs because they were fed up with member management, continuing assessments, club politics, etc.

[SL_Solow]

Steve;  You are probably right and I agree that there is a niche that will be filled by that type of offering.  However, no one should mistake that semiprivate "play with your buddies and leave" enterprise for a "club", just as the CCFAD with all of its service and over hyped course was not a "club."  The camaraderie  that a real club offers has a value that cannot be measured in dollars.  if it is coupled with an outstanding golf course it becomes a very special place.  Finally, if the membership has a collective social conscience, it can do things for charity that no semiprivate enterprise will ever achieve.  There may be a lot wrong with the American model for private clubs but a lot will be lost if it does not survive.  I suspect that clubs which understand their niche will find a way through this crisis and survive for the forseeable future.

[kconway]

the econmic impact of declining membership has obvious negative ramifications on club economics.

i fear that declining membership could also have negative impact on the social fabric of many clubs:  fewer people to get games with; lower participation in events; etc.

it seems to me not having enough members could be as damaging as having too many.

[jeffwarne]

it seems to me not having enough members could be as damaging as having too many.

Ummmm,.....not having enough members would be the definition of the problem.
Clubs aren't folding because they have too many members

[Will MacEwen]

Steve;  You are probably right and I agree that there is a niche that will be filled by that type of offering.  However, no one should mistake that semiprivate "play with your buddies and leave" enterprise for a "club", just as the CCFAD with all of its service and over hyped course was not a "club."  The camaraderie  that a real club offers has a value that cannot be measured in dollars.  if it is coupled with an outstanding golf course it becomes a very special place.  Finally, if the membership has a collective social conscience, it can do things for charity that no semiprivate enterprise will ever achieve.  There may be a lot wrong with the American model for private clubs but a lot will be lost if it does not survive.  I suspect that clubs which understand their niche will find a way through this crisis and survive for the forseeable future.

I generally agree with your opinion, but I don't know many guys my age (38) who are willing to pay up for the benefits of the real club, especially if they haven't grown up as a member of a club somewhere.  Part of that may be because in Vancouver, almost everyone my age is mortgage poor.

[SL_Solow]

Will;  I agree which is why most clubs have an older demographic.  In order to encourage folks like you, they often offer reduced dues and initiation fees while allowing the initiation to be paid over time.  I didn't join my club until I was in my 40's.  I played most of my golf in my 30's at a nice muni with an active men's club.  It was a lot of fun but the difference after my move was very special and remains that way.  I enjoyed my golf before the move and could have stayed but the move has been worth it to me.

[Will MacEwen]

Shelly,

Upon further reflection, the only guys I know who are members at clubs were junior members who grew up with it and their initial buy in was much less.  Also, the golf  clubs in Vancouver don't offer much for families - pool, tennis, etc.  Most couples will choose a general athletic club first.  Vancouver is also somewhat unique - a very expensive cost of living.  I live in the sticks now where there are no private options.

I have only played a handful of private clubs in my life, but I know that when you enter the gates, the entire feeling is just different and palpable.  That is what people are buying, and I get it.

[SB]

Steve: I just read what you wrote on maanagement company acquisitions of existing facilities in the Philly market.....makes sense as its easier to buy an existing facility in the correct demographic than it is to build new.....for the life of me I don't know how these deals will close, as most of the lenders in golf are taking a hiatus.

The old fashioned way.  Cash.

[Mike Bowline]

Entry fees have either dropped or totally dissappeared in many cases. What the clubs need now is income, 40 members times $25,000 per year in dues makes up $1 million in shortfall. My buddy in NY left one club to join another that had an entry fee of $100,000, but they cut him a deal for $10,000.

I am more familiar with annual dues in the range of $5,000-$7,000, not $25,000. So the math becomes 40 x $6,000 = $240,000, not $1,000,000.

