Historically, almost all private golf and country clubs were member-owned and run by member boards in years past. Often started by local business and civic leaders as a place for the “A” list of local society to meet and recreate, private clubs were a bastion of exclusivity. Over the past 25-50 years, however that has changed – somewhat. First, there was Mr. Dedman of ClubCorp, recognizing an economic opportunity and observing that “clubs were run like nobody’s business because they are nobody’s business.” Then, more recently with the golf recession of the 2000’s and subsequent great recession beginning around 2008-2010, many private clubs experienced declining membership and revenues combined in some cases with increased debt. Quite a few were forced to sell to both well-known management firms and investors, such as ClubCorp (now Invited Clubs), Concert, Kemper, ARCIS, Troon, Landscapes and others recognizing a potential business opportunity. Some clubs were preserved by well heeled members who simply sought to perpetuate the existence of their clubs and stepped in financially to rescue the club from closure. This still occurs today.
This has created an industry of “for-profit” clubs, that interestingly includes some of the most elaborate and outstanding club facilities, often with an influential membership, but without the veil of secrecy that can define some member-owned clubs. Given that there are often significant differences in operations, perceptions and desirability between the not-for-profit (member-owned) and for-profit (investor-owned) clubs begs the question as to which operating model is preferable? There are many twists and turns to this debate and I’m hoping to briefly explore some of them here, but certainly make no promises that a conclusive answer to the question is forthcoming.
Given the importance of club culture (see my Book, The Culture of Golf), that would seem a good place to start. One apparent constant is that older, member-owned clubs with a long operating history often perpetuate a culture of exclusivity, which as even those clubs integrate racially, religiously and culturally, is promulgated to promote the perception of status in membership. These clubs sometimes have a rigorous and selective membership process and the atmosphere is often characterized by strict dress codes, restrictions on cell phone usage and lots of other rules that seem to have limited purpose other than enforcement by board members. Conversely, I’ve observed that investor-owned clubs are typically more relaxed when it comes to dress codes and other rules, not to suggest that there aren’t any. While the membership process is often more involved at member-owned clubs, that ebbs and flows, often dependant on the state of the club’s membership rolls, economics and the depth of the competitive club market at any given time. Some clubs, even the oldest ones, that have long waiting lists now were begging for members just 5 short years ago, and had been for a long time. Time will tell if those times will return.
There is sometimes a perceived “stuffiness” to the atmosphere at some member-owned clubs that has members and guests “walking softly” and “looking over their shoulders”, while the investor-owned clubs typically have more of a “buzz” to the environment and feature a “vibe” more commonly found at ski resorts and other recreational facilities. For those of us fortunate enough to have visited Scotland to play golf, the atmosphere at many investor owned clubs is more akin to the typical Scottish club, where golf isn’t so much a status symbol as it is an “everyman’s” game. At many clubs in Scotland, anyone who works at the club is a member, and a dues paying member might be your caddie, while your server or the person who checks you in to play is also afforded membership privileges when off-duty. After golf, all are welcome for food and drink and it’s common for even the General Manager to join in the fun when the work day is over. That rarely happens at most private clubs in the US.
In addition to the more subjective and sometimes subtle (and sometimes not so subtle) differences mentioned above, there are economic differences. The management and operations of non-profit clubs don’t require a return on investment like for-profit clubs do. Thus, the decision-making process varies. Investor-owned clubs are operated as businesses. As such, like most businesses, expenses are managed in a manner that maximizes revenues and cash flow. Conversely, member-owned clubs often spend where investors might not. Given the “space race” for bragging rights that exists between many member-owned clubs, areas such as maintenance budgets and service staffing might be excessive so the members can show off their club’s facilities and sometimes excessive level of service, and spending. Sometimes, improvements are made that either aren’t feasible or are done in an excessive manner. While most golfers can tell the difference between excessive maintenance budgets and inadequate maintenance programs, the real question is at what level is the golfer’s experience is enhanced or diminished enough to justify the added expense. There is no doubt that member-owned clubs typically spend more on golf course maintenance and that it’s noticeable. Are members willing to pay for it? Are they more willing at a club they own versus one they don’t? These two questions are critical to both types of clubs. That specific club’s culture will usually yield the answer.
I’ve always found it fascinating to observe at some member-owned clubs high priced professionals being hired for key management positions (GM, superintendent, membership director, golf pro) only to be told how to do their jobs by the “amateurs” (board members). This is typically referred to as “micromanagement”. Obviously, that doesn’t occur much at investor-owned clubs since there’s usually one final decision-maker. It should be noted that member-owned clubs exist where there is a “benevolent dictator” who has total authority for most decisions.
At member-owned clubs there are often factions who can’t spend too much and factions who seek to be more frugal. These groups often clash and the clubs become politically “charged”. At investor-owned clubs, the politics aren’t nearly as vigorous and while members may not always be pleased with one or more aspects of the club, those members are typically immune from assessments and dues are often less costly. That said, it’s in the owner’s best business interests to understand that club’s culture and provide a product that will help maintain a happy and stable membership that enjoys using the club and keeps coming back. That should mean doing the things that help that.
As suggested above, there’s no clear answer to whether member-owned or investor-owned clubs are “better”. Understanding a club’s culture, the universe of existing and potential members and catering to the market dynamics is essential for both. Regardless, members demand value for their membership dollars and while that can be defined in many ways, when a club becomes no longer enjoyable it suffers economically and there’s bound to be dissatisfaction and decline.