Private Clubs – What’s In Store After COVID-19?

It’s no secret that our American way of life is in largely uncharted waters thanks to the Coronavirus pandemic.  Most of us are working from home, only essential ventures from “stay in place at home” are permitted in many states and the only business most clubs are doing is takeout food & beverage.  I know of a few clubs that are permitting golf, limited to either walking only or one cart per person and no services.  Much of that is likely to be further curtailed.

While the most critical concern is the health risks associated with the spread of the Coronavirus, as you may have heard the economic impact is no small issue.  Many workers will be furloughed or laid off.  Small businesses, experiencing steep revenue declines will tighten their spending policies and families are likely to reduce costs and expenses, at the very least for the foreseeable future.  How will this impact private clubs?  In short, membership is likely to decline – even at the most desirable clubs.

In many states, private clubs are precluded from most operations, and even though members are still being billed for dues, operating revenues will suffer.  No carts will be rented, no drinks served and limited, if any pro shop merchandise will be sold.  Events and functions are being cancelled in favor of social distancing measures.

While, in theory (at least) members are still paying dues, I am already aware of one club (and I’m sure there will be more to come) considering accommodations or leniency to members who may be temporarily unable to meet dues obligations.

Dues are typically “the engine that drives the bus” economically for clubs.  Most other revenues come with a cost factor that is higher than dues.  Club leaders and managers need to consider both the long and short term impact.  If members are permitted to delay or forego dues for a period of time, the club most definitely feels a short-term impact.  If, as economic conditions improve those members are welcomed back with no strings attached, there’s enhanced goodwill and possibly a long-term stability for the club’s membership.  Conversely, if a member is forced to resign from the club, maybe after a long tenure, once able to return, the animosity that may occur could have that member considering alternative options.  Thus, a lost member.

The point is that while we all acknowledge that club membership is a luxury, for those willing and able to pay, not all members are as affluent as perceived. They often are not as financially committed to the club as club leadership and if they’re not frequent users of the club or otherwise “involved” they can become forgotten and their revenues taken for granted.  This is despite the fact that it is just these members, not those that use the club every day, who are the difference between the club’s financial success and possible failure.

Even some very affluent members who may use the club infrequently, in tough times consider a hiatus from the club as their businesses might be impacted, or if they simply wish to make a statement.  If the club reaches out to accommodate the member, the goodwill created may be the difference between keeping and losing members in the long run.  I’ve seen many a member leave a club with a bad taste only to join somewhere else a year or two later.

For sure, the club has to do what is in its best interests.  What I’m suggesting is that there are both long term and short term considerations, that long-term membership stability is important and that each and every situation is different.  Unique times and situations like we find ourselves in today often call for flexible thinking.  Flying around the storm is often preferable to flying through it, even if it takes a few more minutes.

I’ve seen many clubs through the years that declined to consider the impact of economic crises on their members.  Forgetting the members in favor of the club is kind of like looking at the forest without seeing the trees.  Not uncommon in club world.  Some clubs, thinking they were “bulletproof” made it difficult for affected members.  Some of those clubs don’t exist anymore.  No club is bulletproof and now, with the COVID-19 pandemic and all its havoc, is the time for clubs to consider the best approach for long term stability after reviewing the market, their membership, their culture and of course their financial structure.