The private club industry is facing its most acute membership crisis in a generation. Studies show that 40 percent of the nation’s 4,415 private clubs have seen a membership decline, with initiation deposits down by 43 percent. An estimated 10 to 15 percent of clubs are in serious financial trouble, with many turning to third-party management or opening up to public play.
The NGF reports that most clubs are taking action in three primary ways: “(1) offering special membership arrangements; (2) making capital improvements; or (3) introducing new or expanded programming.”
Each solution comes with challenge and risk. Capital improvements and expanded programming require an investment of capital in hopes that membership will rebound. Some clubs that made improvements a few years ago, are now in bankruptcy.
Offering special membership arrangements can be tricky business — you don’t want to alienate existing members.
And so many clubs are opting to convert to public play. In fact, NGF reports that conversions from private to public have out-numbered course closures by a factor of ten to one.
We are witnessing the adage of ‘adapt or die’ in practice. It will be interesting to see what percent of the 500 clubs in peril will adapt versus those that will die. If I were making a guess, I would fall back on the reality that only 20 percent of businesses ever adapt. That would mean 400 private clubs either go bankrupt or convert to public. But in this case, I would guess that another 100 would switch to third-party management before they die.
In any event, a lot more transition is ahead for this industry.