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JC Jones

  • Karma: +0/-0
In this article, http://www.azcentral.com/business/articles/2011/04/25/20110425country-clubs-membership-fees-lowered.html, Brad Klein says:

Quote
"That's capitalism," said Klein, a retired political-science professor. "A golf-club membership is a commodity. It has no inherent value."

Nevermind his Marx-ian understanding of a commodity (not surprising given he was a poli-sci professor), is he right that golf-club memberships are (at least somewhat) fungible and that the only differentiation done by the consumer is price?

Ran seems to think that the clubhouse and the amenities of Sassafras will make it more desirable than, say, a Hidden Creek or Galloway National.  Sure, the architecture and quality of the golf course may matter to some, particularly those on this website, but for the vast majority of people, what are the determining factors in purchasing a golf club membership?  Or, has their been a commoditization in the golf-club membership market?
I get it, you are mad at the world because you are an adult caddie and few people take you seriously.

Excellent spellers usually lack any vision or common sense.

I know plenty of courses that are in the red, and they are killing it.

Steve_ Shaffer

  • Karma: +0/-0
Re: Golf Club Membership - Commodity or Differentiable Product?
« Reply #1 on: May 04, 2011, 09:00:46 AM »
Golf club memberships were a big commodity in Japan in the 1980s:

http://www.businessweek.com/magazine/content/06_43/b4006102.htm
"Some of us worship in churches, some in synagogues, some on golf courses ... "  Adlai Stevenson
Hyman Roth to Michael Corleone: "We're bigger than US Steel."
Ben Hogan “The most important shot in golf is the next one”

Ken Moum

  • Karma: +0/-0
Re: Golf Club Membership - Commodity or Differentiable Product?
« Reply #2 on: May 04, 2011, 09:19:52 AM »
In my market, Topeka, Kan., it is definitely something that golfers see as a commodity with the price determined by the market.

When you have a golf management company http://greatlifegolf.com/index.shtml offering this deal it's pretty hard to get people to pay real country club prices:

Quote
Memberships are available at all eight (8) GreatLife Golf & Fitness locations. Each member (in good standing), his/her spouse, and children are free to use the club facilities at any of the seven locations any time during regular business hours. There are additional fees for members and guests to play miniature golf or participate in fitness classes at the Maple Creek location.

Member Benefits
•No Green Fees or Assessments
•7-day Advanced Tee Times
•Club Charge Privileges
•Member-only Golf and Social Events
•Men’s, Women’s and Couples’ Golf Leagues
Membership entitles members to privileges at Berkshire, Prairie View, Lake Perry, River Oaks, Maple Creek, Western Hills, Chisholm Trail and Fitness 24/7.

Membership Only (Plus Tax):
•Annual Payment - $348
•Monthly Bank Draft* - $29
•Monthly bank draft will run through March 31.
Membership with Private Cart** (Plus Tax):
•Annual Payment - $852
•Monthly Bank Draft* - $71
*Monthly bank draft will run through March 31.
**Private Cart privileges are only offered on an annual basis with a membership.

As tough as the business is in general, having golf and fitness for your family @ $29.00/month on one end, and having the top-end country club offering all kinds of deals at the other end, is part of what doomed my club to receivership.

We are now a semi-private, run by a management company the bank hired.  My dues are $99 a month, and new members can join for about $900 a year. The bank would like to sell it--I think--but the buyers so far aren't offering their price, which I suspect is only about $1 million.  That sounds like a good deal on a Donald Ross course, but in this market, maybe not.  

K

Over time, the guy in the ideal position derives an advantage, and delivering him further  advantage is not worth making the rest of the players suffer at the expense of fun, variety, and ultimately cost -- Jeff Warne, 12-08-2010

Keith OHalloran

  • Karma: +0/-0
Re: Golf Club Membership - Commodity or Differentiable Product?
« Reply #3 on: May 04, 2011, 09:20:25 AM »
JC,
I am not sure if this is what you were going for, but the first consideration (in my opinion) on LOng Island, is the invite. I would love to join Garden City, or Shinnecock, but i check my mail every day and so far no luck!
After the invite, the second phase for younger people becomes the pure economics. I am a member of a golf only club that closes for the winter and therefore the bills stop for several months. A good friend of mine, is the same age, accepted an invitation to join a "Country Club" which has an arguably better course than mine, a pool, paddle tennis, squash, a year round club house, year round minimums and year round bills. He has no kids and  doesn't play tennis. He is often left wondering if he made the right deicsion with his club. With the economy the way it is, I think people would rather join a club that only has what they want i.e. golf, putting green, and bar.
To be fair to both of us, I got lucky that the only place that would have me was a Golf CLub, and at the time he joined, the Country CLub was the only prospect on my friend's horizon as well.

