[JR Potts]

Medinah has 615 members, a wait list, 10MM in debt and 4MM in cash.

Yes, the Ryder Cup should be profitable.

But, we are spending 6MM on a Course #1 renovation.

While golfing members a la Terry and Bill might want a large field with 18 holes only, the reality is that select country clubs and membership in said clubs is now becoming a family decision.  Wives, kids, etc. expect to use the club - especially when the club is asking for 80,000+ of family savings.

While improvements are likely not the most prudent decision for all, for many, they may be the only way to survival.

[Patrick_Mucci]

I'm a member at a club with a modest clubhouse, no pool, no tennis courts, so I can't really answer your question.  But I am a bit amazed that you put the entire question in the subject line. 

+1

A club does need a clubhouse that is functional and attractive.

20+ million is a lot, but if your clubhouse is old and expensive to maintain...do you go with a trailer after the tear down w/ D8s?

William, I think you have to ask, how did the clubhouse get old and expensive to maintain.
Was there no modernization effort within the last few decades ?

If ever there was an old clubhouse, GCGC would seem to be it, yet, the clubhouse works well, but, it needs repairs and upkeep now and then.

What is affordable for a clubhouse?

I think the members of GCGC, Kitansett, Shinnecock, Trump, The Bridge, Liberty National and Sebonack could have a healthy debate on that.

[David_Elvins]

Can you think of five (5) local clubs that spent $ 5,000,000 on their golf course[/b][/size][/color]

One of the clubs I am a member of spent 6mil+ on a reno but I assume you mean local to you, not local to me.   

If you are a member of Boca Rio then I suggest then maybe go across the road to Boca West and ask them how much they spent. It was more than 5mil.  Can't get much more local than that.  

Any club not on sand that does a full reno is most likely spending $5mil+.

[JR Potts]

Patrick,

I think that people on this website focus a bit too much on clubhouse expenses.  Golf course expenditure can, in some cases, be just as detrimental. 

I heard of a club recently that costed their golf course masterplan at $20mil+. 

Now that's a WOW number!  And here I thought Butterfield had top ticked the market at $16mm in early 2008...

Hey, it wasn't that bad....they got a grant from the county.  Subtract 675k from that number. 

[Patrick_Mucci]

Can you think of five (5) local clubs that spent $ 5,000,000 on their golf course[/b][/size][/color]

One of the clubs I am a member of spent 6mil+ on a reno but I assume you mean local to you, not local to me.   

I'll accept "local" as a generic "local"

If you are a member of Boca Rio then I suggest then maybe go across the road to Boca West and ask them how much they spent. It was more than 5mil.  Can't get much more local than that.  

David,

I live in Boca West.

With about 3,000 families and four 18 hole golf course, Boca West hardly qualifies as a local golf course.
It's a residential resort, not a local golf club.

Any club not on sand that does a full reno is most likely spending $5mil+.

What's a full renovation and what clubs other than MPCC have embarked on them ?

[Sean_A]

I am amazed at the amount of debt so many US clubs are willing to take on.  I would be horrified if my club did the same.  Our showers and toilets are in a desperate need of refurbing, but they do work.  When the money is available and after course requirements are taken care of, then the club will upgrade - don't know when that will be. 

I know of very few clubs that don't have direct access to serious tourista cash that would even contemplate taking on a note £2-3 million.  One club I know knocked down their lovely old house which was in need of serious repair to build a modern thing.  The members responded by leaving in droves rather than take on the ~£1 million debt.  The club has never quite recovered and is now always on the look-out for members.  Its quite common to see houses in the UK a bit shabby chic or quite bare bones.  This is certainly one thing these clubs get right.  I know most Americans would struggle to buy into that sort of thing, but it does highlight one of the big differences between the two golf cultures.  Cheap and cheerful usually trumps keeping up with the Jones'.

Ciao 

[David_Elvins]

What's a full renovation and what clubs other than MPCC have embarked on them ?

A full renovation would normally be new green complexes, new fairway bunkers, new tees, maybe 1 or 2 newly routed holes. 

You are not going to do it to a course with the heritage that you play but you would be surprised how many have done it. Like I said, one of my clubs spent 6-7mil.  A few weeks ago I played a reasonably horrible course over here called Sanctuary Cove that just spent 6.8mil on one of their courses.  3 brand new holes, 6-7 newly routed holes, new greens and bunkers, water hazards moved, etc. 

Blackhorse and Bayonnet near Monterey spent 13mil over their two courses, the result was pretty horrible IMO. 

Royal Queensland completely rebuilt on the same site for over $5mil. 

Google will show you plenty more examples.  Golfinc magazine used to have an award category for best renovation over $4 million.  http://www.golfincmagazine.com/news/press-releases/kings-river-golf-linville-ridge-country-club-country-club-darien-named-top-renov

Obviously no-one is going to rip up and completely re-do most the the clubs you play but there are plenty of places without great heritage that will rip up and go with the latest trends. 

