[Dave Givnish]

The Arizona Republic ran an article Sunday about the move among Scottsdale clubs to lower their initiation fees.

http://www.azcentral.com/business/articles/2011/04/25/20110425country-clubs-membership-fees-lowered.html

What wasn't discussed is that most of these clubs reduced their initiation fees quite a bit at the same time they increased dues by 5% to 20%.  The clubs on the higher range there were mostly to service debt when the members bought the club.

In light of the fact that fees are a one-time expense and dues are forever (apparently at least some of these clubs). Should a US club board try to get dues down 5% or 10% by implementing better cost controls, or cut or waive fees and make it up with a 5% or 10% dues increase?

[Roger Wolfe]

Initiation fees are a "stock price."  If you are short members but can handle the dues increase... don't touch it.  If you have a waiting list a mile long... raise the initiation fee.  If you are short members but you cannot handle the dues increase... time to lower it.

The third option should always be a last resort.  Once you go down... its tough to come back.

[Steve_ Shaffer]

Dave,

I posted this thread a few months ago. Unfortunately, it got sidetracked by cart girls:

http://www.golfclubatlas.com/forum/index.php/topic,47612.msg1065804/topicseen.html#msg1065804

As always, the comments are interesting in the article you posted. 

Sanctuary is a public course. What are Mickelson's plans?

Some clubs now have seasonal memberships- Tatum Ranch,for example.

Some clubs in Florida allow limited public play in the summer. Are there any doing this in PHX?

[Greg Ohlendorf]

Dave,

Initiation fees are great if you are in a market that will support a meaningful fee, but dues are the annuity that pays the bills. More members and more monthly dues are generally a good formula.

Greg

[Ben Sims]

Loose liquidity for younger age brackets--and let's be honest, that's who struggling clubs need--is the problem.  It isn't too much of a stretch to think that another car payment is possible for someone looking to join a club.  Let's say $500 a month.  That comes out to 6K a year.  I think there's a few nice clubs out there for 6K a year. 

But asking the 25-35 crowd to plunk down 10, 20, 30K on initiation fees is a tough sell.  A car payment is easier to sell to a young wife than a down payment on a house.

[Roger Wolfe]

We have been very successful with a deferral plan that includes financing.

In the end, everyone pays the same thing regardless of age.  The full nut is $22,000.

I.  Ages 21-29 pay 8,000 (3,000 down, then 1250 at the end of every 12 month period for 48 months with 5% interest)
II.  At age 30 you pay another 7,000 (1,400 down then 1,400 at the end of every 12 month period for 48 months with 5% interest)
III.  At age 35 you pay another 7,000 (1,400 down then 1,400 at the end of every 12 month period for 48 months with 5% interest)

If you join at age 32, you start at Phase II (3,000 down, 3,000 every 12th month, 7,000 at age 35)
If you join at age 35, you start at Phase III (4,400 down, 4,400 every 12th month)

Financing is available at every stage with 20% down, balance paid over 48 months.  We never refund anything... just let you out of the rest of your commitment if you qualify for the "economic uncertainty clauses."  If you lose your job or move we let you out of the unpaid balance.  The consideration you pay for retaining the economic uncertainty clauses is monthly interest.

It's worked well for us and most folks pay the balance off early once they are comfortable with the club and we don't get the members who just use the hell out of the club and then bolt when the "trial period" expires.  We are 5 away from capacity and achieving a waiting list for the first time since 2008 and oone who joined since late 2007 has committed to a dime less than the maximum entry fee.  I highly recommend it as a first step before lowering your initiation fee.

[Dave Givnish]

Roger - We set a $5k downstroke, added $5k to the total fee, and spread it out to age 45.  That, and a new short game practice area have helped  successfully attract young members to what is known as an old f**t's club in the Valley. I like your approach as it makes it more attractive to join earlier.

Steve - I guess that Sanctuary cash flows pretty well at that price. The land value alone has got to come close to covering that. Maybe there is more money in a low priced golf course than in Waffle Houses. 

There has been public play at some of the supposed private clubs even in the winter. One club has been doing a lot of advertising  for a lower fee. You could play there unaccompanied last year for $125 if you stayed at the Four Seasons. Troon North has a seasonal deal. I'm aware that Tatum does also, but I'm not sure if it's a trial deal or not. Quintero and Moon Valley are in the Troon reservation system so they are easy.  On the other hand, it is getting harder to get on the better clubs, even in the summer.    It's baffling to me that there have been no courses closing yet with the over supply of private courses that aren't as good as some of the resort courses.

