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Mike Bodo

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Private Clubs at a Crossroads
« on: June 07, 2019, 11:36:27 PM »
The article at the link below ties in nicely with the subject being discussed in a separate topic regarding golf membership networks and their potential impact on both how and where the game is played.


https://www.city-journal.org/country-clubs


With the baby boomer generation either aging out of the game or (sadly) dieing, where does this leave the remaining private clubs that still exist - many barely hanging by a thread at this time? Outside of the elite and many top-tier private clubs, will there be a mass closure of private golf/country clubs when the next recession hits or will some or many be saved by becoming aligned with reciprocal club networks or going the daily fee route?


I sense we are on the precipice of a major upheaval as it concerns the economic sustainability of the sport and can see a variety of different models fighting it out to reset the the clock and become the standard others follow. I certainly don't have the answers and neither it seems does anyone else despite the many topics and discussions had on this very subject in recent years. The problem the way I see it is that there is no one-size fits all solution and what successful plans clubs and their boards come up with will apply locally or regionally at best. That said, it would be good to hear from others regarding their thoughts on the article, in addition to their opinion on the fate of private clubs and what they see happening with this segment of the golf market in years' to come.
"90% of all putts left short are missed." - Yogi Berra

John Kirk

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #1 on: June 08, 2019, 12:41:19 AM »
...
« Last Edit: November 03, 2023, 08:44:48 AM by John Kirk »

Jeff Taylor

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Re: Private Clubs at a Crossroads
« Reply #2 on: June 08, 2019, 02:52:11 AM »
That last sentence is the perfect summary of your post.

John Kirk

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #3 on: June 08, 2019, 03:38:09 AM »
I came back in the middle of the night to remove that last sort of sentence.  I wrote that after an evening that would have frustrated most of us (three hours on the phone trying to fix something I didn't break), and it affected my mood.

We'll see how that prediction looks in 25 years.  Well, a few of us.

Just for grins, here's the total outstanding debt, according to the Federal Reserve of St. Louis bank.  About $72 trillion, up from about $5 trillion in 1980.  That's about $218k per person, up from about $22k per person in 1980.  $1 in 1980 is worth about $3.10 today (http://www.in2013dollars.com/us/inflation/1980?amount=1), so that would say the increase in debt per person is 218/68.2 = 3.2.  Therefore, the average amount of debt per person has increased 220% in terms of real dollars over the last 40 years.

https://fred.stlouisfed.org/series/TCMDO

$218k per person.  Who is going to spend money on golf?

I say the current incredible state of the game, with so many great courses and fantastic playing conditions, is ultimately unsustainable.


« Last Edit: November 06, 2023, 08:28:11 PM by John Kirk »

Mike Sweeney

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #4 on: June 08, 2019, 05:41:12 AM »
Golf is a game and life is a game. You bob, you weave, and you adjust. As a consumer of golf, I love the changes that we have seen in golf, except for the distance issue of golf balls driven to silly distances that force existing courses and clubs to make expensive changes. That is silly/stupid. You have built 15,000 courses in the USA and roughly 30,000 worldwide. With a few simple adjustments, you can keep the ball in play and not have to add 500-1000 yards to perfectly fine designs. And yes, you can have more than one set of equipment specs, and more than one set of rules.

We tend to be drama queens around here about our golf clubs. It has been harder in the past!! In 1940, Richmond Golf Club (England) wrote this and the club is still here today:



Richmond Golf Club today:



The people who allowed Richmond Golf Club to survive:

« Last Edit: June 08, 2019, 06:13:09 AM by Mike Sweeney »
"One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us."

Dr. Carl Sagan, The Demon-Haunted World: Science as a Candle in the Dark

Steve Kline

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #5 on: June 08, 2019, 06:22:18 AM »
How much of the country club issue is really just a demographic issue?


The baby boom generation was huge, leading to a massive expansion in the number and type (housing development/resort) courses. Generation X was much smaller. There really aren't enough of us to support any industry the way the baby boom generation did. Many industries and economies are starting to feel the effect of that very small generation now as we are in our 40's and 50's but we don't have the collective spending power of the previous generation.


However, the following generations are much, much larger. There will be enough of them to drive higher demand for all kinds of things, including golf and private country clubs. Yes, there is still another round of economic/societal turmoil to go through to resolve the debt issue. But, on the other side of that, there will be enough people demographically to support all kinds of things.

John Kirk

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #6 on: June 08, 2019, 08:40:33 AM »

In my experience, the economics of building a new course and club don't really add up.  Even with a course that has been (eventually) paid for, a maintenance budget of $500k plus other basic administrative functions needs maybe $700-800k to run each year.  That means you need 500 members to pony up $1400-1600 per year each.  Or 200 members at $3500-4000 per year.
« Last Edit: November 03, 2023, 08:47:07 AM by John Kirk »

Mike Sweeney

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #7 on: June 08, 2019, 09:02:39 AM »

There's a bigger problem for me.  I keep trying to participate, and I don't have anything nice or constructive to say anymore.  Sorry again for the invective.


