The demise of the initiation fee

[Tim Martin]

The lu lu #s are awful, why would someone pay $3,500 when they can play for $60-78 without commitment? $2,400 for each adult no age progression BS and allow kids to play for free as long as one adult is member and during certain times.

I thought this as well!  That is a hard sell when I can play over 40 games a year for £3500 with no commitment.  The problem is for a more reasonable ratio of 20 to 1 that would be $175 a game.  Nobody is going to pay that for LuLu. 

Regardless...LuLu is a cool course...still one of my favourites.

Ciao

Sean-You don't think that LuLu will sell memberships at $3,500 for a golf course of that quality in metropolitan Philadelphia? Forget about dividing that number by the amount of rounds played and think about someone that is a 2-3 times a week golfer who will join and hang their hat there. It's absolutely a bargain. You live in the UK which is an apples to oranges comparison when it comes to club structure and pricing.

Tim

For sure LuLu will sell memberships, but to folks who for sure want a membership.  But I don't think they are gonna entice many new club joiners with the fee structured the way it is unless the club is very good. 

In this case, its not apples to oranges.  The analogy across the pond is damn near spot on because there is such an open access policy.

Ciao

Sean-It's basically a semi-private model where can join or not. Did they steal that from across the pond?

Tim

It would be interesting to know a bit of the history behind private clubs with open access.  I suspect back in the day the open access was far more monitored than it is today.  Warm bodies and folding are the only requirements at most places these days 

Ciao

Sean-I think you have to measure location as one of the big factors especially as it relates to LuLu. In Sioux Falls, South Dakota it won't work.

[Mike_Trenham]

The lu lu #s are awful, why would someone pay $3,500 when they can play for $60-78 without commitment? $2,400 for each adult no age progression BS and allow kids to play for free as long as one adult is member and during certain times.

I thought this as well!  That is a hard sell when I can play over 40 games a year for £3500 with no commitment.  The problem is for a more reasonable ratio of 20 to 1 that would be $175 a game.  Nobody is going to pay that for LuLu. 

Regardless...LuLu is a cool course...still one of my favourites.

Ciao

Sean-You don't think that LuLu will sell memberships at $3,500 for a golf course of that quality in metropolitan Philadelphia? Forget about dividing that number by the amount of rounds played and think about someone that is a 2-3 times a week golfer who will join and hang their hat there. It's absolutely a bargain. You live in the UK which is an apples to oranges comparison when it comes to club structure and pricing.

Tim

For sure LuLu will sell memberships, but to folks who for sure want a membership.  But I don't think they are gonna entice many new club joiners with the fee structured the way it is unless the club is very good. 

In this case, its not apples to oranges.  The analogy across the pond is damn near spot on because there is such an open access policy.

Ciao

Sean-It's basically a semi-private model where can join or not. Did they steal that from across the pond?

Tim

It would be interesting to know a bit of the history behind private clubs with open access.  I suspect back in the day the open access was far more monitored than it is today.  Warm bodies and folding are the only requirements at most places these days 

Ciao

Sean: Lu Lu is mostly private, daily fee players are not welcome at just any time or any day they are up for a game. 


LuLu is also one of the best private club values on the annual dues cost in Philadelphia, and this is probably the most cost friendly big city in America for private golf.

[Jerry Kluger]

I know of some clubs where it was proposed that clubs within close proximity would merge and have reciprocal privileges - it makes membership more attractive, becomes more efficient operating model and allows for reducing amenities at one of the locations.


Also have private clubs owned by one company like Club Corp that allows members access to all of the courses.  Or even an individual owning a number of courses and members have access to all of them.  (McConnell)

[AStaples]

The merging of local clubs seems to be happening/have been happening for a while now. Sometimes it happens with another social club in the area without a golf course.

Since most groups of friends are busy with sports, travel, etc, and only get together a few times a month at most, they don't see value in joining a club. I think it's the one reason many of the successful club models today are all family focused clubs.

