Oakland Hills Drastically Cuts Initiation Fees

[Ronald Montesano]

Good points, all.  Having never been on the inside, I cannot summon emotions experienced by folk similar to Elihu Smails when the Al Cerviks darken their first tee.  I retire from the discussion, comfortably sated.  Peace out!

[Jim_Kennedy]

?

[Adam Clayman]

 

I certainly don't think ~$125 is a "competitive" rate for unescorted play in this area.  In many cases, that is less then the escorted rate.  The fact is that for unescorted play the rate is much higher ~$300.  When you get in that range it does become a realistic trade-off to seek out the many charity outings. And you are benefiting worthy causes.

Let's all hope this reality is significantly altered under the new normal.

Green Fees at Private clubs have gone up higher than most goods and services in the last 25 years. Call it the Pebble Beach syndrome, but this notion that $125 is not enough to charge for a round of golf is ludicrous. (not you Corey, the notion)

I can remember guest fees were in $35 range back then, and even Cypress Point Club, didn't go into the atmosphere until relatively recently.

There are those who think their course is worthy of charging astronomical fees based on their architecture and what the market will bare. Since we all know now that these inflated prices are all based on imaginary corporate and real estate profits, let's hope more courses find their market again by lowering their fees getting people golfing more.

One other thought... Golfer's need to touch sticks frequently to keep their touch. High prices for a round of golf do not allow that and the result has been fewer golfers.

[Rick Sides]

I don't think private clubs should really ever allow outside play unless invited by a member or the pro.  Even if you allowed a person to play your club twice a year, that could still bring a slew of outside people taking up the extra tee times I have paid for  my membership.  I don't want to sound rude, but in NJ, our public courses have very large groups of asian players that come to play and are very slow because they bet a lot on each shot.  If outside groups like this came on a normal business day(not Monday) the members would go nuts because of the slow play. The reason that most people join a private club is because it's less crowded.

[Jim Nugent]

?

Caddy Shack.

[Sean_A]

Cory, Clint & Rick

Of course clubs should do as they please and if members don't want outside play fair enough.  My comments are directed at two things.  The idea of losing tax exemption due to outside income being not nearly an issue as some make out and that clubs which are in trouble can take advantage of outside play to a certain degree.  If a club like Oakland Hills can feel pinch, nearly all other clubs in the country can. 

Ciao

[Tom Birkert]

The American model is substantially different to the UK model. I don't think I'd be able to be a Member at a comparable club in the US due to initiation fees.

As has previously been mentioned, surely pushing for overseas and / or national Members is a good thing to do? They pay a percentage of the initiation fee, a percentage of the annual fee and are restricted to a certain number of rounds per year. This, effectively, is money for pretty much nothing.

I don't know what Cypress Point Club have done with their guest fees over the past 18 months but they were very, very reasonable in 2007!

[Mark Chaplin]

A very high percentage of visitor golf in the UK is from members of other clubs. Surely you can open slots to members of other equally private clubs who wish to play 3 or 4 games a year away from their home club at a reasonable fee. You then get the chance to play their course again for a reasonable fee, we call it win-win.

That would sooth the fears of those who do not want slow players of whatever creed or jeans wearing, gum chewing, honest down to earth working people on their course.

[Tom_Doak]

Adam:

With due respect, you obviously don't own a golf club.  There are a lot of golf courses built in the last 25 years that just couldn't make it financially if they did not average at least $125 per round.

In fact, the only thing that keeps most private clubs going is that members never do the math on how much they are paying per round.  Once they realize THEY are paying more than $100 per round, AFTER initiation fees, that's when the unaccompanied guest fees go to $250 or $300, without any remorse.

Accompanied guest fees should be an entirely different matter.  One of the main reasons a person joins a club is to have the privilege of taking guests there, and they shouldn't have to pay through the nose to do so.

[Rick Sides]

Tom,
You are exactly right.  Clubs are having trouble staying alive. I really miss Beechtree by the way, and that is an example of an awesome course having to close because the price was right.  I also agree that unaccompanied fees should be relatively high because it's a privilege to play another private club, but when accompanied guest fees start to climb up past $200.00 or more, that gets a bit much and it's sometimes hard to bring a guest because they can't afford $200.00 + dollars and caddy fees. 