John,


You will have to stand in line behind me for "stupid club memberships". :)


Your post is a good one, please leave it. On the other side of the pond, I joined Enniscrone as an Overseas Life Member for 2000 not-Euro, and there was no Euro back then!! Now it is 4000 Euro and for me, it just paid off with the dream Father & Son trip and Captain Andy and the local members treated us like any golf partner wants to be treated. One great decision in the middle of some bad ones:







Keep the faith!!
"One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us."

Dr. Carl Sagan, The Demon-Haunted World: Science as a Candle in the Dark

Philip Hensley

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #8 on: June 08, 2019, 11:30:24 AM »
What evidence is presented in that article that proves the country club is dying? I must live in bizarro world, as the #1 complaint in my area is that country clubs have too many people! Too hard to get a preferred tee time at your own club, too many people at the club, etc.


The change of culture is what kept many of these country clubs open. Country clubs had to evolve and either become more family friendly, and not treat the rest of the family after Golfer Dad as afterthoughts, or cater to a younger single (non-married) male as a golf/social hangout. Most have gone the family route and are thriving.


The idea that all Millenials live at home with their parents while making $25k a year and have $100k in student debt and can't afford to do anything is a silly stereotype. None one making that kind of money (inflation adjusted) was going to be joining a country club regardless of the times.

How much of the country club issue is really just a demographic issue?


The baby boom generation was huge, leading to a massive expansion in the number and type (housing development/resort) courses. Generation X was much smaller. There really aren't enough of us to support any industry the way the baby boom generation did. Many industries and economies are starting to feel the effect of that very small generation now as we are in our 40's and 50's but we don't have the collective spending power of the previous generation.


However, the following generations are much, much larger. There will be enough of them to drive higher demand for all kinds of things, including golf and private country clubs. Yes, there is still another round of economic/societal turmoil to go through to resolve the debt issue. But, on the other side of that, there will be enough people demographically to support all kinds of things.


This is the real changing of the culture question in regards to private country clubs. If there really is a dying of country clubs, demographic change is the symptom, not the disease. The following generations being much, much larger than GenX doesn't matter if the people in those cultures are not interested in golf in general, and especially private golf. The demand and purchasing power of those generations will be directed elsewhere.

John Kirk

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #9 on: June 08, 2019, 12:54:36 PM »
Here's a recent summary of United States golf industry figures:

https://www.thengfq.com/2018/05/ngf-issues-2018-golf-industry-report/

Mike, my commentary isn't based on personal grievances.  Previous experiences with clubs that experienced foreclosure is water long under the bridge.  Besides, I wouldn't consider my own disappointments when making an opinion about macroeconomics.

My belief that the number of golf facilities and golfers will continue to decline is based of thermodynamics, that you need lots of energy to run a golf course, and that fossil fuel energy is becoming more difficult to discover and produce.  Using energy for golf is a low priority for a society, and therefore golf courses with high associated energy costs will be increasingly difficult to support.  It's hard to see because it happens so slowly.  But maintaining sufficient energy for society is a top security issue.


Like I said, I don't have anything valuable to add.  I've said all of this before.  Very few people agree with that analysis.  I predict a lot of suburban and urban golf course will be developed into smaller, affordable housing.


A few basic statistics comparing younger and older generations via Pew Research.
https://www.pewsocialtrends.org/essay/millennial-life-how-young-adulthood-today-compares-with-prior-generations/

Daryl David

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #10 on: June 08, 2019, 01:13:42 PM »
It’s hard for people to relate to macro trends when we all live in our own micro world. A friend of mine just decided to move to a small rural city (pop. 30,000) in one of the Western states.  Farming community, not a retirement area. He checked in at the only private club in town to inquire about joining. Sorry, we have a long waiting list but you can join as a social member while you wait 4 or 5 years. The private club model is thriving in that micro world.


I think discussions on the future of the private golf clubs need to occur along separate lines.  You should probably take a discreet look at:


-private golf clubs married to real estate developments
-private destination golf clubs
-traditional private country clubs


I think you would see very different current situations and future outlooks.

Wayne_Kozun

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #11 on: June 08, 2019, 02:07:41 PM »
I think the demographic argument is overdone as births did not fall THAT much.  See the chart below - they fell below 3.5M per year for the 70s but other than that they have been between 3.5-4.3M.  And I am guessing that this is somewhat, if not completely, offset by longevity and folks being in better shape for longer thanks to medical advances like joint replacements. 