[Patrick_Mucci]

Sean,

It's absolutely mind boggling to me.

I don't understand why any club would incur substantial debt.
Rarely have I heard of a club that took on massive debt where the outcome was good.

If I was seeking to become a member of a club, one of the first questions I'd ask is, how much debt is the club carrying.

As net membership decreases, the burden per member rises.

David,

Weren't Blackhorse and Bayonet courses on a military base ?
Who paid for the supposed upgrade, a membership or a developer ?

Ripping up a course and spending $ 5,000,000 is rare.
Remodeling a clubhouse and spending $ 5,000,000 or more and borrowing to pay for it,  seems far more common.

[David_Elvins]

Remodeling a clubhouse and spending $ 5,000,000 or more and borrowing to pay for it,  seems far more common.

I 100% agree with you, Patrick.  Spending large sums of money on a clubhouse is definitely more common.  My point was that money can be equally wasted on golf courses and those on this board are far more lenient when it is. 

[JR Potts]

I'm not sure if this thread embodies what has been killing country clubs or what will kill/save country clubs.

There are a few things at work here.  The main reason so many clubs around my area have been required to "upgrade" their facilities is that the facilities were never property taken care of or upgraded over the last 5-6 decades - yet, membership dues have increased.  Many of the clubhouses, pools, golf courses, etc. have not had any meaningful restoration work done in decades.  The 60/70/80something year old members, who joined these clubs for 5 grand, simply did not spend the money preserving the assets over the years - maybe because they were afraid of debt or didn't want to spend the money.  Either way, can these same members, who have driven initiation fees into the high five-figures, sometimes low six-figures, wonder why their newer members expect a better product?

With debt at 3% percent, why not try to update the facilities that were left to rot by past generations? If the clubs don't want to spend the money to do it, then they should lower initiation fees to a number that best represents the product's value or just languish and die - as the 5k initiation members die along with it.  There's really no middle ground with the competition that exists.

[Jud_T]

I think it's pretty hard to generalize.  There are great clubs in wealthy metro areas that need to update old infrastructure as JR points out and there are clubs in rural, less affluent areas that would be crazy to do so.  Seems like a case by case basis to me.  Personally I'm certainly glad that my club puts virtually all it's resources into the golf course, but that's the model they're going for and one of it's main attractions to me.  Most people in large metro areas won't join a pure golf club, they want the traditional Country Club experience.  Then of course you live in a nice area with nice expensive homes and your club has to exude a similar status and offer a certain level of service and aesthetics.  I'm not endorsing this model, it's just the way it is.

[Patrick_Mucci]

I'm not sure if this thread embodies what has been killing country clubs or what will kill/save country clubs.

There are a few things at work here.  The main reason so many clubs around my area have been required to "upgrade" their facilities is that the facilities were never property taken care of or upgraded over the last 5-6 decades - yet, membership dues have increased.


Would you cite the specific clubs ?
I have a hard time believing that clubs did nothing for the last 5-6 decades 

Many of the clubhouses, pools, golf courses, etc. have not had any meaningful restoration work done in decades.  The 60/70/80something year old members, who joined these clubs for 5 grand, simply did not spend the money preserving the assets over the years - maybe because they were afraid of debt or didn't want to spend the money. 

Again, could you cite those clubs where the 60/70/80 year olds did nothing for the last 5-6 decades

Either way, can these same members, who have driven initiation fees into the high five-figures, sometimes low six-figures, wonder why their newer members expect a better product?

If they drove initiations to six figures, what did they do with all that money over the last 5/6 decades ?

With debt at 3% percent, why not try to update the facilities that were left to rot by past generations?

Could you cite five (5) clubs where the facilities were left to rot for decades ?

If the clubs don't want to spend the money to do it, then they should lower initiation fees to a number that best represents the product's value or just languish and die - as the 5k initiation members die along with it. 


If the club is getting an adequate number of new members, why would they want to lower their initiation fee ? ] There's really no middle ground with the competition that exists.

[JR Potts]

Without offending a litany of other clubs in my area, Beverly, Olympia Fields, Medinah, Butterfield and Edgewood Valley.

All had rotting clubhouse/pool/etc. until the last 20 years - in fact, I'm not sure Beverly's has been improved - but again, it's a little bit of a different model than the rest of them.  I never said that the older members did "nothing," you did.  But I can state from experience that no major capital improvements were performed on Medinah's clubhouse from 1928 to the late 90s.  Yeah, there were band-aids, but almost everything was taken to the end of its useful life.  That gets exceedingly expensive to repair/restore - and new members expect, when doling out 70k+, to have a fully functioning clubhouse.  Given the substantial renovation work I've at Olympia Fields, Butterfield and Edgewood Valley, I assume that they too, were treated in a similar manner.

