Buyer's market: a sluggish economy has left many private golf clubs desperate for new members

Golf Digest, Nov, 2003 by Ron Kaspriske

CONSIDERING THE NATION'S STRUGGLING ECONOMY, joining a country club might seem as practical as a two-month vacation in Bora Bora. But Bill Dorgan could not pass up this opportunity.

Quail Creek Country Club in Naples, Fla., was offering 36 holes of golf on newly refurbished courses designed by Arthur Hills. Included in the membership was use of a new clubhouse, tennis courts, heated swimming pool and a well-equipped fitness center.

Earlier this year, the price to join was $85,000. This fall, the price dropped to $35,000.

"It's a no-brainer, " says Dorgan, a retired Naples resident who joined the club this past summer. "I know times are tough, but that's a heckuva deal."

Stagnant growth of golf participation during the past five years, a surplus of private courses and the recession are prime reasons this is one of the best buyer's markets for private golf in recent memory. Golf Digest contacted nearly 100 private golf clubs nationwide to assess the landscape. Many of the clubs refused to divulge information on their membership or financial stability, but of the more than 60 that did, 41 were enduring a crisis or were taking steps to prevent one by dangling incentives for prospective members.

At Newport Beach (Calif.) Country Club, site of the Toshiba Senior Classic, 21-37-year-old golfers can skip the usual $42,000 initiation fee and join for $5,000, plus $2,000 annually until they reach 38. Anyone can join for $15,000 and pay $5,400 a year for the next five years, interest-free.

At The Loxahatchee Club in Jupiter, Fla., which Golf Digest ranks as the 26th-best course in the state, there is an initiation fee of $125,000. But snowbirds under the age of 55 (and over 35) who live outside a 100-mile radius from the club can now join for $30,000, with the payment spread over three years. At 55, they have the option of paying the rest of the initiation fee.

And at Ontario (N.Y.) Golf Club, a Geoffrey Cornish/Brian Silva design that was the site of the 2000 New York State Women's Amateur, the initiation fee has dropped from $4,500 to nothing. That's right, zero. If you can afford the $300 a month in dues, you're in.

"Clubs are getting desperate--not only to attract new members but also to keep the ones they have, " says Jim Koppenhaver, whose Chicago-area company, Pellucid Corp., monitors the 3,700 private golf clubs and 3.8 million private club members in the United States. "About 14 percent of all golfers in the U.S. are private golfers. Our hypothesis is, that number is going down."

There's no evidence of fee-slashing or a reduction in waiting lists to join at big-name private clubs, Koppenhaver says, but it's absolutely prevalent at lesser-known clubs, where waiting lists to join have been replaced by waiting lists to get out.

At Ancala Country Club in Scottsdale, home to a Pete Dye-designed course, members who want to leave the club and get 50 percent of their initiation fee back usually must wait for three new members to join. The club reported that more than 30 members were on the exit list in September, and that's why the once-full club recently reduced its initiation fee from $50,000 to $30,000.

Thanks to the golf course construction boom of the late-1990s, the private-golf sector has become survival of the fittest. When the nation's economy was at its peak from 1998 to 2000, more than 1,100 of the nation's 15,827 golf courses were built, the National Golf Foundation estimates. In other words, despite the fact that golf has been played in the U.S. for more than a century, 7 percent of all U.S. golf courses were built in that three-year period. Now consider that golf course openings have outpaced the number of new golfers for the past five years, and what we're left with is more private-club competition than ever for the nation's 26.2 million golfers.

The initiation fee to join a private club can vary between nothing and $350,000, according to figures supplied by ClubCorp, which owns and operates a number of private golf courses nationwide. Annual fees typically range from $3,000 to $15,000, and those cover everything from carts to the club's employee salaries to the course's maintenance budget. Then there's the monthly food-and-beverage minimum at most clubs, which usually adds another $600 to $2,500 annually.

Those considerable expenses are a major reason 90 percent of ClubCorp's facilities are offering incentives to join, says John Beckert, chief operating officer. "We know it's a big commitment to join a club, so we wanted to make it a great value so people won't walk away, " he says. By paying $25 more a month than current dues, members can play the 200 ClubCorp courses outside their area. Those courses include Firestone Country Club in Akron, Ohio, site of the PGA Tour's WGC-NEC Invitational, and Indian Wells (Calif.) Country Club, one of the courses used for the PGA Tour's Bob Hope Chrysler Classic. Tickets to shows, vacation discounts and concierge services also are part of the incentive program.

"For the last three years we were losing more members than adding, but we now have more than we did on Jan. 1," says Beckert. "I don't think we're out of the woods yet, but this fall looks better."