Inflation. This is one of the most unwelcome of all terms, especially to incumbent politicians. According to the US Federal Reserve, a target of 2% is considered an acceptable inflation rate for our economy. Golf Property Analysts set out to see how the cost of private club membership compared during the past 4 years to both the actual rate of inflation and the Fed’s target rate of 2%.
From 2010 to 2020, according to statista.com, annual inflation rates ranged from .12% to 3.14% with an average rate of 1.72%. From 2021 through (projected) 2024, thanks largely to the COVID pandemic, artificially low interest rates and its supply chain issues, inflation ranged from 2.3% to as high as 8% in 2022, an average rate of 4.87%. The good news is that inflation has declined in 2023 and is projected to be 2.3% in 2024, near the Fed’s target rate.
How does that compare with the average increase in the cost of membership at private golf & country clubs?
We’ve surveyed clubs we’ve analyzed during the past several years and reviewed our database to get a sampling of how the cost of private club membership has risen since the beginning of COVID in 2020. We tracked membership dues (full family), capital dues (if any), annual assessments (if any), and food & beverage minimums (if any) and added those factors to produce total cost of membership. These figures do NOT include other expenditures like cart fees, events, pro shop purchases, etc. Average annual increases were calculated as a percentage along with cumulative increases over the period.
The clubs surveyed included a wide variety of clubs across the economic spectrum with projected 2024 annual cost of membership ranging from $7,680 to $37,500 and entrance fees (2024 projected) ranging from $0 to $250,000. There were smaller clubs (<300 members) and larger clubs (>1,000 members). The results were interesting.
The average annual increase in cost of membership ranged from 0% to 6.4% (per year) and the overall average was 3.81% annual increase over the period 2020 to 2024. Cumulative increase in cost of membership ranged from 0% to 36.6%, with an average cumulative increase of 20.97% for the 5 year period. Thus, on average, the clubs surveyed maintained increases less than the average national inflation rate of 4.87% for the period.
Where clubs experienced the most significant increases was in membership entrance fees, which rose on average approximately 23% per year and nearly tripled over the 5 year period for the clubs surveyed.
As the clubs included in the survey are diverse in nature (size of membership, cost, age, amenities, etc.) this data helps illustrate the direction of private club cost during the COVID era and shows to some degree what levels of increased membership cost have been typical in the market. The highest year over year increase was just over 15% in one year for a club that averaged 6.4% for the period.
Increased debt as a result of extensive renovation projects likely contributed to the increased cost of membership at some clubs, as did “catching up” in some cases where dues were maintained at artificially low levels in the pre-COVID era when clubs were struggling.
Like everything else, the cost of golf, private and public, is increasing. When there are premium daily-fee courses charging $900 for a round of golf it raises eyebrows. In the private club world, members want to know if they’re getting a fair value for their dollar. While clubs and markets vary in pricing, the picture created here is not so much to analyze the cost, but the level of increase. Excessive increases can “raise red flags”. We’ve been contacted, and in some cases engaged by members at some clubs concerned about the rising cost of membership and raising questions about management practices, transparency of operations and spending. Members want to know where the money is going and the club environment is often discouraging to those who seek (and at member-owned clubs have a right to) that information.
Discrepancies do occur at some clubs whether we acknowledge it or not and can originate from a variety of sources. Excessive increases, often imposed simply “because they can,” with limited or no justification can signal broader problems with a club’s management, staff or leadership that however uncomfortable or awkward need to be addressed.