Those of us in the golf industry often attend seminars and conferences where we’re told about GOLF’s competition. Typically, this is based on a price per round analysis of golf compared to other recreational activities like hiking, cycling, concerts, ball games and other activities that typically involve the whole family. That doesn’t always tell the whole story.
Certainly, the private club segment has experienced contraction in recent years, and as we’ve explored previously (http://golfprop.com/blog/is-golfs-culture-the-games-worst-enemy/) there are numerous reasons for that. I thought it would be interesting to compare the cost of private club membership to the typical alternatives.
While many clubs in the current environment have either reduced or eliminated entrance fees or deposits, many still have an initial investment and some can range as high as mid-six figures in the priciest situations. Though few reach that level, many are in the five-figure range that represent at the very least, a significant investment.
Dues also cover a broad range with many middle market clubs in the mid four figure ($4,000-$7500) per year and upscale clubs in major markets and destinations often costing $1,000 per month ($12,000 annually) or more. What does this mean to the prospective member when considering the expenditure of discretionary, recreational dollars?
Our research indicates that annual revenues (per member) at most clubs approximate twice (plus or minus) the annual dues. Thus, the typical annual expenditure per membership is probably between $12,000 & $25,000 at the majority of private clubs.
Since the decision to join or not to join a country club is a “high class problem” the comparisons should also inevitably be equally discretionary. Below are just a few examples of potential substitute recreational endeavors and their typical cost:
- Ownership of vacation or second home- $20,000-$40,000
- Seasonal vacation home rental – $10,000 – $30,000
- Ownership of boat- $5,000 – $30,000
- Ownership of light aircraft- $5,000 – $25,000
- Extensive travel – The sky’s the limit
- Luxury or Sport Automobiles- up to $35,000
- Motor home- up to $35,000
- Attendance at Sporting events – The sky’s the limit ($200/person per game)
- Skiing – $200/person per skiing day + travel
Depending on the level pursued, the costs (acquisition and operating/ownership) may be more or less than the club membership, but are probably comparable and to most necessitate a choice. Since every choice has a price, possibly foregoing one for the other means club membership has to offer value – to the whole family. The activities listed above often benefit the entire family while club membership sometimes only focuses on one or two family members.
Thus, it’s obvious here that private clubs (even the best of them) that wish to keep members happy have to provide value. They compete for the recreational dollar (and time) not only with other clubs and public golf but also a wide variety of often more family-friendly activities.
Now, I’m not suggesting that private clubs become cheap. I’ve seen clubs fail BECAUSE they tried too hard to be cheap. As Warren Buffet says, “cost is what you pay and value is what you get.” The club now has to be a value proposition. It’s impossible for private clubs to be both cheap and desirable to most. As a luxury item, it has to be BETTER. Compared to the activities listed above (and others), it has to be family friendly, of high quality and atmospherically and environmentally appealing.
The private club market environment varies from community to community, and is dependent on climate, competition, demographics, social factors, and facilities. Knowing your club’s market, both within and outside the golf (and other club activities) universe, and responding accordingly is essential to long term success.