Oakland Hills Drastically Cuts Initiation Fees

[J_ Crisham]

If you are wondering how the economic climate is affecting Clubs in the Detroit area, Oakland Hills has slashed their initiation fee. This came in response to a loss of several members and an absence of potential new members on a nonexistent waiting list. The question is how many other clubs will follow suit?                                        Jack

[goldj]

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.

[JLahrman]

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.

I'd be more annoyed if the club I had just joined went under.  Price reductions happen for all types of goods and services, I don't see why the club should refund money to people who joined for a price both parties had agreed to.  I don't know how clubs handle this type of situation, perhaps something can be done since customers see each other on a regular basis (unlike the guy who paid half as much as me for his ipod during a clearance sale).  I wouldn't think refunding initiation fees would be the way to go about it though.

[Jim Thompson]

If credit markets do not loosen up soon, losing 50 k - 110 k in membership fees will seem like a drop in the hat in Michigan.  Those with 110k to put down on a membership have far more to worry about right now.  Everyone here is still ready and willing to work and the auto situation is permeating every industry in the Midwest.  Further, the good people that had credit six to eight months ago still have the same character they did back then.  These are very scary times.

[JohnV]

It happens all the time.  We all take risks when we join a club.

When I joined Pumpkin Ridge in 1992, I paid 30K.  My agreement was that I would get 80% of what the membership was sold for if I decided to leave.  In 2001 I put my name on the list to get out.  At the time, memberships were going for 45K so 80% was 36K which meant I'd make a profit.  Unfortunately the club decided that it need to sell more memberships to clear out the list of those of us who wanted to get out and to finally fill membership, so they lowered the price to 28K.  When my membership sold in 2003, I got 80% of 28K or 22.4K.

Nothing I could do about it unless I wanted to continue paying dues for a club that I lived 2000 miles away from and could get to once or twice a year.

Now I'm trying to get my membership bond back from the club I joined in Pittsburgh.  At least I'll get my entire bond back whenever they sell enough memberships to get around to paying me.

[Paul Nash]

Getting your money out only when they have enough members sounds similar to the few clubs in the UK that operate debenture/ transferable membership options - but there are not that many of them. Also, a big difference in the UK is those big membership fees - the only clubs that are more than £10k to join that I can think of are: Lock lomond (not doing too well!), the Wisley (membership is a proper equity share) and Queenwwod (the dearest of the lot and possibly still doing well - they have social restriction scheme on who can join - i.e. not too many investment bankers). I think a couple of the new Scottish clubs - Renaissance and Archerfield also have expensive up front dues. But that makes 5 I can think of - Wentworth may also be over £10k but that is just a fee with no option of getting anything back.

[cary lichtenstein]

There will  be dozens if not hundreds of stories like this in the next 12 months as club struggle to survive.

[Rick Sides]

Cary is exactly right about hundreds of clubs.  The economy is really, really bad and I would not be shocked to see major clubs close this year or offer membserships to average people who would never have had the chance to become a member before.

[Tommy Williamsen]

One of my clubs lost 40 members this past year after being "full."  The board of directors debated about the best way to make up the shortfall. At first they decided to raise dues 15%.  They shelved that idea, thinking it would only further deter folks from joining.  They opted for an assessment.  I think we will see more of that this year.

[Rick Sides]

I hate to say it, but in this current economy, golf is a luxury and not a necessity(although I beg to differ)  and many people are getting out of their clubs and the club doesn't know what to do.  Clubs can raise fees but that will make members bail, so a lot of clubs in my area of NJ are waiving initiation fees to lure new members.  This may be a chance to join a pretty good club with little or no initiation.

[J_ Crisham]

Rick,   I agree that for many golf will be a luxury.  Jack

[Rick Sides]

Jack makes a good point about many of the more traditional clubs have older members.  I know many friends of mine that are retired and took a killing in the stock market the past year or two.  Many of these seniors may now leave their clubs because of the economic crunch.

[C. Squier]

What about more (affordable) National membership programs?  Seems to me like that's a pretty easy source of cash that doesn't place a huge burden (higher dues and/or assessments) on the local members.  How many National members equal one local member when it comes to rounds played?  Maybe 5:1?  

