"Cost of joining high-end clubs skyrockets, if aspiring members can get off the waiting list"
Article in the Financial Times:
"Luxury golf clubs in south Florida have begun charging high six- and seven-figure joining fees as a pandemic-driven influx of wealthy Americans drives demand for tee times to previously unseen heights."
https://www.ft.com/content/cb5a0e3d-b4e1-483c-b324-14e2bb34558d
Sorry, gated.
@Colin Sheehan....
...this is what I was talking about. Will attempt to paste the article below:
Luxury golf clubs in south Florida have begun charging high six- and seven-figure
joining fees as a pandemic-driven influx of wealthy Americans drives demand for tee
times to previously unseen heights.
Top clubs in the Miami area have doubled or tripled their membership fees since
2020, according to documents and interviews with industry members. The pandemic
saw a flood of rich New Yorkers and Californians moving to Florida, seeking freedom
from harsh lockdowns and income tax, as well as warmer winter weather.
Overflowing demand for golf memberships has left the most exclusive clubs with
years-long waiting lists. New, high-end clubs are also entering the market to capitalise
on demand, offering luxury facilities pitched to the most affluent recreationalists.
Witkoff, a New York-based developer, on Wednesday announced plans for
Dutchman’s Pipe, the first new club in the Palm Beach area in 25 years. Joining fees
for the invitation-only private club, which will open on the site of the former Banyan
Cay this autumn, will range from $300,000 to $350,000.
This is the group’s second new club in the area. The cost of membership at Witkoff
and PPG Development’s invitation-only Shell Bay club, which opened to the north of
Miami Beach late last year, is $1.35mn.
“There’s this access to luxury golf arms race that’s happened,” said one hedge fund
investor who plays in the area. “The types of people moving down there are used to
getting their way and having access to the best of the best. Then you tell them
‘congratulations, you moved to Palm Beach, you can’t be a member of any of the oldschool
clubs because the wait-list is 10 years long’.”
‘Billionaires’ playgrounds’: the $1mn fees upending Florida’s golf clubs
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The cost of membership at Witkoff and PPG Development’s invitation-only Shell Bay club is $1.35mn © Laurence Lambrecht
He said that while public local courses may be available, “these people look at
themselves as masters of the universe, and that is not going to be good enough for
them”.
Demand has driven up prices. The exclusive La Gorce Country Club in Miami Beach
costs $700,000 to join, according to documents from this past autumn, up from
about $200,000 before the pandemic. The historic club is not accepting new
applications for membership, according to its website, and people familiar with the
waiting list say it is five years long.
“It’s like the only show in town, and demand is crazy,” said a caddie at La Gorce who
asked not to be named because the discretion-obsessed world of Miami golf clubs is
small. “DJ Khaled has been trying to get in but isn’t in yet. He’s at Shell Bay.”
DJ Khaled did not respond to requests for comment.
The appetite for golf increased in many places during the pandemic, as working from
home increased demand for outdoor recreation, household savings and available
leisure time. While club membership fees have doubled across the US in the past
decade, almost half of that growth has taken place since 2020, according to the
Bureau of Labor Statistics. At the end of 2019, a quarter of golf and country clubs in
the US had waiting lists, according to Club Benchmarking, a research firm. Today,
almost half do.
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Nowhere has seen more intense demand than south-east Florida. The cost of joining
clubs in south Florida is more than quadruple the national rate, with the median cost
jumping from $120,000 in 2019 to $200,000 in 2023, Club Benchmarking said.
The Breakers, an elite club in Palm Beach, charges $550,000 for new members, while
those familiar say it was closer to $300,000 before the pandemic. Emerald Dunes
costs $700,000, compared to about $300,000 pre-pandemic, and has a waiting list
members say is 100 people long.
“The old clubs are impossible to get into. It’s crazy the initiation fees that people are
paying to just have a place to go to dinner or play golf,” said one financier who plays
at several clubs in the area.
Elite golf clubs are famously secretive about their membership processes and fees,
making it difficult for even avid players to keep track of price inflation. Indian Creek
Country Club, the private golf club located on the Miami island known as
“billionaire’s bunker”, require that would-be joiners liaise directly with existing
members about the cost and how to secure a coveted invitation.
Indian Creek charges new members $500,000, more than double the pre-pandemic
level, and is considering a further increase, according to people familiar with its fees.
Breakers and La Gorce declined to comment, citing their members’ privacy, although
the Breakers noted that its fee structure had changed in recent years. Emerald Dunes
and Indian Creek did not respond to requests for comment.