Andy

[Ira Fishman]

Certainly not true in the Washington, DC area.

DC suffers from twin problems:


1. It was a small city when most of courses close in were built so now there are not enough of them for a much bigger (and wealthier) population.  Hence, initiation fees generally remain high.


2. The depth of quality courses is lacking, particularly compared to cities that were bigger during the Golden Age.


I am hearing that a couple of the clubs that built new, big clubhouses are starting to regret that decision.


Ira

[PCCraig]

I think initiation fees all depend on the MSA, generally speaking, but overall there is a trend towards much lower downstrokes.


The number one issue for clubs getting a big initiation fee is that Companies aren't paying for memberships anymore, or at least not like they used to. Up to just ten years ago Banks were paying memberships at top clubs for sales guys. But after the recession that practice is all but done.


In a city like Chicago, twenty years ago almost every club along the North Shore was charging $75-$100thd in initiation fees. A big part of that is that obviously there is a lot of wealth in the area and not that many clubs, but further driving demand was the general segregation of clubs...there were only so many 'Catholic' clubs, 'WASP' clubs, 'Jewish' clubs, etc. Therefore if you were a weathly Catholic living on the North Shore you were willing to pay a bunch in order to hang out with your wealthy Catholic buddies at North Shore CC or to a lesser extent Sunset Ridge CC.


Many of the clubs on the North Shore still charge big initiation fees, but for younger guys who join in their twenties they attempt to defer the cost to age 35 or 40 to make it easier for those folks to swallow. But even still I know a lot of guys who are Junior members at their parents clubs and they are staring down a $50thd downstroke and many of them just figure it's not worth it. It can be a number of factors, but in Chicago's case a lot of people are staying in the city longer either because that's where they would prefer to live or it's too extensive to buy a house on the North Shore. Or it takes too long to get up to the golf course from the city so the younger people hardly use it or get up there. Or the costs to belong are too high...one friend put it this way...to have three people as guests at a private club on the North Shore it costs $1thd once you factor in guest fees, caddies, drinks, etc. That's a lot of money. So this one person just chooses to go play Harborside with friends when they want to play. Plus I have friends who don't really like to hang out at their clubs anymore...they are outdated, quiet, and not the definition of "fun" that a 25-40 year old is looking for these days.


Here in Minnesota, there are very few clubs that can command an initiation fee more than $20thd. Pretty much Interlachen, Minikahda, WBYC, and Spring Hill as far as I know. And even ICC I know one guy who moved to town, joined, and was given a crazy inexpensive/flexible deal there to join. (He only belonged for a year before he had to move again for work).


My club could probably charge a little more in Initiation Fees, given we're the only club in St. Paul proper. I think full boat is $12thd now. But the leadership likes it generally low as they want/believe they need more bodies and members in order to support the club (even capital expenditures) through dues and cash flow. When they had a new clubhouse planned, even then they weren't planning on assessing the membership...they were just going to raise dues to cover the additional debt service.


My thought at the time was that you've now taken away meaningful initiation fees, so members have way less "skin in the game", and now dues are that much higher. So you've now made the decision to leave the club WAY easier for more people the next time a recession hits...

[Carl Johnson]

. . . My club could probably charge a little more in Initiation Fees, given we're the only club in St. Paul proper. I think full boat is $12thd now. But the leadership likes it generally low as they want/believe they need more bodies and members in order to support the club (even capital expenditures) through dues and cash flow. When they had a new clubhouse planned, even then they weren't planning on assessing the membership...they were just going to raise dues to cover the additional debt service. . . .

That's the approach my club in Charlotte took about 10 years ago when we did a major golf course re-do.  For the first phase, there was a smallish assessment, about $3,500 I think, paid over three years.  That, plus the recession at about that time, caused some membership loss.   For the final phase (the following year), which was much more expensive, the board just borrowed the needed cash and then raised dues.  I have no inside knowledge, but my sense is that they went the dues route at least in part because another assessment would have required an uncertain membership vote, whereas the board could raise dues without a membership vote.  So far it has worked out very, very well.

