What's the cost/value of golf as part of a private club membership?

[Carl Johnson]

For example, in a club that's essentially just golf (no social memberships or ancillary activities), one might put the golf at 95 percent or more, with food and drink being the rest.

Now, compare a full scale American country club (anon.).  The club offers an outstanding golf course, excellent tennis, swimming pool, and fitness facilities and both casual and fine dining.  Full initiation is $50,000, with a social membership (everything but golf) at $37,500 (75% of full) - non-equity.  Monthly dues are $400 full, and $300 social (again, 75% of full).  Add in about $100 of fixed fees and minimums and the dues/fees ratio jumps to 80% for a social membership.  

[Editorial note/addition: The numbers are, in my opinion, a reasonable composit - not just a single club.  I'm focusing on the ratio of golf-apportioned costs to other activities.  You could take these numbers and go up or down the same percentage for each and come out at the same ratio.  I've just done that - tweaked the numbers. The totals would be different, as they should be in different cost markets, but the ratio would be the same.]
 
So, at club anon. one could say golf is priced at about 20% to 25% of the full value of the club.  I have no idea of how this compares with the typical American "country" club.  Would this make sense to you?  In your market or otherwise?  What do you say?

[JESII]

On a quick read...I'd say it doesn't make sense to look at the social membership with those numbers. How could you? Then again, I think that's the point of social memberships...to overprice them to see how many people will actually pay for it and consider it gravy.

[PCCraig]

Obviously the value differs for golfers and non-golfers. Golfers are primarily there for the golf and pay for it. Social members are there primarily for the pool and tennis and dining and are paying what they believe those rights are worth.

[Nigel Islam]

Carl are those numbers a real club? I could not image buying in to a social membership in this day and age. Of course I live in a place that cost of living is about as good as it gets. I think the demise of country clubs has a lot to do with the fact you can put your own pool in for the cost of a couple years of dues at a club. With youth travel teams and the hectic lifestyles of 2013, few acually have time for CC social events. Thus the main reason people join clubs is for business and golf.

[Brent Hutto]

Carl,

I think your way of conceptualizing the question is flawed. You can only do that kind of calculation if someone where allowed to pay 25% of full and just play golf.

The typical Country Club setup seems to me a single product aimed at serving two separate, if not entirely disjoint, markets. Kind of like the car dealership which basically operates two businesses under one roof. They sell new cars and they sell car maintenance service. A big part of the draw for their service department is the prestige and presumptive reliability and quality of being the such-and-such brand dealer.

Surely for some potential social members the Country Club is a more attractive place to eat, swim, play tennis and so forth because of the prestige and sense of the club being a Big Deal because it has a really nice golf course. There are cheaper places to have your oil changed than at the Toyota dealer and likewise there are cheaper places to eat dinner or drop your kids off at the pool during the summer than a high-$$$ Country Club.

Perhaps that becomes a second-order consideration in figuring out how to attract a new-car buyer or a full-golf membership buyer. You've got to offer whatever is the market price for the new car if you're a dealer but you can also afford to not make much money per car because you have that huge profit center out back in the service bays. A full-service Country Club with a substantial number of social memberships in place can perhaps afford to offer a slightly more attractive value-for-money proposition for full-golf members even though the golf course demands a huge proportion of ongoing expenditure.

Just some things to think about...

[Brent Hutto]

Carl are those numbers a real club? I could not image buying in to a social membership in this day and age. Of course I live in a place that cost of living is about as good as it gets. I think the demise of country clubs has a lot to do with the fact you can put your own pool in for the cost of a couple years of dues at a club. With youth travel teams and the hectic lifestyles of 2013, few acually have time for CC social events. Thus the main reason people join clubs is for business and golf.

Nigel,

Like yourself I find those numbers forbiddingly large and have to remind myself that the world is full of people making budget decisions on a basis far beyond my own life experience.

My own club has had a certain amount of success over the past couple years attracting social memberships. We're operating at a fraction of the monthly dues that Carl describes and by "certain amount of success" I mean going from almost no social membership to have a few dozen families. As far as I can tell, the draw seems to be among people who live within a couple miles of the club (which is located in the far suburbs of a midsize metropolitan area) so that the pool and such can serve as a de facto replacement for the typical suburban residential development amenities.

