Private Club Rate Raise

[Rick Sides]

I was talking to a few friends and we are all members of smaller private clubs . We were talking about rate increase at our clubs. I saw Jerry K post about trail fees and my friend course charges that for walking before 10 and it doesn’t include a pull cart. Also someone said  their  cart fees are going up to 60 bucks a round and they doubled the food minimum . I also know one club dues is going up over 30 percent a year . I was wondering if others are also experiencing rate hikes ? I know someone will say “ that’s the price of being part of a private club. “
However are others also seeing this and Is this model sustainable given the current economic climate ? 

[John Kavanaugh]

A dime a stroke ain’t much extra to provide a living wage.

[Rob Marshall]

At my small private club in Western NY we have seen dues and cost increases but nothing as high as you are describing. Our dues including a capital charge is $720 a month plus tax. Our food min is $1200. Cart fees I think are $27 per person for 18 holes. I walk and there is no fee for that. Driving range annual fee is around $300. Locker fee is around $200. We also have to pay for guest passes. I think it's 4 for $200.


Occasionally we get assessed for course improvements like a recent bunker renovation. Our Super needs new facilities. Where they work is a complete disaster. I think were looking at 1.2M to get that done. He and his staff deserve it. We have to vote on any assessment I think that is over $200.


Hope that gives you some information.

[Wayne_Kozun]

I was wondering if others are also experiencing rate hikes ? I know someone will say “ that’s the price of being part of a private club. “
However are others also seeing this and Is this model sustainable given the current economic climate ?

What do you mean by "the current economic climate"? It seems that the wealthy in America are doing very well and the poor are struggling - what is being called a K shape recovery.  Third quarter GDP growth was released last week and it was very strong at 2.8% real.  Add that to inflation of about 2.5% and nominal growth is up 5.3%.  And it seems that demand for private golf clubs exceeds supply ever since Covid hit, especially in places like Florida.  So the model is sustainable while that continues?
At my club in Toronto we have had some increases in dues each year, but less than 10%.  The food minimum was raised but it had been the same for 20 years.  The big increase has been initiation fees have gone from about $15k in 2019 to about $45 now, and we have a very long waiting list which we haven't had for decades. And the Canadian economy is much weaker than the US right now.

[David_Tepper]

The costs of running a club (or just about any business for that matter) have gone up for the past couple of years. Insurance premiums have really spiked. So have wages, utilities, the cost of food, etc. Any club that is borrowing money has seen the interest rate charged on the loan really increase over the past 2-3 years.

[Chris Hughes]

A 30%+ dues jump yr/yr it's almost always driven by large-scale clubhouse construction. 


When the "project" is finished and all the new "amenities" come on-line -- often, if not most of the time, at the end of the first full-year of operating/staffing/maintaining all the new stuff it becomes apparent to management & board that the cost of ownership is higher than expected, and the anticipated F&B revenues are lower than expected...double whammy = 30%+ dues bump.

[Craig Sweet]

$1200 a month for food?  Your food cost you more than your golf?  So, you are a member at a restaurant or a grocery store?

[Wayne_Kozun]

$1200 a month for food?  Your food cost you more than your golf?  So, you are a member at a restaurant or a grocery store?

I am guessing that it is $1200/year. 

[Chris Hughes]

$1200 a month for food?  Your food cost you more than your golf?  So, you are a member at a restaurant or a grocery store?

I am guessing that it is $1200/year.

For sure, and that's high.


Hey Craig, who are you looking to lock up?

[Rick Sides]

I will tell you as a middle class American the cost of inflation is far more progressive than my raise each year and it’s not even close ! The 30 percent hike for the club only includes a redo of the men’s locker room . I could understand if it was a major course makeover or a new clubhouse etc. I am also amazed at how many new high end private clubs are being built across the US so it must mean that for now the increases are sustainable .

[Rob Marshall]

$1200 a month for food?  Your food cost you more than your golf?  So, you are a member at a restaurant or a grocery store?