[Mike_Young]

My thought at the time was that you've now taken away meaningful initiation fees, so members have way less "skin in the game", and now dues are that much higher. So you've now made the decision to leave the club WAY easier for more people the next time a recession hits...

PC,
Yep....I just don't know how one overcomes that....it's going to be a problem..

[Rob Marshall]

My thought at the time was that you've now taken away meaningful initiation fees, so members have way less "skin in the game", and now dues are that much higher. So you've now made the decision to leave the club WAY easier for more people the next time a recession hits...

PC,
Yep....I just don't know how one overcomes that....it's going to be a problem..

At my club in upstate NY not only don't they have any skin in the game they are paying about 65% of the dues long time members are paying.

[Mike_Young]

Here at our club the deal is:  one year trial membership where you pay dues and no assessments.  If under 35 dues are half.  At end of year you decide if you wish to join or leave.  If you stay you pay a $20,000 initiation over 10 years at $2000 per year and if during that time you move or quit you have no obligation to continue the initiation payment.....one downturn and it will be interesting...

[Ulrich Mayring]

700 member per 9 holes, that is what the German Golf Federation places as an upper limit on club membership. My practical experience is that about 1000 members per 18 holes already saturate the course. It stops being fun above that.

200 or 300 member per 18 holes is economically a waste of a good potato field.

Ulrich

[Rob Marshall]

700 member per 9 holes, that is what the German Golf Federation places as an upper limit on club membership. My practical experience is that about 1000 members per 18 holes already saturate the course. It stops being fun above that.

200 or 300 member per 18 holes is economically a waste of a good potato field.

Ulrich

Hopefully 700 of the 1000 members don't play much golf...

[Mike_Trenham]

700 member per 9 holes, that is what the German Golf Federation places as an upper limit on club membership. My practical experience is that about 1000 members per 18 holes already saturate the course. It stops being fun above that.

200 or 300 member per 18 holes is economically a waste of a good potato field.

Ulrich

How do you count a member, plus spouse and kid and all three play golf?

[BCowan]

The merging of local clubs seems to be happening/have been happening for a while now. Sometimes it happens with another social club in the area without a golf course.

Since most groups of friends are busy with sports, travel, etc, and only get together a few times a month at most, they don't see value in joining a club. I think it's the one reason many of the successful club models today are all family focused clubs.

Andy

Andy,

I agree with you on your first sentence.  They are talking about doing that in the Toledo area, it's funny to hear folks come up with ideas when they can't comprehend that the folks can't afford the high monthly dues and the added costs for every round with a cart/caddy. 

Family focused clubs i disagree with you completely.    The location of the club is important to the success of the family focused club.  The one BIG aspect that private clubs in declining areas overlook is the Individual golfer who's wife has no desire to use ANY of the facilities.  They aren't going to be encouraged to pay Family dues with College funds, house prices, and family vacas.  Many high end destination tracks have popped up for 25 years. 

[BCowan]

The lu lu #s are awful, why would someone pay $3,500 when they can play for $60-78 without commitment? $2,400 for each adult no age progression BS and allow kids to play for free as long as one adult is member and during certain times.

I thought this as well!  That is a hard sell when I can play over 40 games a year for £3500 with no commitment.  The problem is for a more reasonable ratio of 20 to 1 that would be $175 a game.  Nobody is going to pay that for LuLu. 

Regardless...LuLu is a cool course...still one of my favourites.

Ciao

Sean-You don't think that LuLu will sell memberships at $3,500 for a golf course of that quality in metropolitan Philadelphia? Forget about dividing that number by the amount of rounds played and think about someone that is a 2-3 times a week golfer who will join and hang their hat there. It's absolutely a bargain. You live in the UK which is an apples to oranges comparison when it comes to club structure and pricing.

