The demise of the initiation fee

[Adrian_Stiff]

Apologies if this has already been raised by others, but one initiative that I recall receiving quite a lot of discussion a few years ago was the EXIT fee, as opposed to initiation or ENTRY fee - i.e. you paid a lump sum on resignation (but generally not death!). This model had the merit of attracting in new members, and locking them in to the club, but equally clearly had other potential drawbacks. Any thoughts?

I would think you would have NO members at all with that idea.

[Mike_Young]

Thanks for all of the replies and suggestions.  Here is what I am saying.  Let's say it used to be in the USA that a club begins and has maybe 30 members who might have paid $10,000 initiation to join.  That's 3 million dollars.  Then with attrition and new members at an estimated rate of 15 per year, that's another $150,000 each year even if initiation had never gone up.  Of course the top 5 clubs or so in a state will always have some type of initiation.  It's the others that are being hit up side the head with this.  It changes maintenance level, clubhouse conditions and so much more. 

[JESII]

Agreed...unless the club figures out how to run a little more efficiently and reallocates that surplus to capital expenditures.  But in total, yes you're correct, it's a tough business right now.

[BCowan]

Thanks for all of the replies and suggestions.  Here is what I am saying.  Let's say it used to be in the USA that a club begins and has maybe 30 members who might have paid $10,000 initiation to join.  That's 3 million dollars.  Then with attrition and new members at an estimated rate of 15 per year, that's another $150,000 each year even if initiation had never gone up.  Of course the top 5 clubs or so in a state will always have some type of initiation.  It's the others that are being hit up side the head with this.  It changes maintenance level, clubhouse conditions and so much more.

Mike,


Even a top tier Detroit club with a large initiation and waiting list closes it's clubhouse down 3 months a year. That is wisdom. The problem with 2nd and 3rd tier clubs is the initiation and boozing in men's grill of yesterday ain't coming back. Those items propped up the draining clubhouse expenses.  My friends club in the Flint area loses tons of money on heating and cooling.  They have a healthy membership but if they don't address this with closing it down longer in the winter they will be in a tough spot next downturn. 


Mike,  ur club is in a wealthy college town ur insulated. 

[Mike Hendren]

  Let's say it used to be in the USA that a club begins and has maybe 30 members who might have paid $10,000 initiation to join.  That's 3 million dollars.

You Georgia Tech guys still using a slide rule?

Mike

[Mark Chaplin]

Duncan the problem with no joining fee is guys are joining a club intending to be there for two years. They max out on the golf and leave after two years to do the same elsewhere. The course gets loads of use but your revenue per round drops.

[Ulrich Mayring]

Out of curiosity, why wouldn't they max out on the golf for four years or six? What's behind that idea of leaving a perfectly fine golf club after two years?

Ulrich

[JESII]

  Let's say it used to be in the USA that a club begins and has maybe 30 members who might have paid $10,000 initiation to join.  That's 3 million dollars.

You Georgia Tech guys still using a slide rule?

Mike

Good!
Wasn't sure what the right needle was[/size][size=78%]...[/size]

[Mike_Young]

  Let's say it used to be in the USA that a club begins and has maybe 30 members who might have paid $10,000 initiation to join.  That's 3 million dollars.

You Georgia Tech guys still using a slide rule?

Mike

oops..meant 300 members....I can use a slide rule but I never got out of that school...

[Duncan Cheslett]

Duncan the problem with no joining fee is guys are joining a club intending to be there for two years. They max out on the golf and leave after two years to do the same elsewhere. The course gets loads of use but your revenue per round drops.

I came to golf after the demise of the joining fee at most clubs. When I started playing, I looked round for a local club to join and simply picked the one with the most interesting golf course and which didn't have a joining fee.


There is no way that I, as a beginner player, would have stumped up a fee to join a club when I didn't even know whether I was going to take to the game (or the club). More importantly, I didn't need to as 90% of local clubs had no joining fee.


In the subsequent years, I have become increasingly happy with my choice. There is not a local club that I would rather be a member of because we have by far the best course. Even members of the posher clubs (the ones with joining fees) freely admit that Reddish Vale is a better golf course than theirs.


We have our share of vagabonds who join for a year or so and then move on. The vast majority of new members however, stick around for exactly the same reasons as I do - the quality of the course we enjoy every week and the camaraderie we share as like-minded spirits and serious golf addicts. I've not seen too many people leaving for trivial reasons or simply to save a few quid elsewhere.


If Reddish Vale had had a joining fee in place seven years ago I would not have joined. I am pretty sure that none of the 100 or so members we have recruited and retained since then would have joined either. The club would now be bankrupt.


The idea that a joining fee promotes 'loyalty' and aids member retention might well have had foundation 20 years ago when golf was booming and all clubs had full memberships, but times have changed dramatically for most.


I often hear the argument that all golf clubs should have banded together years ago and retained joining fees en masse. There may well be merit in this line of thought, and maybe clubs would have been less driven to chase visitor income, avoiding the downward spiral in green fees which has led to club membership becoming an even less attractive proposition to most occasional golfers.