What did the courses do with the money?  What money are we talking about?  The 70k+ initiation is a relatively new phenomenon.  That money was spent in the last two decades and is being spent now - and in healthy clubs - likely supplemented by extraordinarily cheap debt.  

[JMEvensky]

Bill McBride/Tim Martin--Pat's premise,IMO,is that clubs are spending cap ex money to improve facilities/amenities when they should first upgrade the golf course.If I understand his premise,he's saying that the golf course is what attracts and keeps members,ergo,the golf course should be the first priority for cap ex money.

I'll leave aside the argument over whether clubs should be spending any money on anything these days.

At my place,which is member owned,the Green Chairman is a Board member.My point was that,as long as there's going to be cap ex,his responsibility is to make certain that the golf course is seen as the highest priority--and isn't starved of upgrades at the expense of other amenities.

[Jud_T]

JM,

Point taken, but again isn't it a case by case basis?  There are clubs that have a great old course that may be in need of minor tweaking with a clubhouse that is in need of serious structural repair, and there are clubs that have a perfectly fine clubhouse yet a course that is in need of serious renovation/restoration.  Personally, while I agree that too much money has been wasted on facilities, food and beverage broadly in the past couple decades, I don't see how you can generalize here.  Each club has it's own micro geography, economy, climate, GCA, real estate and Plant and Equipment.

[Ed Brzezowski]

Terry Lavin,

Agreed, but, more and more I see clubs spending money to expand their facilities in order to host outside events.

I don't get it.

As we say here in Chicago, they're "axin" for it! 

That is the exact issue at my club, wedding pavillions, wedding walkways  and wedding everything. Maybe I can get a bride to have her pics taken in front of one of the bunkers we need to redo. I see the need for income but we really need to give members a better golf course for their dues.

[JMEvensky]

Jud,every club is sui generis and any/all generalizations are pretty much a waste of time.

But why take away Pat's enjoyment?

[Jason Topp]

To Pat's point, I just left a club and the fact it carries a large debt for things I do not use and the solutions for addressing that debt all sound painful made the decision a much easier than it otherwise would have been.  That club is in a much better financial position than many others in my area.

To anyone looking at joining a club, understanding its debt situation is an important part of due diligence.  Many (if not most) US clubs are nonprofit institutions and their financial situation can be reviewed online here:  http://foundationcenter.org/findfunders/990finder/.

One thing I examine is the club's debt and compare how it is changing year over year.  I also compare its numbers to other area clubs to get a sense of their significance.  I am sure someone with more financial expertise could glean more information than I can.

[Brent Hutto]

I know of very few clubs that don't have direct access to serious tourista cash that would even contemplate taking on a note £2-3 million.  One club I know knocked down their lovely old house which was in need of serious repair to build a modern thing.  The members responded by leaving in droves rather than take on the ~£1 million debt.  The club has never quite recovered and is now always on the look-out for members.

My club took on a note of considerable size to pay for a course refurbishment a decade ago (long before I was a member). The result was losing more than 1/3 of the members, the ones not willing to pay for the refurb. To date we have neither recovered to our former membership numbers nor have we made any significant progress toward paying off the principle. Probably never will.

[Ken Moum]

My club took on a note of considerable size to pay for a course refurbishment a decade ago (long before I was a member). The result was losing more than 1/3 of the members, the ones not willing to pay for the refurb. To date we have neither recovered to our former membership numbers nor have we made any significant progress toward paying off the principle. Probably never will.

I don't think many clubs ever recover from losing a significant percentage of its membership due to taking on debt. It's hard enough to stay ahead of normal attrition.  And that typically ends up where your club is, with a "permanent" debt.

Even When a membership buys in, around these parts it's hard enough for clubs to grow income enough to pay down big debt.

K

[Brent Hutto]

I am not involved in club governance but at this point we seem to be accepting that "permanent" debt over our heads much like someone might live at the base of a mountain prone to landslides. We know that one day the sky may come figuratively crashing down if that note gets called in but we're not inclined to move elsewhere in the meantime because it's a great place to live. Other than the future landslide, that is.

[Ken Moum]

I am not involved in club governance but at this point we seem to be accepting that "permanent" debt over our heads much like someone might live at the base of a mountain prone to landslides. We know that one day the sky may come figuratively crashing down if that note gets called in but we're not inclined to move elsewhere in the meantime because it's a great place to live. Other than the future landslide, that is.

My club borrowed about $1.2 million in 1988, when we joined in 1998 the debt was still close a million.  By 2009, the number was still over $800,000, and the membership was sliding southward.

Despite efforts to add members via dramatically lowered dues, by the spring of 2010 things were pretty much over, and the bank ended up taking it over.

This spring a new owner bought it from the bank. 

It's not pretty.

K

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