Steve Kline

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #12 on: June 08, 2019, 05:06:04 PM »
I think the demographic argument is overdone as births did not fall THAT much.  See the chart below - they fell below 3.5M per year for the 70s but other than that they have been between 3.5-4.3M.  And I am guessing that this is somewhat, if not completely, offset by longevity and folks being in better shape for longer thanks to medical advances like joint replacements. 








Now look at the rate of change of that. Many times it is not the absolute level of something but how fast it is growing or contracting that ultimately matters. People often react to growth by over producing. Then the contraction happens and production gets shut down more than the absolute level would indicate, but is a reaction to over production from the fast growth.

Mike Sweeney

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #13 on: June 08, 2019, 05:11:36 PM »
Very few people agree with that analysis.  I predict a lot of suburban and urban golf course will be developed into smaller, affordable housing.



I probably agree John, so let's play them before they go under!!


"One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us."

Dr. Carl Sagan, The Demon-Haunted World: Science as a Candle in the Dark

John Emerson

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #14 on: June 08, 2019, 05:26:09 PM »
The game of golf, as a whole, would be much better off with several thousand crap courses closing.  I have seen so many times that one person with some scratch builds a course for a large sum.  Few years later the same course is sold for half of what it cost to build.  Few more years later it’s sold again for a third, and finally it sells again for pennies on the dollar and can finally make money. All along going from private, then to public as each consecutive buyer starts hurting for cash.  Then the course runs several others courses close by, out of business because of the ability to charge cheap rates and still make a profit.  It’s a vicious cycle.  I’ve seen this happen several times in Kentucky. 
“There’s links golf, then everything else.”

Tommy Williamsen

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #15 on: June 08, 2019, 05:58:05 PM »
What I cannot figure out is why some clubs struggle and others do not. I was a member at Four Streams outside of DC. Golf only and excellent golf and world class food. We had a good caddie program and it was a second club for most. At one time we were capped at 250 single members (meaning no spouses). It was over leveraged when we bought it from the developer and the initiation fee went from $60,000 to a fraction of that. We still lost members. A member bought the club but from what I understand the club is struggling again. I wonder if some of the clubs that struggle the most are second clubs. The other area country clubs to which I belonged are doing fine.
Where there is no love, put love; there you will find love.
St. John of the Cross

"Deep within your soul-space is a magnificent cathedral where you are sweet beyond telling." Rumi

Steve_ Shaffer

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #16 on: June 08, 2019, 06:14:32 PM »
The author of the this article " Death of the Country Club" is not a golf writer or a golf business writer as far as my research shows. He is assistant editor of City Journal. His writing has appeared in City Journal, The American Conservative, The Atlantic, National Review . He has used 3 examples of closed private clubs to generalize the subject and  written another " doom and gloom" article.  Obviously, he his unfamiliar with my posting of golf course club closings, both private and public, here.
Yes, since the "Great Recession" some clubs have closed because of declining membership or closed because their land was too valuable not to sell and were cashed in; however, those that remain should be placed in different categories. His concluding paragraph doesn't mean anything.
There will always be the " Top Tier Member Owned Clubs" in the major metro areas that will not struggle. We all know who they are without naming names. They are the home of the " One Percenters" for the most part.
The second and third tier clubs may struggle, depending on demographics and location. Some may have been saved already by the influx of capital from Concert Golf and others. Some may go semi-private or even link with Dormie  or Boxgroove or others with an influx national or traveling members. Some may close.  It's the survival of the fittest for them.
Residential private clubs range from the ultra high end to " active adult" The ones that have failed are not so numerous.  The ones that are ultra high end are usually located in highly desirable weather areas, full time or part time, and unless another " Great Recession" happens, should survive.
Private destination clubs, we know who they are,  obviously attract  the " One Percenters" and the Captains of Industry .
Will there be a " resurgence"  of private clubs? Perhaps but not death. As I said, this was just another " doom and gloom" article.
« Last Edit: June 08, 2019, 06:17:57 PM by Steve_ Shaffer »
"Some of us worship in churches, some in synagogues, some on golf courses ... "  Adlai Stevenson
Hyman Roth to Michael Corleone: "We're bigger than US Steel."
Ben Hogan “The most important shot in golf is the next one”

Mike_Young

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #17 on: June 08, 2019, 07:47:25 PM »
Private clubs are at a crossroads but the big issue is going to be clubhouses more than the courses when it comes to surviving...
"just standing on a corner in Winslow Arizona"

Steve_ Shaffer

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #18 on: June 08, 2019, 08:03:04 PM »
Toll Bros, a NYSE company, is building a private Nicklaus Design ( not a Jack N signature design) course  in a new residential community 10 minutes from my house in the West Valley of Phoenix WITH a 40,000sf clubhouse.


