The demise of the initiation fee

[JESII]

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.


Ulrich

Ulrich,


My use of "in a given period of time" was meant to limit the window to a few years, maybe five tops. I did this because generally an explanation as to why people don't want to pay an initiation fee is that they are only in town for a few years.


So, I assume you are not suggesting that 90% of people relocate for work in a five year window. Using those parameters, in my experiences here in the suburbs of Philadelphia, maybe 10% of people relocate for work (discounting their initial big boy or big girl job).


Also, relocate obviously has to mean 'pick up and move residences more than say 20 miles?

[Wayne_Kozun]

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.

Duncan - how much would these joining fees be at these clubs?

[Sean_A]

Often times joining fees are equivalent to ~1 year of dues...at many fancy dan clubs...especially south...it can be much more like 2-5 (or more) yearly dues.  However, most clubs are happy to sign up a member let alone seek membership fees.  For many it comes down to there is only so much in the golf pot and many of these members don't spend much playing away from their club. 

Ciao

[Wayne_Kozun]

At the time I joined my club in Toronto it was an equity club (which has since changed) and I remember saying to a friend that this was a better deal than a traditional initiation fee club.  His response was that it takes X dollars to run a club and if it is all coming from the members then it doesn't matter when the ownership and fee structure looks like as it will all come from the members over time (at least for member-owned clubs).


When you think about it that is very true.  Whether there are initiation fees or not the club has to fund its expenses or go bankrupt.  If there are no initiation fees as a source of cash then over time the club will have to get the money from assessments to members, have higher annual dues or cut expenses (assuming that the club is a going concern in its present structure).  So does it really matter if you are going to belong to a club for 30 years or so (I have belonged to my club for 18 years)?  Maybe that isn't the case for an opportunist who wants to get in and out depending on short term economics but if we want a place to call home for the long term and we are staying put in our city then one shouldn't get overly fussed around fee structures.

[BCowan]

At the time I joined my club in Toronto it was an equity club (which has since changed) and I remember saying to a friend that this was a better deal than a traditional initiation fee club.  His response was that it takes X dollars to run a club and if it is all coming from the members then it doesn't matter when the ownership and fee structure looks like as it will all come from the members over time (at least for member-owned clubs).


When you think about it that is very true.  Whether there are initiation fees or not the club has to fund its expenses or go bankrupt.  If there are no initiation fees as a source of cash then over time the club will have to get the money from assessments to members, have higher annual dues or cut expenses (assuming that the club is a going concern in its present structure).  So does it really matter if you are going to belong to a club for 30 years or so (I have belonged to my club for 18 years)?  Maybe that isn't the case for an opportunist who wants to get in and out depending on short term economics but if we want a place to call home for the long term and we are staying put in our city then one shouldn't get overly fussed around fee structures.

This is a broad stroke brush and doesn't have to be, 1950s thinking.  Clubs can have monday outings, look at areas to cut wasteful spending.  Inititation is only relevant for a small section of private clubs in big markets or highly ranked tracks.   

[Sean_A]

At the time I joined my club in Toronto it was an equity club (which has since changed) and I remember saying to a friend that this was a better deal than a traditional initiation fee club.  His response was that it takes X dollars to run a club and if it is all coming from the members then it doesn't matter when the ownership and fee structure looks like as it will all come from the members over time (at least for member-owned clubs).


When you think about it that is very true.  Whether there are initiation fees or not the club has to fund its expenses or go bankrupt.  If there are no initiation fees as a source of cash then over time the club will have to get the money from assessments to members, have higher annual dues or cut expenses (assuming that the club is a going concern in its present structure).  So does it really matter if you are going to belong to a club for 30 years or so (I have belonged to my club for 18 years)?  Maybe that isn't the case for an opportunist who wants to get in and out depending on short term economics but if we want a place to call home for the long term and we are staying put in our city then one shouldn't get overly fussed around fee structures.

Wayne

The upfront cost is a huge issue.  Many will scoff at a £2000 commitment compared to a £1000 commitment..it is a deal breaker for a significant percentage of UK golfers....partly because they know its possible to avoid this extra cost(even if clubs spread it out over several years).  What these same people don't factor in is that less money generally means a course in lesser condition, a house with more ongoing issues not fixed properly and a less stable foundation for club finances.  Bottom line, there is very little loyality at most clubs these days...its a financial decision on how to spend leisure cash and many could care less about the club aspect or its future.  This is understandable given the fact that memberships are only just affordable for many.  I know I wouldn't ever contemplate paying the joining fee for the muckety clubs down south...it all relative.