Tim

For sure LuLu will sell memberships, but to folks who for sure want a membership.  But I don't think they are gonna entice many new club joiners with the fee structured the way it is unless the club is very good. 

In this case, its not apples to oranges.  The analogy across the pond is damn near spot on because there is such an open access policy.

Ciao

Sean-It's basically a semi-private model where can join or not. Did they steal that from across the pond?

Tim

It would be interesting to know a bit of the history behind private clubs with open access.  I suspect back in the day the open access was far more monitored than it is today.  Warm bodies and folding are the only requirements at most places these days 

Ciao

Sean: Lu Lu is mostly private, daily fee players are not welcome at just any time or any day they are up for a game. 


LuLu is also one of the best private club values on the annual dues cost in Philadelphia, and this is probably the most cost friendly big city in America for private golf.

Mike,

   Can you elaborate on LuLu some more?  Do weekdays have hours times blocked off?  Weekends?  I didn't see that on the website though I didn't go over thoroughly. 

[Duncan Cheslett]

700 member per 9 holes, that is what the German Golf Federation places as an upper limit on club membership. My practical experience is that about 1000 members per 18 holes already saturate the course. It stops being fun above that.

200 or 300 member per 18 holes is economically a waste of a good potato field.

Ulrich

These figures don't compute for me. Golf club members in Germany must have very different expectations to those at UK golf clubs.


We have approximately 300 playing members, around 150 of whom play in the competition every Saturday. Maybe another 30-40 play mainly on Sundays and a few play their golf mid-week. Almost all members play at least once per week, with most playing a couple of times and a few virtually every day.


As a club we just about break even year to year. Another 50 members would make a huge difference (about £50k pa) to our finances but many more than that would be unmanageable as the course would be full at the times most people want or are able to play.


One of the main reasons I hear for people leaving one club for another is the inability to guarantee a Saturday morning tee time.


A joining fee (initiation) helps prevent such defections but at the core level of British golf such fees no longer exist at all. I would be very surprised if more than 500 out of the UK's 3000 golf clubs still have joining fees. Indeed, many clubs now attempt to lure in new members by offering a hefty discount on the first year's dues - a reverse joining fee!


Personally, I dislike the whole notion of an initiation. Club loyalty should be gained through offering the best possible member experience, not by holding a member to ransom over the potential forfeit of his joining fee.

Such fees, particularly at the eye-watering levels spoken of at American clubs - discriminate against the majority of people who simply cannot afford or justify the shelling out of a lump sum but might otherwise make excellent long-term members. To me, joining fees are a relic of the old snobbery attached to golf clubs and largely a way of "keeping out the riff-raff".

Golf - and golf clubs in particular - need to attract participants from a far wider demographic than ever before. A few clubs at the top end might be able to cling on to the old elitist model, but for the vast majority it means democratising the game and the industry.

Joining fees are fast becoming history. Hopefully dress codes will quickly follow!

[Sean_A]

700 member per 9 holes, that is what the German Golf Federation places as an upper limit on club membership. My practical experience is that about 1000 members per 18 holes already saturate the course. It stops being fun above that.

200 or 300 member per 18 holes is economically a waste of a good potato field.

Ulrich

But if a guy wants to pay a premium for an empty course what is it to anybody else?  Its difficult to place hard membership numbers on what makes for affordable dues.   That is why there are all sorts of different approaches/models.   I think 1000 members is well pushing the bursting point of prime weekend playing times.  So for me its fine to cut the membership by 300ish and eliminate visitor access to AM weekend times. 

Jeepers, if I had it my way the Muirfield system is what I would want....but ya have to have a course that people are willing to line up to play or basically say you don't care much about visitor fees if they are only allowed Tuesday & Thursdays.  Bottom line, I believe a great many clubs in the US will go the LuLu (GB&I) route for adding cash to the coffers without having to dramatically increase membership numbers.  Where things go badly wrong in the UK is clubs forget the course is mainly for members and instead chase visitor money far too much at the expense of the membership access.  Fees have been kept so low for so long that clubs are terrified of significant dues hikes to reinvest in courses or reduce heavy visitor play. 