We had a choice to lower the dues or to reduce the initiation fee. The dues change was possible because we figured out a way to pull a good chunk out of our maintenance bill without sacrificing conditions.  We chose to lower the dues as we thought that would help to retain existing members and attract new members.  I'm going to be interested to see how going in a somewhat opposite direction of the market in this market will work. 

[Tim Nugent]

David, how does one "pull a good chunk out of our maintenance bill without sacrificing conditions"? I'm sure many would love to know that.  I appauld you for attacking the Dues side of the equation.  The Jewel was the mention of "member retention".  Clubs, all too often, lose sight of this important aspect.  These are members that have already been attracted.  IF a club needs more members, the 1st place to examine is why did they lose members in the 1st place.  Heck, they were already captured.  Odds are the ones who left could no longer afford the monthly dues.  The ones who are left could.  But those same members have already paid X to join.  So now a club thinks charging less than X is a way to get new members?  That tends to piss of those who already have paid X.  They feel like they are being asked to subsidize the newbies and theyrenet it. Sometime to the point of quiting on principal.
Lowering the dues is a more equitable solution.  Plus you may retain some who are on the fence as to whether they can remain.  Roger's method is a nice way to spread the pain of the Big Nut for cashflow rich but equity poor younger,potential members (and an easier sell to the wife).

[Scott Szabo]

This is a tough call.  I think alot would depend on what the initiation fee is.  Initiation fees at some of the higher end clubs are sometimes $40k or $50k or even higher.  Not too many have the ability to pay that kind of fee up front, at least not those that I know.  The dues may not be what's keeping some younger guys from joining, but the upfront requirement may be.  As Ben said, it's not so much an issue to sell the monthly (or annual) dues to a family, but rather the upfront amount.  

There is one club I'd love to join but right now but, unfortunately, the upfront cash is what's holding me back.  Not the annual dues.  There is another club about 20 minutes further away that has an upfront requirement of only $6k, with a similar dues structure, that has a much better chance of landing me as a member, even though I'd prefer to be a member at the other.  Make sense?

  

[Bill_McBride]

David, how does one "pull a good chunk out of our maintenance bill without sacrificing conditions"? I'm sure many would love to know that.  I appauld you for attacking the Dues side of the equation.  The Jewel was the mention of "member retention".  Clubs, all too often, lose sight of this important aspect.  These are members that have already been attracted.  IF a club needs more members, the 1st place to examine is why did they lose members in the 1st place.  Heck, they were already captured.  Odds are the ones who left could no longer afford the monthly dues.  The ones who are left could.  But those same members have already paid X to join.  So now a club thinks charging less than X is a way to get new members?  That tends to piss of those who already have paid X.  They feel like they are being asked to subsidize the newbies and theyrenet it. Sometime to the point of quiting on principal.
Lowering the dues is a more equitable solution.  Plus you may retain some who are on the fence as to whether they can remain.  Roger's method is a nice way to spread the pain of the Big Nut for cashflow rich but equity poor younger,potential members (and an easier sell to the wife).

In my personal experience, what drives away existing members more than anything else is a hefty assessment.

[Dave Givnish]

Thanks all.  Retention has been more of a problem during the last couple years than attracting new members.  We're a niche player in a market of lifestyle clubs driven by real estate communities so our market is narrower to begin with.  Keeping costs under control, and minimizing the potential for assessments has been critical in this environment.  People are finally starting to buy homes in Scottsdale again, so the candidate pool size will hopefully improve. 

Tim - strategic outsourcing of the course maintenance is how we did it.  It took a while to find a partner that could deliver what we wanted and so far, they have performed quite well.  Our budget is 20% lower than we projected, and we're passing those savings back to the members.  The members are very happy with the results so far.

Scott - good point.  Spreading the fee over a couple or several installments as Roger suggested is worth trying. 

[Dave Givnish]

We added push carts about 4 years ago.  The riding membership thought that we would see the end of the world, at least in terms of cart fee revenues.  The number of riding rounds has stayed the same, and the number of walking rounds has increased because about half of the new members joined specifically because they could walk, and just throw their bag on their shoulder if they wanted.  Our push cart fleet is three times as big now as it was then.

[Jerry Kluger]

Clubs should not look at initiation fees as operating revenue - if it is an equity club those funds are supposed to be reserves to be paid to members who leave the club - if it is not an equity club those funds should be used exclusively for capital improvements.  Clubs that have budgeted their operating revenue to include initiation fees can be in trouble when they fail to attract new members.

Prospective members look at dues and other costs and try to determine how much it will actually cost them to be a member.  I spoke with a prospective member of my club and he included food minimums in determining his annual cost to belong to the club.  My feeling is if the club gives you value for your food dollar then just look at how much you spend on eating outside of your home and offset it against that.  