[Jay Flemma]

If you are wondering how the economic climate is affecting Clubs in the Detroit area, Oakland Hills has slashed their initiation fee from 110K to 60K. This came in response to a loss of several members and an absence of potential new members on a nonexistent waiting list. The question is how many other clubs will follow suit? OHCC has a 10% equity position in their initiation fee. Tough to be the guy that bought in last season at 110K!
                                                                               Jack

That is an absolute steal, run, dont walk.  I fell in love with the course when I was there.  It blew away my expectations.  Plus the people are super-nice.  Join.

[J_ Crisham]

Clint,  I agree that clubs will have to be more creative.   Jack

[Kevin_Reilly]

I think a thread about the finances or membership rolls of a private club is in bad taste. 

There was a thread earlier in the year questioning the business model of a new club, and that thread was pulled or edited for good reason.

Now here we have a thread (with a sensational title) with specifics about one club's membership information that is certainly considered confidential by the club itself.   If the initiation fee information below is on the club's website or available to the public, then I'll retract this.

[Mike_Young]

I am fortunate to belong to a club begun in 1926 ....a DR course.....with a board of genuises that most play no more than 10 times per year or less......a couple of them went to a DRS meeting a few years ago and now we have a proposal for a 6 million dollar redo/assessment....all debt.....the club has around 800 members and 600 voted...it passed by 8 votes....they decided to go ahead.....they say they know that plenty will leave..they project over 100...it will be more.....the argument is that we will be so far ahead of the competition when we come out of this that everyone will want to join.....so far we have ben able to stall it but it is a sad thing.....

[ed_getka]

Mike,
   What do the geniuses think is wrong with the course that make it worth spending $6million on in this economic environment?

[Mike_Young]

Mike,
   What do the geniuses think is wrong with the course that make it worth spending $6million on in this economic environment?

Only 3.5 mill goes toward the course......and of course they really don't want to cut many trees but they really like cart path w curb......oh and we need to improve the present range for aorund $500,000 where they can have some more tee space and mainly nice target greens....problem is the range is in the wrong place.....but they also want to copy the original DR green drawings.....that's what Donald wold have wanted

[PThomas]

or i wonder if we will see more privates open for limited outside play like in the UK??

[Dean Stokes]

or i wonder if we will see more privates open for limited outside play like in the UK??

I would hope so Paul but I doubt it. It would make great sense to have a couple of tee times a day reserved for unaccompanied groups. Make them the most unused tee times at each club, require handicap certificates and charge a healthy but fair sum of money for the pleasure. Great idea.

[Patrick_Mucci_Jr]

Mike Young,

I don't know the particulars, but, committing 3.5 - 6 million to any capital project in these times seems somewhere between irresponsible and reckless.

I'd categorize it as insanity, without the need for the qualifying words, "financial suicide"

I'd rather horde what capital I have, weather the current storm and reassess my needs and ability to raise funds when the storm has passed.

Any Board embarking upon a project of this nature should be questioned and challenged with an alternative slate.

I know a club that recently spent in excess of 1 million to redo the locker room and about 600 K to put paver bricks on top of their concrete cart paths.  The proponents claimed it would attract new members.

Surprise ...... it hasn't, nor will it.

When was the last time that someone joined a club because the cart paths were pretty ?

Sometimes, the problem with a club with a large membership, is that substantive projects are couched in the all too familiar, " it will only cost X per member".   While that's true, it's based upon the large number of members remaining static or increasing.  However, that number can and probably will diminish, leaving a greater financial burden for those who remain, which will also happen on the operations end.

This is how organizations/clubs go into a death spiral

Fight the good fight, this is NOT the time to be cavalier with a voluntary organization's money

Kevin Reilly,

I agree with you.

This only feeds into the media frenzy of undermining consumer confidence, but, don't worry, all that will change on January 21st.

[Mike Mosely]

should we start an open thread of all the courses that follow suit?  That way we have all the courses that do that in one place for easy reference?

[Tom_Doak]

Well, if any club in America ought to be having trouble right now, it would be the most expensive club in Detroit, wouldn't it?

Unfortunately, there are plenty of clubs in America in similar straits, and there will probably be more of them before this is over.  But we went through the same thing in the 70's, and everybody survived.

It is only so painful because for the last ten years, a lot of people have been living a fantasy life where money was easy and everything was there for the taking ... but a lot of it was borrowed money.  It's just like golf, nobody ever admits to the good bounces, they just complain about the bad ones.

[JMEvensky]

should we start an open thread of all the courses that follow suit?  That way we have all the courses that do that in one place for easy reference?

Unfortunately,it would probably make more sense to list those clubs that don't follow suit.It will be a much shorter list.