Duncan...unlike you I still beleive joining fees are important to accruing reserves.  A course in decent shape and with a long term plan for improvements is essential and without cash it is all just talk.  Having a great reputation as a club with a good course doesn't just happen.  It takes cash, great forward planning, some good leaders and a willing membership.  Most clubs without a buy in will always be in danger of shutting their doors as a private club. 


BTW...I do think your club is unusual if it has 300 members and a packed course all weekend.  My club is easily twice as big and on most Sundays the tee sheet is wide open. The Saturday comp is busy as hell unless you don't mind playing in the afternoon.

Ciao

[Adam Lawrence]

700 member per 9 holes, that is what the German Golf Federation places as an upper limit on club membership. My practical experience is that about 1000 members per 18 holes already saturate the course. It stops being fun above that.

200 or 300 member per 18 holes is economically a waste of a good potato field.

Ulrich

How do you count a member, plus spouse and kid and all three play golf?

You don't. If the spouse or kid want to play golf, they join the club.

[Adrian_Stiff]

The loose rules are:

1000 members is fine for a UK golf club if you have no visitor play.


As soon as you have visitor play if you restrict to weekdays only then 700 is acceptable.


If you allow visitors on weekends then 500 is normal.


Everything is equated that a member plays 40 times per year (40,000 rounds per year is a highly used golf course), some clubs are more, most are less with 26 our average.


These are UK stats based on Summer and Winter available tee times which vary quite a lot with our 50/60 degree latitude, generally half the membership do not play more than 2 rounds in the winter.


Reddish Vale situation was rare but is being seen more and more. Effectively anyone that uses a golf course more than 40 times per year is a high user, if you have a lot of these it stymies you taking further members. Anyone playing 80 times effectively takes two member spots so you end up with tee hogging. At the end of the scale if every member played each day you could only have 150-200 members. The perfect member is one that pays his fees and does not play, but people don't do this for long.


The joining fee is very important and clubs that have dropped it have acted foolishly in my opinion. It prevents members leaving or hopping to other clubs, easy ways to join a golf club equal easy ways to leave the golf club. If you do a deal to attract members, another club sees it and they counter-offer an attractive deal also, most clubs have 200+ plus members that are driven by £$£ and not by the things we like on this site. It is very different up North to what it is in the South and if every club is wheeling and dealing it is much harder to hold your head up.


We still have a 'disguised' joining fee of £900, paid £150 over 6 years, but it is worded differently in that members get a loyalty bonus after 6 continued years. We also rebate our members for every round under 25 that they did not play. You still get someone that stops his DD in October after playing 31 rounds in the previous 6 months and if they break the terms and conditions they go on the '**** list' which we display on our website. Only one name added this year though.

[Mike Sweeney]

Adrian,


Thanks for that. Obviously there are variables for each club/course but that is a valuable post in terms of quality information.


Now back to R&A Rules Official bashing

[JESII]

Isn't the initiation fee thing really just a basic supply and demand conversation?


Steve Shaffer laid out the supply issue in Philadelphia's northern suburbs...the demand component is how many people are ready, willing and able to pay the full year dues?


If 4 of those courses went away, the other 14 or so would become quite healthy. Some of them have been to the brink, LuLu included. Only a couple would claim to be at full capacity and not in need (or maybe "want") of more members.








Sweeney - LuLu as my guest anytime you're back in the neighborhood.

[Adrian_Stiff]

What should really happen if you want to be fair is something like this.... The value of the company (golf course, land, clubhouse, machines, goodwill) is say £1,500,000. If it has 500 members then each in-coming new member should pay (the going rate £3000) to join, when he leaves the club, he sells his share at the going rate. Perhaps with a rule that the share has to be sold via the golf club with a bid/offer price.


