Club Culture – The Economic Impact

The culture of any club is critical to its success.  Assume that you’re a member or in management of a private golf or country club. You’re probably a member in good standing, being up to date on all dues, fees and assessments.  Do you consider yourself an owner of that club, or just a customer? Think of your fellow members at this club: Do they act like customers or owners?

In consulting with private clubs all over the US for more than 30 years, and I’m convinced there are two kinds of clubs: those with owners and those with customers.  Though many clubs are member owned, even those members often act like customers. Let me give you an example: The golf course at private, residential club is now 30 years old and needs a major facelift — not just a redesign but better drainage, bunkers that actually drain after a rain event, a proper practice facility, and maybe a new banquet facility. If that club can’t gain majority approval for this renovation project, or it passes but the required assessment results in significant member exodus, that could be a club with too many customers and not enough owners.

For long-term success, clubs need to be both populated and led by “owners”. One term I’ve seen used, quite appropriately, in my view, is “stewardship”. Club stewardship is the province of member/owners who are committed to passing on a stable, healthy and viable club to the next generation.

This is more than a mere thought experiment for private clubs today, especially those with real estate components. Proper stewardship means effective planning — addressing the lifespan of club assets in addition to the golf course, such as roofing, HVAC systems, swimming pools, racquet sports facilities and fitness facilities. If these deteriorate, the club deteriorates — followed just as surely by surrounding home values. Proper stewardship and planning protect everyone’s investment and perpetuate the future of the club.

Planning for the inevitable (and normal) wear and tear is something investor-owners handle as a matter of course. Think of the way you maintain your own home. In the short term, it’s as simple as a club establishing a reserve sinking fund as part of the budget each year. This means setting aside actual cash to fund the replacement of various short-lived items. The problem is that most member-owned clubs with tight budgets often eliminate these sinking fund/reserves in order to balance the budget. It’s often the easiest way for boards to make ends meet without raising dues, implementing assessments or increasing usage fees — things that members (customers) hate!

Unfortunately, it’s also the fastest way to dig a hole that a club may never climb out of. That sinking fund is hugely important, and it’s never too late to start one. Though it may not reverse past neglect, establishing a reserve NOW at least cushions the impact when reinvestment in the club is no longer a matter of choice. Maybe it’s the golf course. Maybe the club depends on function revenue and the ballrooms/kitchen facilities need to be updated. There will come a time when that reinvestment must be done — owners plan for such things, while customers often just leave for greener pastures or leave it to the next generation as the club declines.

Good master planning also requires a club commitment to find independent, professional assistance in the areas of golf course design, clubhouse design and third-party market/financial/operational consultation. But good master planning requires something else: members who think and act like owners. Members who think and act like customers cannot and will not plan for the future.

The next time you’re frustrated by the way things are going at your club, think first about the club’s culture. Club cultures can and do change. Indeed, a good assessment often weeds out the customers, leaving behind a core of stewards to do what has to be done.