I also think the fact that social members can pay a guest fee and play up to a couple rounds a month on the golf course is a crucial element. There seems to be a sizable market niche for families where only one person (usually the father) plays golf at all and when he does it's maybe 20, 30, 40 rounds a year not all of which are at his home course.  Our social memberships are less than half the full-golf membership dues which means even paying a guest fee or two per month the total cost is still far lower than a full membership.

It's an odd seeming thing to me but then again I play 100+ rounds of golf a year and don't have preteen kids clamoring for a swimming pool every day from Memorial Day through Labor Day. I've got to say, though, that given the fact zero of those folks would be associated with a golf-only version of our club I welcome the additional income their dues represent. We're going to have a pool and a kitchen and all that stuff anyway so social memberships are almost like found money with little impact on the expense side of the equation.

[Nigel Islam]

In my midwestern "city" of 120,000 people we have essentially 5 private golf courses. There is a golf only GD top 100 with an initiation fee substantially less than Carl's number. There is the old established country club with minimal buy in. There are three other clubs with no buy ins. The four country clubs have dues estimated at $4000-4500 a year. I believe the golf only club to be twice that. At least one of those country clubs has been on life support more than once. I think the construction of a big name, big game golf course in the 1990s has changed the country clubs forever. I know though that all five clubs have some level of membership drive.

[Carl Johnson]

Carl are those numbers a real club? I could not image buying in to a social membership in this day and age. Of course I live in a place that cost of living is about as good as it gets. I think the demise of country clubs has a lot to do with the fact you can put your own pool in for the cost of a couple years of dues at a club. With youth travel teams and the hectic lifestyles of 2013, few acually have time for CC social events. Thus the main reason people join clubs is for business and golf.

Here's the note I've added above: [Editorial note/addition: The numbers are, in my opinion, a reasonable composit - not just a single club.  I'm focusing on the ratio of golf-apportioned costs to other activities.  You could take these numbers and go up or down the same percentage for each and come out at the same ratio.  I've just done that - tweaked the numbers.  The totals would be different, as they should be in different cost markets, but the ratio would be the same.]

It seems to me the ringer question is what would be the ratio of social to full memberships at such a club?  My guess would be that, except for some very old memberships who recently dropped out of golf, you would not get many social memberships based on this fee structure, but I don't know.  In other words, Nigel, I'm in agreement with you.  Assuming a club such as this hypothetical wants to offer a non-golf membership, what sort of price structure would be better for everyone?

[JMEvensky]

It seems to me the ringer question is what would be the ratio of social to full memberships at such a club?  My guess would be that, except for some very old memberships who recently dropped out of golf, you would not get many social memberships based on this fee structure, but I don't know.  In other words, Nigel, I'm in agreement with you.  Assuming a club such as this hypothetical wants to offer a non-golf membership, what sort of price structure would be better for everyone?

In my part of the world,what Jim Sullivan said above.A Board consists of full golfing members who usually look at social members' dues as gravy.Anything you can get is "found money" because they don't have golf privileges.

A club with "aspirational" value might be different. If being a non-golfingl member conveys some business or social value,then your proportional numbers might make sense.

[Kyle Casella]

There are some clubs that use social membership as a stepping stone to golf membership when there is a waiting list. Obviously there are very clubs in this category, but it is a shrewd move by them to get people in the door and paying until they can step-up to full golf membership.

[michael j fay]

This is a very good question.

If you are in it for just the golf you are looking at a Club bill (all inclusive) of around $ 1,200 a month, 12 months of the year plus the amortization of the initiation fee. Let us say $ 12,000 a year plus $ 6,000. This is the low end of the spectrum.

Simple arithmetic $ 18,000 a year divided by 50 rounds is $ 333.33 plus the additional pleasures of eating Country Club food a couple of times a month and having your family swim in the pool and play tennis.

The more you play, the less per round. The less you play the greater per round.

The major problem IMHO with Country Clubs is the costs that are beyond the golf. If you don't swim you pay X for a non event, same with tennis and all the others. Food service is always expensive and in my travels tends to be high end mediocre at best. Ask yourself, iif you have a guest coming in to town and want to take them out to dinner is the Club your first choice? Unless you have a minimum to burn I seriously doubt it. Frankly all a Club needs for food service is a good hot dog or hamburger at the turn and a fresh sandwich for lunch or after golf.