[Michael Rossi]

Opening up a few T-times I don't feel is going to harm anyone or the course however it will hurt  the public facility that this player would have otherwise paid to play. Is it more beneficial for growing the game to allow players to experience courses that are private and usually of the best quality, I believe so.

Very difficult for me to pick a side, other than the side of growing the game.

Perhaps in the tough economic times people should accept that we need to give up some "luxuries" until they can be afforded and not worry about finding extra or new revenue to pay for the "luxuries".

[Adam Clayman]

Adam:

With due respect, you obviously don't own a golf club.  There are a lot of golf courses built in the last 25 years that just couldn't make it financially if they did not average at least $125 per round.

That fact is only important to the owner with a debt service that strangles all but the most populated courses (volume). I suppose it's a good thing that for over a third of those 25 years, I have cautioned against people building courses for the wrong reasons. Older designs have sunk their costs and should have a leg up in surviving the expected lean times.  Golfer who know they want to play often, but also want to be fiscally responsible, are finding fewer and fewer options thanks to mindsets inherent in your industry.
With due respect, you probably have not had to pay for a round of golf for a long time.

[Tom_Doak]

Adam:

I don't have to pay for all of my golf, but I do wind up paying a handful of times every year ... especially in Scotland and Ireland, where it's pretty egalitarian, i.e. everybody pays.

I am the first to agree with you that the cost of golf is too high.  But it's high because the cost of BUILDING and MAINTAINING golf courses is high.  You can't expect people to sell the golf for less than it costs them to provide it ... so you should be speaking up on threads about maintenance and construction costs, not about guest fees at courses where the cat is already out of the bag.

[Patrick_Mucci_Jr]

That fact is only important to the owner with a debt service that strangles all but the most populated courses (volume).

Adam, it doesn't matter if the project is financed or fully funded, unless of course, you want the owner to treat the project as a charitable venture.

How do you propose that the owner goes about acquiring the land,  building the golf course and then maintaining the golf course without using substantial funds ? 
The owner MUST invest his capital.
Once he does that, he's entitled to recapture his investment, and subsequently, a return on his investment.

Owners face a dilema.
They can't choose land so remote that their target market can't access it and they can't choose prime land in the midst of their target market at a low price.  So, they have to strike a balance that they feel comfortable with.
In most cases, that drives up the cost to acquire land.

Destination courses, like Bandon, Ballyneal, Sand Hills and others were able to acquire the land at minimal costs, but, those courses are in their infancy and certainly haven't passed the test of time.  It will be interesting to see how they fare over the next few years.  Certainly, having an owner with deep pockets CAN help, but, the owners can't give rounds away as if the golf course was a charitable venture.

I suppose it's a good thing that for over a third of those 25 years, I have cautioned against people building courses for the wrong reasons.

Older designs have sunk their costs and should have a leg up in surviving the expected lean times. 

Golfer who know they want to play often, but also want to be fiscally responsible, are finding fewer and fewer options thanks to mindsets inherent in your industry.

I don't believe that it's got anything to do with an inherent industry mindset.
I believe that the reality is in the financial facts of life.
Namely, the cost to acquire the land, the cost to develop the land, the cost to maintain the land and the cost of the ROI.

If a developer spent $ 10,000,000 to acquire 200 acres (50K/Acre)
$ 5,000,000 to build the golf course and it takes $ 1,000,000 to maintain it annually, HOW MUCH SHOULD THE DEVELOPER CHARGE PER ROUND ?

Ideally, the developer would like rounds per year to cover his maintainance costs, any carrying costs, and a return OF his investment of 15 M.

So, what should he charge per round, assuming 20,000 rounds per year ?

[Jim_Kennedy]

Pat,
That 'new' course would be charging $265.00 a round.

I would not want to be that guy today. 

[Sean_A]

That fact is only important to the owner with a debt service that strangles all but the most populated courses (volume).

Adam, it doesn't matter if the project is financed or fully funded, unless of course, you want the owner to treat the project as a charitable venture.

How do you propose that the owner goes about acquiring the land,  building the golf course and then maintaining the golf course without using substantial funds ? 
The owner MUST invest his capital.
Once he does that, he's entitled to recapture his investment, and subsequently, a return on his investment.