Or maybe clubs would be finding it even more difficult to attract new members than they currently are.


Whatever - it didn't happen!


As in all other areas of life, there is in golf a widening divide between the elite clubs and the rest. It is all very well for a member of a Top 100 (or 500) club to declare that joining fees are essential to shore up the reserves and to ensnare members for life, but among the other 3000 or so clubs in the UK there are no reserves and life has simply become a battle to survive the year.


For the majority of clubs, joining fees have gone and there is little prospect of them returning. Any club trying to re-instate a joining fee will find that they recruit no members.


I am amazed that so few golf clubs have gone out of business so far. Consolidation in the UK golf industry is long overdue.


I expect to see many suburban golf courses become housing developments in the coming years. Maybe joining fees among the remaining clubs may then make a return!




Edited to add;




What about the idea of a one-year 'trial membership' period?   Full benefits of membership at the normal price for 12 months, with the joining fee applicable upon renewal.  The fee could then be spread over the next 3-5 years.  This would at least get over my initial objection to the joining fee - "How do I know whether I'm going to want to stick around?"


It is then up to the club to ensure that the experience of those on the scheme is so good that they want to pay the fee in order to remain.

[Sean_A]

My club offers a winter membership at a very reasonable cost.  If folks decide to stay that fee is put against the cost of membership for the following year.  I think its a clever marketing ploy because almost all of these prospective members will have been used to a horrible wet course during the winter.  It really allows these folks to experience the best aspect of membership to a links.

Ciao

[Adrian_Stiff]

The UK situation is that the better clubs still do have a joining fee.


I can understand the Northern situation where the pricing of golf is cut throat and it gets very hard not to do similar things that other clubs are doing or have done to compete in the market place.


I don't think there will be a total demise of the joining fee, since demise means 'death' but what Duncan describes could still spread further into other regions.


There is no doubt in my mind the words joining fee is hated by persons thinking of joining a golf club, if the JFee is £1000 then allowing the prospective member to pay over 5 years at £200 takes away a lot of the 'will I like it there' worry. In our area most perhaps ALL the clubs do allow the JFEE payment staggered.


Tee off times/ Golf Now is one of the biggest worries to me as 1700 courses compete via an online low price chase. The 1700 courses tend to be the worst of 3000 courses but there are still a few good uns in there that have dropped their pants and shown the world their lowest price.


Over the last few years there are quite a lot of closed courses, mainly 9 holers, newer ones or remote courses. Most golf clubs have a lot less loyalty than yesteryear and if a club got into trouble I think it could be really hard to rally member support.

[Ulrich Mayring]

Joining fees aren't sustainable anymore, because people are becoming increasingly mobile. Not necessarily of their own accord, but because the business world demands it. Today's young professionals cannot count on staying with one company in one place for longer than a few years. Even if you're not after a high-profile career, you can lose your job any day and may be forced to relocate.

Most people, who are able and willing to stay put and live in their own house, are retired or close to it. They tend to have a bit of money as well, so clubs with joining fees are going after this elderly crowd.

Ulrich

[JESII]

I don't believe more than a single digit percentage of people actually relocate for work in any given period of time. This isn't hurting the private club business much. This single digit percentage, added to the single digit percentage that no longer have it subsidized by their employer plus a different family dynamic (dual income households and only one interested in golf) gets us a 20% to 25% shortfall.


In the Philly area, if 3 or 4 clubs went out of business, the rest would be as healthy as they want to be.

[Peter Pallotta]

Jim's post has me thinking: whether or not the news of the initiation fee's passing is a tad premature, there is no doubt that we are in the midst of a profound sociological shift, driven by a confluence of technological, economic, environmental, labour market, and corporate change -- all in the context of a global rebalancing of historical imbalances between north and south, and between east and west. The end result, I think, is that in North America we will see that, for the first time in 100+ years at least, the *next* generation will not be better off, and indeed will likely be much worse off, than the generation before. All of which is to ask: what specifically does/must a traditional golf club membership (and the initiation fees that goes with it) offer this next generation of golfers in order to meet their needs in this new reality?

[cary lichtenstein]

Here in Jupiter/Palm Beach Gardens, the imitation fee is alive and well, clubs are alive and quite healthy, fees range from $90,000 to $175,000.

[Mike Sweeney]

For the first time in 100+ years at least, the *next* generation will not be better off, and indeed will likely be much worse off, than the generation before. All of which is to ask: what specifically does/must a traditional golf club membership (and the initiation fees that goes with it) offer this next generation of golfers in order to meet their needs in this new reality?

Times change but that does not necessarily mean worse off. There is a simultaneous thread about "Are course conditions too perfect?"


http://www.golfclubatlas.com/forum/index.php/topic,64842.0.html

Back in the old days, my in-laws were Founders of a swim and tennis club in Connecticut. When my Mother-in-Law passed away, we got the original $5000 bond paid back, no interest, that they and roughly 25+ other families put up to start the club. That does not happen today as most new clubs are profit driven. There has never been more access to private clubs, munis are being rehabbed, and the "country club for a day" models that may not be our favorites here at GCA, serve a big slice of the golfing population.


