Among the many challenges for private clubs today is planning for the future. Private clubs, often being a collection of intelligent, successful and sometimes strongly opinionated members who join the club for different reasons usually means there’s no shortage of a variety ideas and suggestions for the future of the club.
What’s best for the future of the club isn’t always easily recognizable by membership or even those involved in club leadership. As discussed in my recent blog “Is Now the Time for Large Capital Projects” the decision to embark on capital projects requires not only consideration of the issues intrinsic to the club, but also a look “outside the box” to other peer and competitive clubs in the market and the economic conditions in general. Once it’s concluded that the club needs some capital, the question is how to proceed.
If the facilities and infrastructure are adequate and simply need to be updated, a refurbishment is likely in order. A refurbishment typically refers to a renovation of existing facilities. At a club, it would include things like rebuilding bunkers, repaving parking areas, replacing irrigation or HVAC systems or replacing a roof. These types of projects are usually mandatory in nature in that they represent addressing deferred maintenance or necessary updating but don’t change the character of the property.
A reinvention, especially in the club world typically means that the club will make major modifications, normally in response to changes in the club’s culture or the market dynamics to better position the club for future generations of membership. A reinvention of a club may recognize changing demographics at the club and modify facilities to meet those changes. Golf practice areas could be added or enhanced, fitness facilities could be developed or expanded or eating areas could be re-imagined for a more casual atmosphere. Outdoor eating areas could be added and facilities might be expanded for a variety of purposes.
While a reinvention might include a re-purposing of certain spaces within the club, a re-purposing for this discussion refers to converting the property to an alternative use. Many clubs that are experiencing financial distress have been either fully or partially converted to alternative developments. Some clubs have to consider either re-purposing the entire site for a higher and better use or downsizing the club to fewer holes (maybe 18 to 9) and selling or developing the excess land.
Any club considering these kinds of options needs to balance the desires and needs of the membership, the long-term best interests of the club as a whole and combine that with an objective understanding of the club’s financial condition, competition, market position and the property’s highest and best use.
It’s not unusual for the highest and best use of a club property to be something other than continued use as a club. If the club is operating successfully and the membership desires to continue onsite, highest and best use is a moot point. However, if the club is distressed it can be critical. With zoning and restrictive covenants often playing a big role in the determination of highest and best use, some clubs have limited options. While not impossible to change or expand allowable alternative uses, it can be expensive and take many years thus being prepared for same is essential. Distressed clubs sometimes sell to developers who operate the clubs for a period of time until entitlements for alternative uses can be achieved, at which time the members lose their club.
The most successful clubs often focus on long and short range planning, but club economics can change rapidly. Refurbishing is a fact of life for all properties. Re-invention is often the only way for a club to succeed as a club into the future. Re-purposing is often the last resort but also requires planning and an understanding of highest and best use if the club is no longer viable.