If you study the accounting of most clubs you will need to be a reader of fiction. Almost all will show a small loss or small gain in food service. If the numbers are put into the proper categories (managers salary, ass't managers salary, etc., along with proper proportional overhead costs) there will be a big loss. I seems that most are satisfied with this form of fiction for the sake of exclusivity. The main point here is that you cannot run a white tablecloth restaurant 5-6 nights a week with the potential of 500 customers. One of three restaurants fail in areas that are inhabited by 350,000 potential customers.

Any monies that are pinpointed as Administrative are really F&B monies. Dues are supposed to go for the upkeep of the golf course, not to subsidize the kitchen.

So what do you get for your $ 333.33 per round? Eighteen holes, with a cart and some $ 250.00 of unwanted expenses.

Is it worth it?

More and more clubs in the US are finding it more and more difficult to convince people that it is.

[David_Tepper]

Carl Johnson -

Are there really country clubs where the cost of a social membership (initiation fee and dues) is 75% of a full membership? I find that figure surprisingly high.

My expectation would be that the cost of a social membership at such a country club would be between 25% and 50% of a full membership. After all, isn't the cost of operating and maintaining the golf course the biggest annual expense (by far) for the country club?

DT  

[BCowan]

Mr Fay is my hero!

   I have seen clubs located in good locations attract a strong social membership due to the pool.  I'd imagine clubs in big markets are used to impress for business purposes.  If the pool is popular and location is great, then it can pay for itself and not be a drain on the course.  Newer subdivisions are starting to put pools in them.  I think a course has to look at cost benefit analysis to decide if having a pool is wise.  I don't see private clubs advertising the pool/social aspect enough.  Word of mouth is always best.  

[Carl Johnson]

Carl Johnson -

Are there really country clubs where the cost of a social membership (initiation fee and dues) is 75% of a full membership? I find that figure surprisingly high.

My expectation would be that the cost of a social membership at such a country club would be between 25% and 50% of a full membership. After all, isn't the cost of operating and maintaining the golf course the biggest annual expense (by far) for the country club?

DT  

David, in fact there are (at 75%), but my thinking is kind of like yours, which is why I raise the question.  Pure golf is one model, and should be easy to price.  But there are plenty of country clubs that offer a lot more than golf.  So, if you really want social members, the price for that option would need to be reasonable.  If not, no one would take the club up on it, so why offer it?

I did not take up golf until late, and my club today is just golf.  We may have a social membership on the books, but if so, it's not something we're interested in, and I'd be surprised if we had any social members.  Whey I was young and my kids were little, we joined a swimming pool.  When they got older, we switched to a tennis/swim club (no food, except maybe a candy and cracker machine).  We could have joined a country club and gotten swimming and tennis, but weren't interested in paying for the golf, dining, etc. that we had no interest in.

I wonder if any others know of different ratios.  Is it possible to have just a social membership that would work?

[Jason Topp]

There are more social members than golf members at my former club and it is not cheap.  The primary value as I understand it, relates to networking. 

[Patrick_Mucci]

For example, in a club that's essentially just golf (no social memberships or ancillary activities), one might put the golf at 95 percent or more, with food and drink being the rest.

Carl, your 95 % - 5 % ratio is way off, you still have significant house expenses seperate from F&B to account for.

Now, compare a full scale American country club (anon.).  The club offers an outstanding golf course, excellent tennis, swimming pool, and fitness facilities and both casual and fine dining.  Full initiation is $50,000, with a social membership (everything but golf) at $37,500 (75% of full) - non-equity.  Monthly dues are $400 full, and $300 social (again, 75% of full).  Add in about $100 of fixed fees and minimums and the dues/fees ratio jumps to 80% for a social membership.  

Your numbers are way off

[Editorial note/addition: The numbers are, in my opinion, a reasonable composit - not just a single club.  I'm focusing on the ratio of golf-apportioned costs to other activities.  You could take these numbers and go up or down the same percentage for each and come out at the same ratio.  I've just done that - tweaked the numbers. The totals would be different, as they should be in different cost markets, but the ratio would be the same.]
 