Owners face a dilema.
They can't choose land so remote that their target market can't access it and they can't choose prime land in the midst of their target market at a low price.  So, they have to strike a balance that they feel comfortable with.
In most cases, that drives up the cost to acquire land.

Destination courses, like Bandon, Ballyneal, Sand Hills and others were able to acquire the land at minimal costs, but, those courses are in their infancy and certainly haven't passed the test of time.  It will be interesting to see how they fare over the next few years.  Certainly, having an owner with deep pockets CAN help, but, the owners can't give rounds away as if the golf course was a charitable venture.

I suppose it's a good thing that for over a third of those 25 years, I have cautioned against people building courses for the wrong reasons.

Older designs have sunk their costs and should have a leg up in surviving the expected lean times. 

Golfer who know they want to play often, but also want to be fiscally responsible, are finding fewer and fewer options thanks to mindsets inherent in your industry.

I don't believe that it's got anything to do with an inherent industry mindset.
I believe that the reality is in the financial facts of life.
Namely, the cost to acquire the land, the cost to develop the land, the cost to maintain the land and the cost of the ROI.

If a developer spent $ 10,000,000 to acquire 200 acres (50K/Acre)
$ 5,000,000 to build the golf course and it takes $ 1,000,000 to maintain it annually, HOW MUCH SHOULD THE DEVELOPER CHARGE PER ROUND ?

Ideally, the developer would like rounds per year to cover his maintainance costs, any carrying costs, and a return OF his investment of 15 M.

So, what should he charge per round, assuming 20,000 rounds per year ?

Pat

Given a general, very general view of the situation, the man in your scenario can't really charge less than $200, and that is probably a low ball estimate.  Its not a proposition I would take up!

However, I am talking about private courses trying to boost their revenue in troubling times.

Ciao

[Chris Cupit]

FWIW a very general rule of thumb in the industry is that for every million dollars in expense in building your facility, you need to charge $10 per round.  Pat's example would mean AVERAGING $160 per round and I think most owners would assume 20,000 rounds the first year AT LEAST with the total number of rounds increasing to about 30,000 rounds each year.  With discounts and off peak rates, the rpime time rate of Pat's example would most likekly be $200-$225.

Also, very few owners would consider doing a golf course with land costs that high--many "deals" involve little if any land aquisition costs.  Just shows the crazy amounts spent to build the course, clubhouse and other amenities.

[Dave_Miller]

Are they going to refund some portion of initiation fees for members who joined within the last few years?

Seems to me that if I had joined a year or two ago at a higher level, I might be fairly annoyed.

goldj:
That was then this is now. Timing is everything
Best
Dave

[Jason Hines]

I think the solution is very apparent for the public and private side, its bailout time!!!  Hey, the automaker’s model doesn’t work either and they are going to get one!!
My current club here in Kansas is the benefactor of some good luck, when I first joined in ’07, they were trying to build up the membership to take over the public 18 holer across the parking lot.  The effort stalled, but the extra membership they built up in this endeavor is apparently helping them maintain revenues.
Basically, we are back to the question that most of us would rather join a golf club instead of a country club.  I know this group’s answer and personally I would pay more to get what I want with a golf club and to have my revenues maintain the golf portion.   
Sounds like the market is getting ready to do its job.

[Chris Kane]

A very high percentage of visitor golf in the UK is from members of other clubs. Surely you can open slots to members of other equally private clubs who wish to play 3 or 4 games a year away from their home club at a reasonable fee. You then get the chance to play their course again for a reasonable fee, we call it win-win.

...which is what the sandbelt clubs have done:  the members of RM, KH, Commonwealth, Victoria, Peninsula, Metro, Yarra and Huntingdale are now entitled to one game per year at each club for $60 (which is about the average green fee for a member's guest).  It gives additional value to the members of the eight clubs, and also extra revenue.  A win-win. 

It was an excellent idea, I should take advantage of it!

[Jeff Goldman]

A very high percentage of visitor golf in the UK is from members of other clubs. Surely you can open slots to members of other equally private clubs who wish to play 3 or 4 games a year away from their home club at a reasonable fee. You then get the chance to play their course again for a reasonable fee, we call it win-win.

