PRIVATE MATTERS
The stumbling global economy, to no one’s surprise, is having a major impact on the golf industry. With the exception of a few hardcore golfers, keeping a roof over their head, keeping the lights on and keeping mouth’s fed are their top financial priorities. This country’s depression, in both economic and emotional terms, has struck even those holding the highest reserves of disposable income.
As evidence, the Golf Club of Cape Cod (Massachusetts) completely waived its hefty $85,000 initiation fee at the start of 2009. Golfers interested in joining were given, for the time being at least, a free pass.
The persistent downturn has driven many clubs to come up with creative financing to attract and maintain existing members. The bad news is that the golf industry is feeling a hurtful pinch. The good news is that now is the time for, dare I say Joe the Plumber, to ride the coattails of the Clampetts into the luxuries of the country club lifestyle.
Golf clubs in Atlanta have not been immune to the financial woes. Unsubstantiated scuttlebutt (the clubs in question would not return phone calls) is that some of the city’s most highly sought after clubs have fully depleted their membership waiting lists.
Phone surveys of general managers and membership directors at a handful of the city’s higher-tier private clubs revealed that, yes, Atlanta has been hit by the downturn, but not to the severity of their counterparts elsewhere in the country. Relaxed financing options are widespread in the area, but no headline-grabbing, bargain-basement pricing like that in Cape Cod could be found.
“I can tell you that everyone is struggling regardless of the caliber of club that you are at,” says Mike Ryan, chief operating officer at Country Club of the South. “Most of the clubs around here are doing deferred programs on their initiation fee, whether it is one-year, two-year, three-year or even six-year deferred payments. I know of one club in the area that bases the initiation fee on how long you stay at the club. If you stay for five years, you probably don’t owe any initiation fee. If you leave before, you owe a percentage.
“But basically it is a dues game,” says Ryan. “We live off of our dues and not really our initiation fees. Initiation fees are usually used for capital (improvements). Dues are for operations. Clubs are just trying to get new members in the doors right now and are taking down the (financial) barriers. Clubs are hoping that two years down the road, or whenever things get better, that they can reinstate and recover those fees.”
Along with deferred payments, other clubs are trying what Ryan referred to as “callable” initiation fees. There is no initial fee but the club can call and ask you to pay at any time. He felt that tactic, while creative, would not be as successful as the deferred option.
Country Club of the South currently offers a one-year deferred option on its initiation fee.
“There is just a surplus of private golf clubs in this market,” says Bryan Schacht, director of sales and marketing at TPC Sugarloaf in Duluth, a Greg Norman layout that served for many years as a PGA Tour stop. “We are fortunate to be owned by PGA Tour Golf Course Properties. We are not owned by the members. It is not an equity club. We haven’t had to offer free memberships or deferred initiation fees or dues-only programs. However, we are doing some pretty aggressive finance options on membership deposits. We are offering the opportunity to delay dues for those joining in the winter to not start paying until the spring, but we are maintaining the integrity of our membership deposit. It has not been discounted.”
Schacht says that the membership numbers at TPC Sugarloaf were flat last year. A sign of the times is that in 2008 the club had 28 members resign with a refund and an additional 20 “walk-away” members, meaning those that just quit the club without a refund. The club had previously averaged only one or two walk-aways per year in its history.
Attracting corporate golf memberships has proven a significant challenge for Schacht as Wall Street has tumbled. Companies need to continue to entertain clients, but most are cutting back significantly. Schacht says he finds his corporate golf memberships in much tougher competition, going head to head against suites at the Georgia Dome or Atlanta Braves season tickets as companies decide what to keep and what to jettison.
Even Hawks Ridge Golf Club near Ball Ground, a favored home course to many of Atlanta’s most recognizable – and well-paid – athletes, has had to make some concessions to the economy.
The club is deferring its initiation fee for three years with all dues paid up front, according to Bill Wagner, general manager at Hawks Ridge and a former president of the Club Managers Association of America. The initiation fee is due in full after three years (100 percent refundable) or can be paid in installments in years four, five and six (75 percent refundable). The club experienced a net gain of 53 members in 2008.
“Georgia, and Atlanta in particular, has always been known as having the finest collection of member-owned clubs in the country,” says Wagner, who spent his previous 15 years managing Riviera Country Club in Coral Gables, Florida. Cherokee, Capital City, Peachtree and Druid Hills were among those that immediately came to mention.
“Those old-line clubs, many of them had waiting lists before the economic crisis. Some still do, but they are a lot shorter than they once were. But they don’t have to do anything as far as initiation fees. They have capital accounts that have cash in them. They can get by just about any membership crisis. It’s the club’s without the war chests that are suffering. Some are making previously unheard of policies to accommodate their memberships.”
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