https://www.tollbrothers.com/luxury-homes-for-sale/Arizona/Sterling-Grove
"Some of us worship in churches, some in synagogues, some on golf courses ... "  Adlai Stevenson
Hyman Roth to Michael Corleone: "We're bigger than US Steel."
Ben Hogan “The most important shot in golf is the next one”

Tom_Doak

  • Karma: +2/-1
Re: Private Clubs at a Crossroads
« Reply #19 on: June 08, 2019, 09:42:43 PM »
What I cannot figure out is why some clubs struggle and others do not. I was a member at Four Streams outside of DC. Golf only and excellent golf and world class food. We had a good caddie program and it was a second club for most. At one time we were capped at 250 single members (meaning no spouses). It was over leveraged when we bought it from the developer and the initiation fee went from $60,000 to a fraction of that. We still lost members. A member bought the club but from what I understand the club is struggling again. I wonder if some of the clubs that struggle the most are second clubs. The other area country clubs to which I belonged are doing fine.


Golf courses struggle because of supply and demand.


In general, most small towns do not build too many private country clubs, but in Daryl David's example of the small Western rural city, if someone did decide to build a second course there, it would probably not only fail but take the other club down with it.


In bigger cities, there are already too many private country clubs from another era, and some will inevitably close as all but the best kill each other trying to compete on price at unsustainable levels.  Most of these clubs are set up for 300 members, and have 150-200, but the truth is they ought to have 400 members to keep the dues down a bit, and they could do so easily since many of the members play less golf now than they did 15 years ago.


"Second clubs" are another problem entirely, because they are competing in the entire universe of "second clubs" in a much broader region.  A guy in San Francisco who wants to be a member of a second club could join a club anywhere from Montana to Hawaii.  Some such clubs will have a very hard time competing against others in that universe because their situations are so different - yet they are still competing for the same people.

Dave Doxey

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #20 on: June 08, 2019, 10:15:36 PM »
  Add in real estate development courses, which are built by developers to anchor a new development and sell house lots at a premium.  Most of these courses have cost structures that are unsustainable as an ongoing business and are either given to an HOA or sold at a large discount, once the lots are sold and the developer moves on.  These courses either become a burden to the HOA or go through a series of bankruptcies and often end up as struggling daily fee courses. 
Frequently they are zoned to be open land by the developer to meet housing density rules and thus are not able to be developed.  Costs for maintenance of the course and upkeep of overly large clubhouses make existence as a private club impossible.  A development course near me is closed and owned by the HOA.  Reportedly cost $20+M to build, yet the HOA has not been able to find a firm willing to operate the course on a lease at $1 per year. Zoned for golf or open space. Now a cost homeowners. Not to mention previous members, who lost $50K initiations.

Bernie Bell

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #21 on: June 09, 2019, 11:21:40 PM »
Four Streams, of which I was also a member, is a one-off and a poor case study for any macro trends, in my view.  Supply and demand was not the issue.  The current demand for golf in Montgomery County MD is strong at every level -- county-run courses, private daily fee courses, and private clubs at every price point and level of exclusivity.  As in any business, some golf courses will struggle simply because they're poorly directed. 

Ryan Farrow

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #22 on: June 10, 2019, 01:12:49 AM »
Is the end of new Country Club construction upon us or has it just been replaced by high end, destination resort golf? I see a large # of private club logos at Bandon, Sand Valley, Streamsong etc... Are these places nothing more than 2nd club replacements? It does seem to be a younger crowd which is a bit of a departure from the standard CC demographic.


What I am saying is that I have no idea what is going on right now and it's not just related to the the golf world.

Jeff Schley

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #23 on: June 10, 2019, 09:06:31 AM »
There are so many factors at play with this situation, it is a complex problem. Some obvious facts are golf numbers in terms or participation are going down in the US (not sure about other countries). Time to play golf is prohibitive for many millennials. To make a CC a family destination you need much more capital for the pools, clubhouses, pickle ball, dinning rooms, etc., which only adds to the dues and operations.  All three of those things seem to me to be facts which work against the viability for CC's sustainability. I would think more closures/consolidations are imminent this coming decade.
"To give anything less than your best, is to sacrifice your gifts."
- Steve Prefontaine

Jeff Schley

  • Karma: +0/-0
Re: Private Clubs at a Crossroads
« Reply #24 on: June 10, 2019, 09:27:51 AM »
Also keep in mind the tax code presently allows for these private clubs to not pay income taxes as they are non-profits, in addition to minimal property taxes.  Should the government eliminate these provisions (which I doubt they will) the private clubs would be in jeopardy big time.

At one point in time one could also write off their dues as a business expense, now only guest fees.
"To give anything less than your best, is to sacrifice your gifts."
- Steve Prefontaine

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