Ciao

[Wayne_Kozun]

This is a broad stroke brush and doesn't have to be, 1950s thinking.  Clubs can have monday outings, look at areas to cut wasteful spending.  Inititation is only relevant for a small section of private clubs in big markets or highly ranked tracks.   

Most private clubs here, including mine, do have Monday outings.  So do at least some of the elite clubs in the US - I got to play Merion on a Monday outing several times.


You say initiation is only relevant for a small section of private clubs in big markets - a very significant number of people happen to live in the big markets.  Here in Canada 42% of the population live in the five biggest cities.  Initiation is relevant for all of the private clubs in Toronto. 

[Ulrich Mayring]

So, I assume you are not suggesting that 90% of people relocate for work in a five year window.

Young professionals most certainly do. Their rise through the ranks will inevitably slow down after a while, at which point they can easily stay in the same place for 10 or 20 years. That is why I wrote that golf clubs with initiation fees only go after the elderly.

Plus, most initiation fees over here are much higher than just a year's dues, so they are expected to amortise themselves only over 10 or 20 years. Which, again, is perfectly fine if you're only going after the elderly.

Finally, the whole calculation cannot be done such that you say "if I only move once every five years, I can pay an initiation fee over five years". The point is that you don't know the precise point in time, when you will have to relocate. It could be after two years (if your new job isn't satisfactory) or it could last seven years, if you take that long to hit the career ceiling in this particular company.

The whole point is that in today's business world you simply don't know when you will have to change jobs, only that it is very likely you will have to do it a couple of times throughout your professional life.

Clubs need to be way more flexible. If I know I am going to relocate next summer, then I'm going to have to terminate my long-standing membership at the end of this year. Because my club isn't flexible enough to let me out mid-year. So I would have to pay membership dues for the whole year, but could only play the first half. So my choice is between staying on and losing half a year of golf or leaving and playing public courses for a greenfee for the entire next year.

And the choice for my club is, do they want my fees for half a year or do they want nothing at all? Incredibly, their choice is always the latter!

Ulrich

[Wayne_Kozun]

@Ulrich - That can depend on what sector you work in.  Some sectors are very concentrated in one city. 


I work in the financial sector and live and work in Toronto.  Almost all of the people that I know that work in this sector are pretty stationary and have spent their entire professional careers in Toronto, unless their firm sends them to NYC or London for a few years.  But even if they do go away for a few years then they can put their golf club membership on hold.


It is the same for workers in the financial sector in NY or London.  It is highly likely that they will be in the same city for pretty much their entire careers.  The only exception being structural shifts, like London-based bankers that may be moving to the continent due to Brexit.


And finance workers are in the income bracket that can generally afford indulgences like belonging to private golf clubs.

[Ira Fishman]

I cannot speak to the situation in GBI/Europe because I do not know anything about the market.  In the US, the unfortunate reality is that too many good clubs in markets where demand has declined are stuck with cost structures that put them on a vicious spiral. They are not elite enough to sustain high initiation fees or dues, but then they need to "chase after" members by lowering both in order to try to support the non-golf aspects of the club--Clubhouse, restaurants, etc.  My guess is that if you looked at just the golf-related costs, the club is cash-positive, but then it faces related dilemmas: membership would rebel if it razed the Clubhouse, etc and club staff would argue (perhaps correctly) that cannot attract new members without the aspects of the Club that are money losers. The problems were exacerbated pre-2008 Recession when Clubs thought the Punch Bowl would never end so they borrowed heavily to build new Clubhouses.


Ira

[Duncan Cheslett]

Duncan - how much would these joining fees be at these clubs?

Between £1000 and £2000


That might not sound a lot by American standards, but it is a big deal-breaker for UK golfers, the majority of whom nowadays are not from the "professional" classes.


It is tough enough for guys in their 30s and 40s to justify to their wives spending half the weekend playing golf at a cost of £1000 per year plus at least another £1000 in consumables, competition entry, and drinks. That's before trips away or even the odd green fee at another course.


