Agreed that every situation is different and a hypothetical just can't really come to any workable rule of thumb or formula.
First, one would have to survey the members in line to leave and ask them. Are they selling or taking a bath in this membership to upgrade to another course that has more that they want. And then find out what it is they want. If they want something that puts your club behind a financial 8 ball, and you can still market to a more thifty niche, then just work on quality presentation of what you have and hope to retain and gain new members that aren't so demanding.
But, the scenario isn't too far fetched in recent economic stress years that the members trying to sell at whatever price they can get, need the money, and aren't upgrading. Maybe like many, they decided to play muni-public golf, rather than pay this price. I know members at nice CCs that just decided they will apply the money to playing around different courses rather than feel locked in, and thus pocket the money and usually are way ahead.
On the question, I would personally lean towards modest facility upgrades, with eye towards uping the quality of what experience is there, without expensive brick and mortar investments in clubhouse, and hope the member are there for the golf and 19th hole pub and grub you have been providing. In this area of WI, I am not aware of any clubs picking up members. Some seem to be losing them, yet still uping their fees, chasing facility upgrades too far in debt, and watching their members dwindle, despite the greater investments.
BTW, does Rees Jones sell upgrades and remodel jobs?