We often get calls from member-owned clubs seeking appraisals for use in consideration of selling their club, sometimes after years of “treading water” financially and finally surrendering as soon as someone makes a proposal to “rescue” (purchase) the club.
One of my father’s favorite quotes was: “the longer you let a problem go, the bigger it grows”. Many clubs are much like the patient who notices a small problem but avoids seeing the doctor until it becomes a big problem. The element of emotion in governance, along with the laborious and time consuming process of implementing change at most clubs hinder the club’s ability to correct the offending condition(s).
In many situations, before understanding the market value for a potential sale, the club may be best served by having an independent review of the club and market to determine if a sale is truly necessary. Whatever the results of that study, if a market value estimate (appraisal) is then needed, most of the work is already done.
Included in such a study might be the following:
- Membership Analysis (age, location, etc.)
- Competitive Market Analysis (# of members, openings and closures, fair share, entrance fees, dues, etc.)
- Club Membership Program (categories, cost, etc.)
- Site & Facilities Analysis (age, usage, condition, capital, etc.)
- Financial Analysis (revenue, expenses, capital)
- S W O T Analysis
- Options, Conclusions & Recommendations
Armed with this information, the club can make an informed decision on whether selling is the right option, or if the club can re-position in the market, renovate, reconfigure it’s operations or enhance marketing to turn things around.
Club boards have a fiduciary responsibility to the membership. Accordingly, just as an appraisal would provide a level of comfort in a sale, a review of the club as described above would clearly identify the best path forward for the club without the emotional and political burdens that often infest club board rooms.
If it’s concluded that it’s time to sell, the focus then shifts to achieving the best price. Formulating an exit strategy, which might involve an appraisal, but also a plan to prepare the club for the best possible marketing prospects should be considered. Depending on the club’s finances, deferred maintenance should be addressed and any enhancements that can be made for the benefit of the financial statements should be implemented. It’s important for the club to be presented in its best light, with all relevant information compiled and organized and with consideration of the time of year so that transfer of ownership can take place at the least disruptive time.
When is it time to sell? Only after the board is fully informed that selling is the right thing to do and prepared to market the club to achieve the best price possible.