“It’s crazy and happening very rapidly. Two or four years ago you had upscale clubs in
Naples and Miami and Palm Beach that were getting two or three hundred thousand
[dollars] and that was a lot,” said Larry Hirsh, president of Golf Property Analysts.
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The elite Breakers Club in Palm Beach charges new members $550,000 © Steve Allen/Allen Creative/Alamy
The lack of public information about clubs is part of their marketing. “It’s all part of
the aura. Clubs are very concerned with prestige because some people — that’s what
they pay for,” said Hirsh. Secretiveness means fee increases are “hidden”, and in
2022, the year US inflation climbed to 9.1 per cent, Patrick Harker, the president of
the Federal Reserve Bank of Philadelphia, said the wildly rising costs of private golf
clubs could be seen as a silent contributor.
Florida has the highest density of golf courses of any US state, with more than 1,250
courses, according to the National Golf Foundation. But new land for development in
Miami and Palm Beach, bordered by the ocean on one side and the Everglades, a
protected wetland, on the other, is scarce.
Golfers must vie for spots at existing clubs, which sometimes restrict membership so
tightly that a current member must die in order for a new member to be admitted, or
new developers must buy and renovate existing properties at high valuations.
Dutchman’s Pipe will be a private 220-acre course in West Palm Beach, a 15-minute
drive from Palm Beach Island, where the median single family home sells for nearly
$13mn. Acquiring the club “was a generational opportunity”, said Alex Witkoff, the
developer’s co-chief executive. “Building a new course in Palm Beach is never going to
happen.”
The new luxury offerings from clubs speak to the region’s rapid transformation since
the pandemic, and its impact on golf culture.
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“People are not looking for the same old country club experience,” Witkoff said.
Dutchman’s Pipe’s bougainvillea-covered clubhouse will feature a spa and a chef who
cut his teeth at Annabel’s, the private members club for the well-heeled in London’s
Mayfair.
“People are seeking world class dining, they don’t want banal club food,” Witkoff said:
“Yes, you will be able to get a great burger, but also branzino and tuna tartare.”
The high price point also aims to sidestep another issue playing out in the old Miami
and Palm Beach golf clubs — tensions between new money versus old members.
Affluent golfers moving from New York and Los Angeles are used to paying top dollar
for elite experiences, and have expectations for what $700,000 should buy. But
members who joined clubs decades ago for a fraction of that price are less enthused
about dues going up to fund costly changes, leading to clubhouse conflicts.
Florida has long been a magnet for
“snowbirds” — Americans flying south for the
winter. But the cost and design of the new
private clubs “is reflective of the people who
have been moving down to Miami” more
recently, Witkoff said, many of whom are
staying for much of the year.
The state estimates that almost two-thirds of
the money that moved to Florida in 2022
alone came from New York. “We are postsnowbird.
We are building these clubs to
focus on Florida today, not Florida a decade
ago,” Witkoff said.
A high entry price also ensures that members have exceptional long-term spending
power — a guard against sudden economic shocks — as well as a “shared
psychographic profile”, Witkoff said.
But some question how long the industry can sustain such rapid price growth, asking
if the current boom will turn out to be a “golf bubble”.
“The question is, is this sustainable?” the hedge fund golfer said. “Is this Florida thing
a permanent deal where people are going to stick around and support these clubs
until the end of time?”
Golf has been a cyclical industry that booms in times of economic growth, and pulls
People are not looking
for the same old
country club
experience . . . Yes, you
will be able to get a
great burger, but also
branzino and tuna
tartare
Alex Witkoff
‘Billionaires’ playgrounds’: the $1mn fees upending Florida’s golf clubs
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Copyright The Financial Times Limited 2024. All rights reserved.
Golf has been a cyclical industry that booms in times of economic growth, and pulls
back in rough years for markets. After the 2008 financial crisis, many clubs dropped
their joining fees to attract members. They also changed their business models. It
used to be common for members to be able to recoup some or all of their joining costs
when they left, which caught many clubs off-guard when the recession caused an
exodus.
What makes the current surge in the cost of playing golf in Florida so striking to many
enthusiasts is that many of today’s sky-high joining fees are non-refundable. “That
million is sunk,” one player noted.
But as the hedge fund golfer noted of south Florida’s new luxury clubs, “these
billionaires’ playgrounds, where members can afford massive initiation fees, are
betting that these people are recession proof because they’re so flush”.
Golfers writing non-refundable cheques to join these clubs, many of them
professional punters on Wall Street, are making a similar bet.