Initiation fees were universal when golf club membership was a sought-after thing, a sign of upward mobility, and a source of business contacts. At some clubs - the fancy ones on the smart side of town - this model still pertains. These are not necessarily the best golf courses, although the affluence of the club normally guarantees very good presentation.


At least 75% of clubs however, do not fall into this category, and have dropped their initiation in the last 15 years in order to attract new members as the old brigade dies off.


One thing that the fancy clubs have nearly all done is to introduce a very cheap membership for young guys under the age of 30 or 35, normally without any initiation. The clear hope is that by the time they reach early middle age they will be in a financial position to pay a joining fee, and so institutionalised into club culture that they will not want to leave.


I have anecdotal evidence however, that many young guys are taking advantage of these deals in the expectation that by the time they reach the age that the fee is due, it will either no longer be in place or that their threat of leaving will lead to it being quietly waived.


I suspect strongly that in many cases this is exactly what happens.


I know for a fact that very low handicappers are rarely asked to pay a joining fee.

[Adrian_Stiff]

Duncan - how much would these joining fees be at these clubs?

Between £1000 and £2000


That might not sound a lot by American standards, but it is a big deal-breaker for UK golfers, the majority of whom nowadays are not from the "professional" classes.


It is tough enough for guys in their 30s and 40s to justify to their wives spending half the weekend playing golf at a cost of £1000 per year plus at least another £1000 in consumables, competition entry, and drinks. That's before trips away or even the odd green fee at another course.


Initiation fees were universal when golf club membership was a sought-after thing, a sign of upward mobility, and a source of business contacts. At some clubs - the fancy ones on the smart side of town - this model still pertains. These are not necessarily the best golf courses, although the affluence of the club normally guarantees very good presentation.


At least 75% of clubs however, do not fall into this category, and have dropped their initiation in the last 15 years in order to attract new members.


One thing that the fancy clubs have nearly all done is to introduce a very cheap membership for young guys under the age of 30 or 35, normally without any initiation. The clear hope is that by the time they reach early middle age they will be in a financial position to pay a joining fee, and so institutionalised into club culture that they will not want to leave.


I have anecdotal evidence however, that many young guys are taking advantage of these deals in the expectation that by the time they reach the age that the fee is due, it will either no longer be in place or that their threat of leaving will lead to it being quietly waived.


I suspect strongly that in many cases this is exactly what happens.


I know for a fact that very low handicappers are rarely asked to pay a joining fee.

Spot on Duncan -I think the very low handicap situation is happening at 99% of clubs and probably always happened...somewhere like Sunningdale would never budge, they even made the "stars" attend interviews and start as 5 day members. Sunningdale are kind to greenkeepers and pro's though. Our Under 30 situation is that you do not pay the 'joining fee' (you go straight to loyalty), the hope is that this keeps the Under 30s, however the real truth is that unless they don't have a wife or baby you are always going to struggle to keep these no matter what the carrott is. Keeping the 25-35 year old's is just plain tough, most give up 'membership' with the underlying factor being time. if they keep playing they might go into the 0-10 rounds per year bracket.
In our area (Bristol and SW) I can't think of a club over £1000 joining fee...£500-£1000 is the range.

[Duncan Cheslett]

This of course is compounded by the elite clubs attempting to poach your best young players with the offer of virtually free membership and enhanced practice facilities.

[Mark Chaplin]

Sean are you saying if you were living in the south east and liked a club with a joining fee that alone would put you off? I'd be more concerned about joining a strong financially viable club than a cheap one.


I believe the current situation at RCP is everyone pays the appropriate joining fee according to their age. You then pay the remainder of the full fee at 30, however 10% is knocked off for every year of membership. I maybe wrong but I think that's the case.


We don't poach anyone as we don't play competitive league matches, etc.

[Sean_A]

Chappers

Nope...if the fee was too high I would give it a miss just as I do where I live now.  I didn't join two clubs because I thought the joining fee was too much.  I am not that bothered about club membership.

Ciao 

[Ulrich Mayring]

Well, RCP is one of those clubs, where I would fall over myself just to be allowed to join. Initiation fee or not, who cares when you can join RCP. However, that's a short list of golf courses with that pedigree. Most have an average product - how's that for tautology of the month?

Ulrich