Annual, I prepay it since I winter in Florida. It was $900 for about 20 years and was bumped last year like like Wayne's club,

[Rob Marshall]

I will tell you as a middle class American the cost of inflation is far more progressive than my raise each year and it’s not even close ! The 30 percent hike for the club only includes a redo of the men’s locker room . I could understand if it was a major course makeover or a new clubhouse etc. I am also amazed at how many new high end private clubs are being built across the US so it must mean that for now the increases are sustainable .

We over paid for our locker room when we did a renovation. Waste of money. How long are you actually in there unless it's also the men's grill. Take a look at the first season of the netflix golf show. Oak Hill still had metal lockers in 2023.

[John Kavanaugh]

Every single individual who makes it possible for us to play this game also deserves to live as middle class Americans. Pay the damn fees.

[Ira Fishman]

Every single individual who makes it possible for us to play this game also deserves to live as middle class Americans. Pay the damn fees.

JK,


I could not agree more, but I fear that the additional dues/fees we pay are not making their way to the pros, greens crew, starters, servers, and bag room attendants.


Ira

[John Kavanaugh]

Gentlemen don’t discuss economics. My apologies.

[Rob Marshall]

Every single individual who makes it possible for us to play this game also deserves to live as middle class Americans. Pay the damn fees.

JK,


I could not agree more, but I fear that the additional dues/fees we pay are not making their way to the pros, greens crew, starters, servers, and bag room attendants.


Ira

Where do you think they are going?

[Ira Fishman]

Every single individual who makes it possible for us to play this game also deserves to live as middle class Americans. Pay the damn fees.

JK,


I could not agree more, but I fear that the additional dues/fees we pay are not making their way to the pros, greens crew, starters, servers, and bag room attendants.


Ira

Where do you think they are going?

I know. I suggest that you ask your club managers.

[Rob Marshall]

Every single individual who makes it possible for us to play this game also deserves to live as middle class Americans. Pay the damn fees.

JK,


I could not agree more, but I fear that the additional dues/fees we pay are not making their way to the pros, greens crew, starters, servers, and bag room attendants.


Ira

Where do you think they are going?

I know. I suggest that you ask your club managers.

Great, thank you.

[Rick Sides]

Rob,
I think I know where the funds are going . All the guys I talked to belong to belong to private clubs owned by an individual so I’m guessing he/she are making bank !!!!!

[Rob Marshall]

Rob,
I think I know where the funds are going . All the guys I talked to belong to belong to private clubs owned by an individual so I’m guessing he/she are making bank !!!!!

I would hazard to guess that the majority of private clubs are owned by the members like mine. But i could be wrong.

[SB]

As a golf course owner, I can assure you that the cost of running a golf course is up dramatically.  Even for member owned non-profit clubs.  At nearly all clubs, labor is the largest single line item, in some cases almost 50% of total expenses.  For some positions at my course, the starting wage is up almost 100% since the start of COVID.  Other positions have not been affected as much, but they are up as well. The number of hours is also up, as the increase in rounds means more pro shop staff, more outside staff, and more restaurant servers.  That's not an increase of thousands of dollars, it's easily hundreds and hundreds of thousands of dollars or certainly more than a million dollars for many clubs. 


Insurance is up by 2X or 3X, property taxes are up, mower prices have doubled and you can now easily pay a hundred thousand dollars for a single mower.  And there is NO used equipment at any price.  Any project requiring outside contractors is up 50%.  Sorry, but we are not immune from inflation and our heavy reliance on labor means we are are seeing more inflation than other industries.



If your private club has $5M in expenses, then a 20% increase overall is a million dollars.  And 20% could be just one year's hit. 
 
If your club was full, then the number of members hasn't changed, so clubs (even non-profit) can either cut services or raise fees, and nobody is looking to cut services right now.  Quite the opposite, members are demanding better conditions to keep up with the club next door.  If you divide $1M by 400 members, that's $2,500 a year per member.


