Hidden Pitfalls of Club Membership

Posted by John

December 1, 2008

Over the weekend I read an excellent article by John Paul Newport in the weekend version of The Wall Street Journal. Read it here for those who want the complete story. He writes about a topic I’ve covered in this blog before; many private country clubs are having difficulties maintaining membership levels. The underlying problem is that while the number of golf courses has grown quickly over the last 20 to 30 years, the number of golfers has not. Now, our general economic woes only make the situation more precarious for clubs and their management. Some clubs are already failing, many more will unless they can come up with new operating models. Mr. Newport brings up what I think is an important point for anyone considering joining a private club these days – do you really know what you are getting?

There are significant number of clubs underwater these days. They have large debts and their membership dues are not enough to cover their annual operating costs. While these clubs may be offering great sounding ‘deals’, like reduced initiation fees or extended payment plans, how safe is your investment? John Paul Newport suggests looking carefully at a club’s financials before you plop down your hard earned bucks just like you should before joining a condo association. Some golf clubs now have waiting lists for existing members who want to LEAVE, but want to recoup their equity stake. In most cases there is no way to get your money out until it’s replaced by someone else’s investment.

And what will your club be like in the coming years? Can you say for certain what it will look like. Will the existing members face annual assessments to make up for operating shortfalls? Will course maintenance suffer? Will the club have to become semi-private to make ends meet? These are all interesting questions that should be thoroughly researched before you commit. To be certain, there will be some great membership deals to be had in the coming years. Unfortunately, there will also be some hidden land mines for the unsuspecting.