[Steve_ Shaffer]

SBusch,

You're right- cash AND credits to members of these clubs in the form of zero or greatly reduced dues for a period of time can do the deal. One of the clubs in the Philly 'burbs involved in these discussions has a note due this year of about 2.5M. Around here, this type of deal is known as a "Melrose" as the new owner bought the club from the members using this approach.

[ChipRoyce]

I think "measures of committment" as a euphemism for "initiation fees" will become a thing of the past at most second and third tier member owned clubs as they are gobbled up in the future by golf management companies. They will be replaced by " refundable membership deposits" or nothing at all (just annual dues) as these clubs operate as non-equity private clubs. There is a need for these types of clubs as many golfers just want to play golf in 4 hours with other golfers,not the duffers that can be found on public courses, eat and leave. As a former member of such a club, there were many who joined from member owned private clubs because they were fed up with member management, continuing assessments, club politics, etc.

Gobbling up by management companies is one scenario.

Another, which I think was also prevalent during the depression and to a lesser extent the 60's and 70's, is where Municipalities absorb courses for public use via imminent domain of distressed country clubs which are then operated on shoestring budgets as public facilities (soon to be your local dog track and some day restored by GCA as a hidden gem).

While I hate the thought of many clubs going this route, I think it much more likely.

[Jerry Kluger]

I am a "babyboomer" who is a member of a private club but I have a bit of insight into what "Generation X" is thinking as I have two sons, ages 12 and 15.  The cost of a college education has skyrocketed since the babyboomers went to college and really scares the heck out of you.   4 years of private college can easily cost $250,000 so for two kids it is a half a million bucks.  Public universities cost significantly less but they are becoming more and more competitive and your child must be suitable for large classes, etc. 

The bad economy is also creating almost a class warfare where some people are critical of individuals making lavish expenditures.  As noted in earlier replies, today's country club is not nearly as lavish as it had been but it is viewed by many as lavish. Personally, I don't care about the perception of a private club but many people do. 

It will be difficult for private clubs to survive but they are not alone.

[Lou_Duran]

I am acquainted with an individual who has been invited to join one of the best clubs on the west coast but hasn't because of his wife's perception of the club and CCs in general.  Beyond economics, I think men today pay much closer attention to their wive's feelings and preferences.  To the extent that women do not seem to place golf among their highest priorities- and I know that this is a generality that can be discredited with a few exceptions- the high initiation fee private club may be anachronistic.

A further influence is the mobility of the work force where changing jobs every few years and 10-15 times in a career is the norm.  It may not make a lot of sense to invest $50 to $100m in a fixed location if frequent relocations are possibilities.     

[JMEvensky]

I am acquainted with an individual who has been invited to join one of the best clubs on the west coast but hasn't because of his wife's perception of the club and CCs in general.  Beyond economics, I think men today pay much closer attention to their wive's feelings and preferences.  To the extent that women do not seem to place golf among their highest priorities- and I know that this is a generality that can be discredited with a few exceptions- the high initiation fee private club may be anachronistic.

A further influence is the mobility of the work force where changing jobs every few years and 10-15 times in a career is the norm.  It may not make a lot of sense to invest $50 to $100m in a fixed location if frequent relocations are possibilities.     

I agree 100% with each premise.If the wife can't be made to feel the initiation/dues provide value for the entire family,it's a no go.

As you say,the prospect of job relocation is another barrier to joining.Non-refundable initiation fees may be a deal breaker-even fees much lower than $50,000.

[Tom_Doak]

If any of the better clubs have trouble, they might look to what Shinnecock Hills did in the Depression.  One way or another, Shinnecock wound up with 75 stock members who have a preferred deal because they (or their forefathers) were the ones who supported the club through hard times.  Everyone else is on annual renewal ... which is a useful weapon in the boom times!

[Adrian_Stiff]

Artisan membership may be the way forward in the UK.

[Steve_ Shaffer]

I don't think too many, if any, governments would exercise their power of eminent domain in this economy and purchase a golf course. The public outcry would be significant and the elected officials would not be re-elected.

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