...which is what the sandbelt clubs have done:  the members of RM, KH, Commonwealth, Victoria, Peninsula, Metro, Yarra and Huntingdale are now entitled to one game per year at each club for $60 (which is about the average green fee for a member's guest).  It gives additional value to the members of the eight clubs, and also extra revenue.  A win-win. 

It was an excellent idea, I should take advantage of it!

I think that there is a lot of that in the US, though on a more informal basis.  Not many clubs prohibit unaccompanied play absolutely, which can often be arranged by a call from the head pro to head pro.  The only ones I know of in Chicago that prohibit absolutely unaccompanied play are Chicago Golf, Onwentsia, Old Elm and one or two others.  Other clubs do require a member to sponsor an unaccompanied game, but again not that many.

[Chuck Brown]

I don't know if anyone has mentioned it in all of the posts above (a quick scan on my part did not find any), but this is not the first "depression" that Oakland Hills has endured.

As many know, OHCC is 36 holes, with courses on both the South and North sides of Maple Road.  During the Great Depression of the 1930's. the club was forced to sell off the North Course to Public play, and it operated as North Hills Golf Course until the later 1960's.  Then, flush with the success of the 1951 U.S. Open, and with a number of majors that came back in the 70's, 80's, 90's, and into the 21st Century, OHCC bought North Hills back from public use, reconfigured it slightly, and it is now the North Course at OHCC.

So that is how bad it was, or could be.

The very tony Birmingham CC, located about a JB Homes drive from OHCC (shortish parkland design that crosses back and forth across a Rouge River tributary), which has traditionally had a rather exclusive membership, enjoys a sweet location in the north Detroit suburbs that is a walk from downtown Birmingham, and has had sterling food and beverage service, now has a waiting list of people wanting to sell out of their equity memberships.

Maybe more interesting to my fellow GCA members, Detroit Golf Club (36 wonderful Donald Ross golf holes) now has a campaign for new members with a downstroke of as little as $10,000 with a discount to boot for early '09 entry!  DGC has been home to most of Michigan's hottest ams over the years, (flocks of plus-handicap members of the Red Wings, sales reps, tust-funders, etc., who play serious golf) and hosts the Golf Association of Michigan's early spring medal play championship.

If you are a lover of great golf courses, and in the business of, say, cardiology,  , or perhaps bankruptcy law, move to Michigan.  Now.

[mike_beene]

Those hockey guys can really play.Down here Hull and Modano alone keep several clubs busy.I guess Oakmont has a similar option to Oakland Hills in that they own that other course that I believe is public.More importantly,it helps to have the land to get the majors that I assume keep things solid.

[JWinick]

Kevin,

Your argument is outdated and reeks of snobbery.   In today's 24/7 information age, private affairs are increasingly discussed in the public domain.   None of us on this board have a fiduciary responsiblity to keep a clubs finances confidential - unless they are members of the said club.  Furthermore, the tax returns on any non-profit organization are available for inspection.   

When the economy is as tough as it is now, protecting the privacy and stature of Oakland Hills members is no one's priority.   The reality is private clubs need the word to get out to some extent to attract members.   

Tim Cronin -- I don't know if you are late to the thread or not, and saw earlier posts with specific information about the initiation fee and the percentage of that fee that constitutes equity.  All information that is by all good reason confidential and proprietary.  The posts above were edited and the information is no longer there - in my mind a good outcome for this thread.

I also don't know if you are a member of a private club.  If you were, you might understand the implications of confidential club financial information being posted on a public internet board to be bantered about by people with no stake in the affairs of a specific club.  Information obtained without license for public discussion.

If you are a golf writer and are looking for subject matter for your next column or blog, call the club mentioned in this thread, or any club of interest to you, and see if you can obtain the information regarding its membership rolls "on the record".  Or you can rely on some source like Crains.  Good luck with your column on that basis. 

As someone who is not a golf writer like you, my opinion might not carry as much weight, but I believe it is not our job to air the "secrets" of a private club.  But, I could be wrong...there might be an appetite among the other 1499 for titillating information or rumors about assessments, waiting lists, initiation fees and dues increases among the country's top 100 golf clubs. 

[Chuck Brown]

Um, I don't expect that I am being challenged on it, but my comment specifically relative to the Detroit Golf Club's price-cutting membership drive is posted on the public pages of the club's website.