So, at club anon. one could say golf is priced at about 20% to 25% of the full value of the club.  I have no idea of how this compares with the typical American "country" club.  Would this make sense to you?  In your market or otherwise?  What do you say?

We used to compare operating budgets from nearby clubs and it was always a difficult task due to different accounting methods in terms of line item assignability.

A golf club, strictly golf or full service, is a luxury item and justification through cost analysis a difficult, if not impossible task.
It's more visceral than financial in many cases

[Andrew Buck]

It seems to me the ringer question is what would be the ratio of social to full memberships at such a club?  My guess would be that, except for some very old memberships who recently dropped out of golf, you would not get many social memberships based on this fee structure, but I don't know.  In other words, Nigel, I'm in agreement with you.  Assuming a club such as this hypothetical wants to offer a non-golf membership, what sort of price structure would be better for everyone?

I look at it differently.  At all clubs I've been associated with, the resources spent on golf course dwarf the resources spent on the other "activities" (tennis/pool).  While a lot of many may be spent on F&B, and this is controversial, in theory all members are being charged for F&B per use, and this is not really part of the dues.  I know of very few social members (other than long-time members who no longer golf) who join for F&B alone.  

Based on this, since approx 75% of the club "activity" expenditures are toward golf, I think it makes sense that the Golf dues are much greater than social (ours are about 4X).  

[JESII]

Pat,

I'll post over there as well, but don't you think your last sentence there answers the question about measuring the return on certain golf course projects? Is there a single golf course project that could rationally create a positive return that makes it worth the investment?

[Carl Johnson]

I know nothing personally about this club, but Standard Country Club in Louisville is offering a la carte options, including, apparently, "golf only."  Here's an excerpt from a newspaper article: "If members want a stand-alone golf membership for the 18-hole course, that will be an option. If they want tennis facilities only, that’s an option, along with choosing a Standard swimming pool membership – or any combination of the three, along with access – or not – to the clubhouse."

Here's a link to the entire article: http://insiderlouisville.com/news/2013/03/21/sources-standard-country-club-members-closing-clubhouse-discussing-possible-redevelopment/

Here's a link to the rate section on the club's website, which doesn't mention the club house (or tennis alone) being a la carte: http://www.standardcc.net/Membership/Plans-and-Rates.aspx

Anyone know how this plan is working out?

[Carl Johnson]

Carl,

I think your way of conceptualizing the question is flawed. You can only do that kind of calculation if someone where allowed to pay 25% of full and just play golf.

Right - probably better turned around - what's the value of a social membership?  What I'm trying to get at is pricing models for full-service clubs, including golf, that might work.  The approach of the "club" I've used in the example, which in fact is based on real life, seems flawed to me.

. . . .

[Brent Hutto]

I'm no business person but surely pricing is best determined by what the (potential) market will pay than by what various options cost. The problem is, it's real hard for people like us to guess what somebody might or might not be willing to pay for a social membership that is fundamentally worthless (or nearly so) from our perspective as hard-core golfers.

[Paul Jones]

Carl,

I found those numbers to be extremely high - I am sure those numbers are fare in the big cities and top clubs, but I would guess that initiation fees are quite less around the US - closer to $15,000.  Social memberships are usually 1/2 cost (initiation and dues) of Full Membership from what I have seen.

[Gary Slatter]

For many, joining a golf and Country Club is still the cheapest way to move up the Social Ladder.   For the other 30percent, it's the golf!

[Brent Hutto]

Just to show what a clueless existence I lead...

I'll admit to being surprised at the notion that any Social Ladder exists which could be climbed by joining a Country Club. I thought it was all about Mercedes and Land Rover SUV's and elite kindergartens nowadays.

[Carl Johnson]

Carl,

I found those numbers to be extremely high - I am sure those numbers are fare in the big cities and top clubs, but I would guess that initiation fees are quite less around the US - closer to $15,000.  Social memberships are usually 1/2 cost (initiation and dues) of Full Membership from what I have seen.

I was assuming a high-end club in a major metropolitan area.  But, to scale down, if $15,000 was full initiation, then in my model, a social membership would be $11,250.  You're suggesting that $7,500 would be a better bet for a social membership price.  That does seem more reasonable to me.  Remember, I'm trying to get at pricing (not accounting or budgeting) for various aspects of a full-service club.