Each member should own 1/500th of the company. You can play about with figures all you want too and have 1000 shares or any amount, but that capital is >>>what started the golf club against the value of what it is worth now. In Spain at many clubs you own a share and that entitles you to pay the membership fee if you want too. When some clubs dont have enough shareholders paying the annuals an annual fee of say 125% may be available for a non- shareholder

[Duncan Cheslett]

Reddish Vale situation was rare but is being seen more and more. Effectively anyone that uses a golf course more than 40 times per year is a high user, if you have a lot of these it stymies you taking further members. Anyone playing 80 times effectively takes two member spots so you end up with tee hogging. At the end of the scale if every member played each day you could only have 150-200 members. The perfect member is one that pays his fees and does not play, but people don't do this for long.

The membership profile of golf clubs is certainly changing; it has been that way for some while among the bread and butter clubs and is working its way inexorably upwards.


Members of golf clubs are increasingly serious golf addicts, who need their fix at least every few days. They will play to a decent standard and take part in numerous qualifying competitions. Typically, they are self-employed small business owners, tradesmen, shift workers, or newly retired.


The twice a month kind of guy has no need any more to be a member of a club. He can simply hook up with some pals and pay a green fee whenever he fancies. If he wants to play in Open Competitions he needs a CONGU handicap, but this can be obtained as a pay and play member at many clubs without any commitment at all.


The full member who rarely plays is almost extinct, replaced inevitably by an addict who wants to play three times a week, including Saturday morning.


Only three members' clubs out of fifty in my immediate vicinity still have initiation fees. I have played two of them - Stockport and Bramall Park - this year for £25 each time. Why would I (or anyone else) pay an initiation of £1750 plus annual dues of £1200 when I can play there for £25? It is an unsustainable model.

We still have a 'disguised' joining fee of £900, paid £150 over 6 years, but it is worded differently in that members get a loyalty bonus after 6 continued years. We also rebate our members for every round under 25 that they did not play. You still get someone that stops his DD in October after playing 31 rounds in the previous 6 months and if they break the terms and conditions they go on the '**** list' which we display on our website. Only one name added this year though.

I like this idea very much.

[Duncan Cheslett]

What should really happen if you want to be fair is something like this.... The value of the company (golf course, land, clubhouse, machines, goodwill) is say £1,500,000. If it has 500 members then each in-coming new member should pay (the going rate £3000) to join, when he leaves the club, he sells his share at the going rate. Perhaps with a rule that the share has to be sold via the golf club with a bid/offer price.


Each member should own 1/500th of the company. You can play about with figures all you want too and have 1000 shares or any amount, but that capital is >>>what started the golf club against the value of what it is worth now. In Spain at many clubs you own a share and that entitles you to pay the membership fee if you want too. When some clubs dont have enough shareholders paying the annuals an annual fee of say 125% may be available for a non- shareholder

If the joining fee was linked to share ownership and redeemable upon leaving it would make sense. I suspect that this was the intention when clubs were established 100+ years ago, but somehow the concept has been lost in the mists of time.


It is difficult to see how this could be reinstated now though.

[Adrian_Stiff]

Yes it would be hard to re-instate now but it could be done at many clubs at the £1,500,000 level especially if a club was in a potential development area. A club would have to change its rules, mem & arts but to raise money they could go to ALL 500 members and offer EACH MEMBER the right to buy a share at £3000. Any member may offer to buy further shares at £3000 in the event that the subscription is not fully taken up. Any unallocated shares are offered to members who wish to take an excess to their single share entitlement allocation.


It is likely several people may have 10 or more shares, you could restrict that no member may have any more than x shares or that each member may only have vote in order to protect the club.


For some people a £30,000 investment into a 2% share of a 150 acre land bank might be seen a nice way to pass on to grandchildren. Plus there would always be a 'value' to them if an unexpected raincloud dropped.


It is a possible way of UK clubs raising money should they so wish. I am pretty sure non-members might like to get their greasy paws onto some as well.