[Brent Hutto]

So people who love caddies think the sky will fall if golfers are allowed by walk without a caddie.

And people who love carts think the sky will fall if golfers are allowed to use push carts.

And walkers think the sky will fall if anyone rides in a cart.

It's a miracle private clubs have survived as a species given the sky falling here, there and everywhere...

[Brent Hutto]

I spoke with a prospective member of my club and he included food minimums in determining his annual cost to belong to the club.  My feeling is if the club gives you value for your food dollar then just look at how much you spend on eating outside of your home and offset it against that.  

If I'm contractually obligated to spend a certain amount every month that's part of the monthly expense. It doesn't not-count because it's food and I would eat anyway. My rounds of golf are something I do instead of something else but I still want to know how much I'm obligated to pay for the option of playing golf.

My bill tonight at the bistro down the street will be zero if I don't go there. And it'll be zero for the month if I don't go there again until June. Not so with the food minimum at my club. That money was already spent the day I joined, just like dues. The food minimum is like a locker fee or range-ball fee or any of the other nickel-and-dime stuff Shivas referred to. Fortunately at my club the food minimum, as with the dues and other monthly charges, is quite reasonable so it's no big deal. But for my part, I resent nickel-and-dime stuff and particularly nickel-and-dime stuff designed to coerce me into something I would not otherwise do (like drive 20+ miles to eat at my club). But in the end all that matters is the number on the bill at the end of the month.

P.S. I should have added to my previous list the folks who believe the sky will fall if I don't show up to eat a steak with them in the clubhouse dining room on Friday evenings.

[Jud_T]

It's six of one, half a dozen of another.  It's called the present value of money guys...

[JMEvensky]

Clubs should not look at initiation fees as operating revenue - if it is an equity club those funds are supposed to be reserves to be paid to members who leave the club - if it is not an equity club those funds should be used exclusively for capital improvements.  Clubs that have budgeted their operating revenue to include initiation fees can be in trouble when they fail to attract new members.

Prospective members look at dues and other costs and try to determine how much it will actually cost them to be a member.  I spoke with a prospective member of my club and he included food minimums in determining his annual cost to belong to the club.  My feeling is if the club gives you value for your food dollar then just look at how much you spend on eating outside of your home and offset it against that.  

JK,your first paragraph should be read to every Board member before every meeting.The lure of comingling fees with general revenues is a strong one.Unfortunately,the result is never pretty.Selling an operating assessment is never easy--but it's a lot easier than selling a capital improvement assessment.

As regards your second paragraph,I was with you until you detoured into food minimums.They're just dues by another name.If a club has to force its members to spend money in the dining room,there's something wrong with the dues structure.I understand the logic of "but you get food for your $100/month"--I've used it to members myself.But,as a general rule,members understand that the reason for the minimum is because the F/B isn't carrying its own share.No member wants a dues increase,but,IMO,they're likely to live with it  in exchange for removing the food minimum.

[David Harshbarger]

I have to agree on the food minimums and the ticky-tacky charges.  They really turned me off of some local clubs, who were charging extra for GHIN membership, lockers, and club storage.  Hmm, should I spend $80 to have my clubs stored? leads to the question "Why am I being asked if $80 is fair value for club storage?"

On the food charges, I wouldn't mind a minimum but I expect good value, and $8 kids plates did not represent value.  The thought of my kids running up $500-$1,000/month on burgers at the pool was over the top.

[Steve Kline]

Initiation fees are a killer for me. I can swing dues at a lot of places but can't even touch the initiation fee. I detest all the extras - range fee, locker fee, food minimum, cart minimum, etc. Just tell me what the monthly cost is and I'll decided if I want to pay it or not. It's not like I won't do the math anyway. And, I end up feeling nickel and dimed.

I refuse to join any club where I can't walk whenever I want. One of the reasons I play golf is for the exercise. And, the camraderie is better when walking. Also, while I can afford the dues as much as I play I don't want to pay for a cart (or caddy) ever time I go out.

There is a club by my office that I grew up playing at and had a junior membership after college. My dad and I quit when I was 25 because they wanted to charge a large assessment to fix up the clubhouse. I tried to convince them as young married man with one child that I was their target market. That the golf course was the most important and that if my wife and I were going out to eat it wouldn't be at the club so spending money on the clubhouse was a stupid idea. I tried to tell them if anything it would be best to have kid-friendly sports bar with simple food - burgers, pizza, sandwiches, etc. with a very relaxed atmosphere. But they wouldn't listen and the club has struggled for the last decade - almost being sold to an apartment developer at one point. Now I have joined another club right by my office. The course is inferior and too hard for my wife and soon but is at least half the price of my previous club with no initiation fee. Also, I will probably join Pinehurst this summer. The total cost of my new club and Pinehurst is about the same as my old club. Too many clubs are living in fantasy land when it comes to what the customer wants and their value proposition.

