Transparency and the “3 C’s” at Private Clubs

Among the most common complaints of members at private clubs is a lack of transparency. Not surprisingly, at investor-owned clubs that are operated for profit, the management dynamics and governance vary from that found at not-for-profit member-owned clubs, typically run by member boards. At investor-owned, for-profit clubs, operations are designed to maximize financial return to the investor. Sometimes, the interests of members seeking value for their recreational dollar and the required return of investment don’t match up and the club suffers, either from dissatisfied members, unsatisfactory returns, or both.

At member-owned clubs run by boards, there is no profit motive, thus (in theory) members (through the board) decide what they want and if they’re willing to pay for it. In either model, problems occur when decisions are made with limited or no input from the membership and (even when the club is not member-owned) there is no transparency of club decisions or finances.

Though one might ask why members at investor-owned clubs feel as if they have the right to know club finances, they often express concerns that the owner is “making too much money”. If this isn’t handled deftly by ownership, unhappy members can result along with the residual challenges of same. Members’ rights to transparency is a question often debated, not only at investor-owned clubs but member-owned as well.

The dynamic at member-owned clubs is much different. By virtue of ownership, members have a legal right to access to financial records and depending on by-laws, participation in decisions involving expenditures above a certain amount. It doesn’t always work that way.

At many clubs few members are willing to serve in leadership positions and some boards operate in an environment with little oversight, infrequent changes in leadership and most notably, finances and decision-making that is often done in secret and with little or no communication with the membership. When this happens, the club environment being what it is grumbling begins among the membership, a result of a brewing distress. Despite numerous surveys, the desire of most members to bring guests and show off their club, and despite often excellent and desirable facilities, member dissatisfaction is more prominent than leadership lets on. This occurs even at many great clubs, though isn’t often discussed openly.

From my observations at the numerous clubs we’ve observed, analyzed and visited, I’ve learned that whether member-owned or investor-owned the keys to real member satisfaction at clubs are what I call the “3 C’s”:

  • Communication
  • Consistency
  • Culture

Like many of life’s challenges, member dissatisfaction can often be resolved with effective and clear communication. Club leaders and owners often send numerous emails informing members of events, temporary closures and tournament results. Rarely, are communications sent that advise the membership of board meeting minutes, expenditures or governance issues. Policy changes which may not be popular are often done behind closed doors, and membership is informed after the fact. At many clubs, the “same old crowd” populates board and leadership positions and many members who might be willing to serve are unable to penetrate the inner circle.

This results in a lack of transparency and when new (and often unpopular) rules and policies are implemented or problems aren’t addressed members feel like they’re being taken advantage of. In the recently resurgent club membership market, some members feel like their clubs have evolved from a place where the answer to most questions and requests was “yes” to one where some policies are implemented for the express purpose of saying “no”.

Why is this discussion important? As I wrote recently about sustainability, the economic uncertainty of our times is such that clubs could be right back where they were pre-COVID, scrambling for more members, offering “deals” and scratching heads about how to balance budgets before we know it. Despite what we all think about the invulnerability of our clubs no club is bulletproof and the key to retention of members gained during good times is keeping them happy, starting with the “3 C’s”. Happy members are the lifeblood of any club. They (like anyone else) want to feel appreciated. As soon as they don’t, bad things happen. Even in these thriving times when many clubs are full with waiting lists, the club needs the members more than the members need the club.