Brent Hutto

Re: Golf Club Membership - Commodity or Differentiable Product?
« Reply #4 on: May 04, 2011, 09:26:11 AM »
Are we talking about 50 grand initiation fee and 8 grand a year in dues type clubs?

Or is it 5 grand initiation fee and a couple hundred a month type clubs?

Those might both be "Country Clubs" but there's no reason to assume the same economic decisions underlie each of them. The latter are almost certainly viewed as commodities by some potential members. Harder to say if the same is true of the former.

John Kavanaugh

  • Karma: +0/-0
Re: Golf Club Membership - Commodity or Differentiable Product?
« Reply #5 on: May 04, 2011, 09:31:30 AM »
Everyone was happy when Walmart first moved into town. 

Dan Byrnes

  • Karma: +0/-0
Re: Golf Club Membership - Commodity or Differentiable Product?
« Reply #6 on: May 04, 2011, 09:35:12 AM »
I believe it is very dependent on location.  In Westchester and Long Island, Northern New Jersey it doesn't appear you can choose your club as much as they still have to choose you.  That area due to economics and populations still has demand.  I imagine a lot of big metro area are like that.  Certainly though even in those metro area there are weaker competitors who are struggling and access is easy, but for premier clubs invitation is the toughest hurdle.

In my area the clubs are more of a commodity.  Access is open for anyone who can write the check pretty much, there are different "commodities" in so much a high end, middle of the road and low end clubs.  I have personally seen the member and prospective member moving much more to the commodity mind set in the last decade.

When my club got in trouble due to mismanagement over a long period members didn't want to step up and save their club, the left and went down the street to a similar club that was cheaper and was financially sound.  I believe these same people would Move again if the price was right or a combination of price and amenities.

So in my opinion clubs being commoditized if very much location specific.

Dan
« Last Edit: May 04, 2011, 09:37:48 AM by Dan Byrnes »

Brent Hutto

Re: Golf Club Membership - Commodity or Differentiable Product?
« Reply #7 on: May 04, 2011, 09:35:26 AM »
Funny, in my town I heard nothing but bitching when Wal-Mart arrived. The bitching hasn't let up since.

Bill Brightly

  • Karma: +0/-0
Re: Golf Club Membership - Commodity or Differentiable Product?
« Reply #8 on: May 04, 2011, 09:38:56 AM »
Of course it is not a commodity as defined in Econ 101 and of course there is differentiation between clubs. I hate to have to defend Brad but I think you missed his point. He means "commodity" in the sense you are not buying a hard asset, but rather, you are paying for time on a golf course. The purchase is "used up" like a commodity.

David Harshbarger

  • Karma: +0/-0
Re: Golf Club Membership - Commodity or Differentiable Product?
« Reply #9 on: May 04, 2011, 01:07:06 PM »
From Wikipedia:

Quote
A commodity is a good for which there is demand, but which is supplied without qualitative differentiation across a market.

I could well imagine in some Arizona markets that there is little qualitative differentiation in some tiers of the Golf Club Membership market.  Price, then, will be determined by supply and demand, in classic economic theory.  And with an overabundance of supply, prices will drop.

It's reasonable to think that there are different grades of quality of Club Memberships, and you might be able to tier clubs within a market. 

Certainly, the sellers of club memberships are going to do everything they can to avoid commoditization, and of course, to some extent, they can.  Location relative to the membership is obviously a differentiator, and to some the amount and quality of services can differentiate.  But, I would think if there are an over-abundance of accessible Memberships in a local market, the market will exhibit many characteristics of commodities.
The trouble with modern equipment and distance—and I don't see anyone pointing this out—is that it robs from the player's experience. - Mickey Wright


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