[Sean_A]

Yes, I don't mind the idea of food minimums either so long as they are reasonable.  Say enough for one dinner, two lunches and and drinks for two games a month.  Not sure what that would add up to, maybe $100 a month, but spread across the year as I see fit rather than month to month.  Even so, food minimums are a form of dues, but I figure there has to be a minimum a member should be happy to spend at his club.  If he is not happy spending money there he isn't likely to be a good member.  We don't really do minimums in the UK and this is an area I think clubs would be better off doing with the option of buying more card money at a discounted rate.  Say the first £150 is the minimum.  If you put an additional £150 on the card in January you get 10% off.  An extra £300 gets 15% off etc.  It helps clubs budget and actually would help with creating a better service for the members.  I just can't understand a member not being willing to buy a pint of beer a week at his club.  To me this is pathetic.

Ciao

[Jerry Kluger]

The fact is that every day it costs X amount of dollars for the club to operate and there is no getting around that.  If the club has dining facilities it means a certain amount must be spent for staff to prepare and serve the food and beverages as well as maintain the facilities.  Good staff needs to be employed 12 months of the year and the building must be maintained all year.  You can raise the dues to cover that cost or you can install a food minimum.  When you join a club part of the equation should be how often you go out to eat and would you be satisfied if all or part of that dining would be at the club.  My experience with clubs goes back a long time and I have always felt that the food at the clubs was good and well priced.  The food and beverage operation should be considered when joining a club but you have to keep it in perspective.   

[Brent Hutto]

I consider food and beverage from two perspectives. There's the 50 bucks a month minimum that has to be calculated into my dues cost (along with eight bucks a month for a locker and twenty-five a year for a handicap). And there's the fact that I like to have lunch after my round.

My being willing to pay the $50/month and having an after-round lunch several times month doesn't change the fact that the minimum is part of my monthly fees just as surely as the nominal dues. If you call a tail a leg how many legs does a dog have? Four. Plus a tail that's called a leg. As attested by my bill last December when I did not set foot on the property all month long.

The hell of it is, lunch-time pricing is so reasonable that four or five lunches a month doesn't even cover the minimum. Especially considering that drinks (including the Coke I have with lunch) and snacks (like the pack of crackers I buy to take with me on my round) don't count against the minimum. Nor of course do taxes and tips, which makes sense. Or carry-out.

[JMEvensky]

Jerry,it's the "perspective" part where I think we might disagree.

No question that a country club must have something like full-service F/B.However,if a significant percentage of your membership is adamantly opposed to a food minimum then there's something wrong.I understand the minimum from the club's side--it's a "painless" addition to the monthly dues.

However,the food minimum is a tough thing to justify in today's world.Those older members for whom it was no big deal are being replaced,hopefully,with a group who don't want to commit to a weekly or monthly "dinner at the club".To them,a food minimum is seen as one more reason not to join.

I certainly agree that anyone who joins a club has a vested interest in using it--for everyone's sake.But,I think the lesser evil of higher dues to offset possibly lower F/B revenue is the more palatable choice for a lot of people.

[Jerry Kluger]

You can certainly view a F & B minimum from different perspectives but keep in mind that you are getting something for your money.  The argument is sometimes made by childless couples or those where there children no longer live with them that they should not be paying high taxes to support school improvements but good schools add to the value of their homes. The situation here is similar - a quality food and beverage operation is part of what a club has to offer - if that is not one of your wants or needs then you should consider finding a different club.  I have a problem getting to my club during the week but I could not afford a club closer to my home.  We have quite a few semi-private clubs in my area that offer annual memberships with no other obligations or you can choose to pay a daily fee.  That certainly is an advantage to some but personally I like knowing that I will be playing with another member, that I can walk and carry my bag, that a round of golf won't take more than 4 hours, and I will rarely have a problem getting out the course.  There are tradeoffs with everything.

[Cliff Hamm]

The logical answer is that it depends on your age/how long you plan on staying at a club.  If you are young you desire low dues with a higher initiation fee.  If you are older the opposite. 

I am surprised that golf communities aimed at retirees in the south have not gone this route.  If I join at 70 seems I should have a lower initiation fee than if I join at 55.

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