Many U.S. country clubs modernizing for survival
BOSTON (Reuters) - When summer kicks off, members will find a fully updated Westwood Country Club with a redesigned golf course, new pool house with a better snack bar, and a teen center.
The nearly $7 million project temporarily closed the Vienna, Virginia, course but was seen as an investment in its viability, a way to retain members and attract new ones. With less than 30 days of construction left, the club will be a place "to be proud of for years and years to come," General Manager Paul Flood says.
Senior members, however, were less convinced. As the vote to proceed neared back in 2010, they questioned whether, given the economic climate, the club could afford to take on new debt. They doubted the proposed $50 per month dues increase would be enough to help pay for the project while revenue was lost during construction. A few members threatened to quit.
Forget tee times - in recent years private clubs in the United States have dealt with budget battles, dwindling membership, and even lawsuits. In the last five years the economic downturn has forced scores of Americans to relinquish their memberships rather than pay average annual dues of $7,000 and initiation fees that can range from $5,000 to $500,000.
Dozens of clubs facing cash shortages or foreclosure have closed. Others, trying to avoid major cutbacks, have reduced fees and modified admission requirements.
With few exceptions, clubs that survived the recession have undertaken sweeping makeovers, often pitting long-held traditions against the need to attract the next generation of members. Enticements often include state-of-the-art fitness or business centers, children's programs, gourmet dining and even relaxed rules.
"This debate is playing out at every single club," says Steve Graves, founder of the consultancy Creative Golf Marketing. "More seasoned members inevitably resist change, but the clubs flourishing today are more casual, more family-friendly and more women-friendly."
Potential new members are finding updated facilities where they can spend weekends with family and friends at very discounted prices. As Graves puts it, "Clubs are really offering members more for their money than ever before."
NOT YOUR GRANDPARENT'S CLUB
While the county's most renowned clubs - think New Jersey's Pine Valley or California's Cypress Point - remain out of reach for all but a select few, many clubs are still struggling to regain their financial footing despite the slowly improving economy.
According to the National Golf Foundation, about 160 18-hole private and public golf courses closed in 2011. Country clubs saw sales - new memberships - shrink nearly 1 percent during the last two years on top of losses racked up during the recession, according to financial research firm Sageworks Inc.
While there was steady growth through the early 2000s, overall membership has dropped by as much as 30 percent at some clubs since 2008.
As a result, clubs that once offered membership by invitation only are advertising markdowns on initiation fees or eliminating them and lowering annual dues. Others are featuring trial memberships with money-back guarantees, or they have opened their courses to the public, charging a per-day fee for a round of golf and use of the facilities. "We're seeing a serious price correction," says Jim McLaughlin, senior vice president at Troon Golf, a club-management group based in Arizona.
Consider the Shady Canyon Golf Club in Irvine, California, where the original initiation fee of $300,000 was reduced to $125,000 in 2011. Myrtle Beach's exclusive Members Club has cut initiation fees to $12,500 from $45,000 in 2005. Shaker Ridge Country Club in Albany, New York, has waived its $6,000 initiation fee through June.
In Arizona, the Pinnacle Peak Country Club is offering potential members between the ages of 35 and 45 the option of putting down a fully refundable $5,000 deposit for a one-year trial membership before committing to a $35,000 initiation fee. Monthly dues are reduced 75 percent.
THEN THERE'S THE FINE PRINT
Enticing as these offers might be, a contract is a contract, and it should be carefully read. Dues can increase. Extra charges such as food minimums or cart fees can add up.
Some clubs refund some or all of an initiation fee if a member leaves, but it can take several months or even years before the money is repaid.
Ask the 36 members of Pinnacle Peak who sued the club to recoup some $1.5 million they say they are collectively owed. After close to 70 members left during the recession, the club changed its bylaws in 2011 to end quick payments for departing senior members. That lawsuit was dismissed in March, but similar litigation has been filed against other clubs from Arizona to Florida.
It also pays to understand clubs' financial health, especially those doing away with initiation fees.
Such fees are used to pay down debt or for capital projects, Graves notes. Without them, a rundown club will stay that way, or members can expect assessments when funds are needed.
TRADITION VERSUS VALUE
Gone are the days when people joined a country club simply because their parents belonged or to garner respect in local business networks. And corporate sponsorships are hardly as common as they used to be.
"For the price they're paying, members expect a lot and they want good value," says Frank Vain, president of the golf consultancy McMahon Group, based in Missouri. "Clubs have to feel like a 52-week vacation getaway less than 20 minutes from home."
Today, vying for attention in hectic two-income households, clubs must appeal to the whole family. Vain suggests that spending on capital improvements, even for cash-strapped clubs, is often the best way to attract these people.
Michigan's Midland Country Club began a complete renovation about four years ago of its golf course and clubhouse. It added fitness and day care facilities and an aquatics center modeled on Disney World water parks. In winter, golfers can play on new indoor simulators.
Steve Pederson, Midland's general manager, says there was initial resistance to the investment from some long-time members. "But we showed them that, for the longevity of the club, we had to appeal to a younger generation," Pederson says. "The model of the old club is pretty much broken."
In time, he adds, longtime members became some of the most frequent users of the fitness club. Since mid-2008, Midland has recruited nearly 400 new members, and it has nearly reached its capacity of 825 members.
Child-focused programming pays off, too. At Brynwood Golf and Country Club in New York's Westchester County, a Troon-run club, members were offered the choice of a free event at the club or a junior set of golf clubs. "Ninety-five percent chose the golf clubs," says McLaughlin, emphasizing a way country clubs can appeal to youngsters.
And most private clubs can afford to relax a little. Lifting bans on blue jeans, mobile phones, and children in dining facilities can also go a long way to attracting new members.
"If I have to change my clothes to eat at the club, I'm not coming," says McLaughlin. "Club rules today need to reflect America of tomorrow, not yesterday."
Members at Westwood Country Club still maintain a dress code, but Flood says family has long been part of its fabric, including a hardy junior golf club, family tennis socials, and a kids center that opened two years ago.
The extensive renovations already are having an impact: Flood says the club recently decided to raise its initiation fee.
(The author is a Reuters contributor.)
(Editing by Lauren Young and Jilian Mincer)
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