Augusta National Golf Club has MORE female members than Golf Club Atlas!! As the Great Terry Lavin stated:

We are a bunch of mutts but we are stuck in the same kennel.

[John Foley]

Rochester, NY is a fascinating study here.    Rochester is a small metro area with an abundance of excellent+ golf courses.    I don't know what they charge for initiation up there, but I'm guessing they can charge a pretty hefty fee due to the quality of places like Monroe, CCR, Oak Hill, etc.


And it's a very interesting city (I have 2 brothers living there).   They've been crucified by economic factors - Kodak is almost gone, Xerox is tiny compared the the old days, Global Crossing went kaput.   Yeah, Wegmans is there, but it's a grocery store.


And they have a pretty short golf season.   Probably one of the reasons Oak Hill has bowling alleys.

The courses mentioned all still have initiation fees but they also provide a pretty generous period of time to pay it. Wegmans is up and down the east coast. U of R is a large employer and Rochester is loaded with successful businesses. Constellation brands is one.


Oh, This year is not the norm but the season for the most part is 4/1 to 11/30. It's not Antarctica by any means.

The demise of the Rochester area is highly exaggerated. The ability of the white-collar worker to find significant employment thru the EK , Xerox & B&L downturns is pretty amazing.


As for the courses & initiation fee issue, there is Oak Hill, CCR & Monroe in that order. Sure all are full with, albeit short, waiting lists. The rest of the tiers - Cobblestone Creek, Locus Hill, Brook-Lea, Ridgemont, Penfield, Midvale all have significantly reduced the initiation fee. Monthly dues are all there though as they can't operate w/out that annual $$. Outside the top three it's definitely a buyers market. 


Always wondered why there is no high quality golf only course w/ no large clubhouse footprint in the area. Dual memberships with he big 3 w/out the whole massive clubhouse given the passion & talent for high level golf in the area I would think it would thrive.

[Ulrich Mayring]

I don't believe more than a single digit percentage of people actually relocate for work in any given period of time.

Not sure where that belief is coming from. Where I live a single digit percentage of people have never relocated for work. It's probably a question of regionality, but I'm fairly confident speaking for larger cities and metropolitan areas in continental Europe.

Many golf clubs here in Frankfurt have about 30% members, who only join for the couple of years that they work here, before their company sends them elsewhere. Many Asians fall into that category and there are some good players among them. They're winning the club championship in their German club and then go back to Korea the next year. Times they are a-changing

Ulrich

[cary lichtenstein]

In Jupiter and Palm Beach Gardens where I live, initiation fees and gated golf communities are a way of life. $100,000 to $175,000 are normal

[Mike Sweeney]

Here in Jupiter/Palm Beach Gardens, the imitation fee is alive and well, clubs are alive and quite healthy, fees range from $90,000 to $175,000.

Cary,


Did the "imitation fee" really jump $10,000 in two days ?


Maybe we should all go to cash?


Apologies to Ran. I promised but come on....

[BCowan]

Sweeney,

   What do you think of this double wide?  Music on the range and putter, with a chef/cook grilling on the weekends! 

[Mike Sweeney]

Sweeney,

   What do you think of this double wide?  Music on the range and putter, with a chef/cook grilling on the weekends! 

I am a Yale member for many years, and I support the carts at Yale, along with the push carts, and bag carriers (our own bags, not caddies). There is no way that Yale should ask the members of the class of '70 to walk that course on a hot and humid day like today.


With 15,000+ courses in the USA, there are lots of options out there. Just look at Ran's last two reviews, Cape A and a Pete Dye course with a MONSTROUS clubhouse. I obviously prefer Cape A, but I am glad that the Keswick golfers have a place to play so that they stay out of Maine


My slightly snarky post to Cary is similar. I am glad that the Mr and Mrs Seinfeld have COUNTRY CLUBS with nice buffets to play in South Florida, but my wife will never leave Broadway for Del Boca Vista, so that is found money for The Sweeney's !!


Fairways and greens to all.

[Duncan Cheslett]

I played last night in an inter-club match against Mottram Hall, a corporate hotel based course which operates its membership on a points based system involving minimal initial outlay.


My opponent voiced his dissatisfaction with the course and his desire to join a proper members' club.  We talked through the various options near his home in the leafy suburbs of north Cheshire, and he dismissed them all because he was not willing to pay a joining fee.


It turned out that he is a partner in a GP practice only a mile or so from Reddish Vale, and he has always loved the course. He also knows well the half dozen or so doctors we already have as members. It looks like I may have made a sale!

If we have reached the stage that well-paid professionals such as doctors are refusing to pay joining fees then the demise of the initiation fee might well be nigh, in this part of the world at least.

[Matt MacIver]

I just read somewhere that Tom Brady had to wait a few years and pay +$100k to join Brookline.  IMHO there will always be a few $$$ clubs in every zip code, and thus there will always be a second tier of clubs that fill the gap and only charge $$, and $.  There may be less of the $ clubs going forward but i don't think the $$$ and $$ are going anywhere - golf is but a part of these groups' social circle.