Throw in a dining room renovation, increased maintenance, or an irrigation project and now you're talking real money. 


Sorry to break it to you, but it's math.

[A.G._Crockett]

As a golf course owner, I can assure you that the cost of running a golf course is up dramatically.  Even for member owned non-profit clubs.  At nearly all clubs, labor is the largest single line item, in some cases almost 50% of total expenses.  For some positions at my course, the starting wage is up almost 100% since the start of COVID.  Other positions have not been affected as much, but they are up as well. The number of hours is also up, as the increase in rounds means more pro shop staff, more outside staff, and more restaurant servers.  That's not an increase of thousands of dollars, it's easily hundreds and hundreds of thousands of dollars or certainly more than a million dollars for many clubs. 


Insurance is up by 2X or 3X, property taxes are up, mower prices have doubled and you can now easily pay a hundred thousand dollars for a single mower.  And there is NO used equipment at any price.  Any project requiring outside contractors is up 50%.  Sorry, but we are not immune from inflation and our heavy reliance on labor means we are are seeing more inflation than other industries.



If your private club has $5M in expenses, then a 20% increase overall is a million dollars.  And 20% could be just one year's hit. 
 
If your club was full, then the number of members hasn't changed, so clubs (even non-profit) can either cut services or raise fees, and nobody is looking to cut services right now.  Quite the opposite, members are demanding better conditions to keep up with the club next door.  If you divide $1M by 400 members, that's $2,500 a year per member.


Throw in a dining room renovation, increased maintenance, or an irrigation project and now you're talking real money. 


Sorry to break it to you, but it's math.

Great post; thank you.


My club (member owned) went through a very lengthy and very careful process in 2022 and 2023 to determine the next steps for both facilities upgrades and improvements.  The determination was made that there would be a bunker renovation, a new pool and pool house to replace the original ones from 1966, and 4 dedicated pickleball courts.  (The pool/pool house and bunkers were much more deferred maintenance than just capital improvements.)


There was a $4k per membership unit assessment, and the bunker work, which required no permitting, proceeded last winter. The financing of the project also included a $50/month dues increase that would take effect when the demo on the existing pool began.


By the time we closed the pool for the season and had all the permits in place to begin that work, costs had gone up so much that the club had to borrow an extra $1 million and change above the projections from just a year earlier.


All of this has happened at an extremely well-run and financially healthy member-owned club.

[Tommy Williamsen]

Over the last fifteen years, I have belonged to four member-owned clubs and one owned by the group that built the course. All four were in financial trouble. One owner changed the ethos and raised dues substantially. Many members resigned, but by all accounts, the club seems to be making money.


One was purchased by a member who raised dues and fired half a dozen employees. The club lost members and loses money every year.


One was purchased by a company that owns many other clubs. They increased the membership from 350 to 400 and is solvent. We had spent $2,000,000 regressing the course and increasing the size of the clubhouse. Even with a substantial dues increase and assessment, we lost money. The club was mismanaged.


Another was purchased by an individual who owns a dozen other courses. He invested a million dollars into the club and did not raise dues. This past year, the club made money for the first time in its existence. The course was too hard to attract many members, so the new owner created a new membership category that attracted new members.


I'm not sure what all this means, but there certainly are fewer member-owned clubs.

[Ian Mackenzie]

Restaurant prices up.
Labor rates up.
Food prices up.


Club dues up.


Market up.
Golf play up.


Club initiation fees up.


Inevitable headwinds will return and that will wipe away much of the "irrational exuberance" we have seen.
At the very least, we may see some right-sizing of these fee trends.

[Pierre_C]

My home club increased monthly dues by 10% each of past 2 years and initiation by 35% this year. We have a great caddy program, and minimum caddy 'tip suggestion' increased by 15%. Carts are now $47.50 per person versus $42.00 2 years ago.


Inflation is global, so there isn't much a club can do when operating costs increase across the board.  I'm more than willing to pay the increases in order for the club to provide and maintain golf conditions.