A CLUB'S DILEMNA
Planned Unit Developments (PUD's) with golf courses are complex animals.
Recently, we were awarded an assignment from a private, multi-course residential community club to estimate the value of some of their property which has been proposed for alternative (non-golf) development. As part of the assignment, we are also advising the club on their "reinvention" as a smaller, updated club with proper market positioning.
As the golf industry and markets have evolved, many clubs have repositioned themselves to better respond to demand. In many cases, private clubs have either opened to outside play or converted to daily-fee facilities. In other cases, clubs have repositioned themselves on the basis of price in order to find a market niche in competitive markets. There are numerous examples of clubs that have embarked on major or minor renovation projects in order to compete more effectively and provide better value. There are also clubs that have focused on expense reduction to the point where dues and fee levels were maintained, but membership declined due to perceived diminishing value.
Some clubs, like our client, are part of an older community with both aging membership and aging homes, built in the 1970's. These clubs (and communities) where the majority of the residents are either part time (snowbirds) or retired often have a short economic life due to the age of most of the buyers and members. This creates a club (and community) that ages quickly because older residents/members quit playing golf and the club goes into decline, often requiring outside members and home values can also be impacted.
The domino effect is that capital improvements are neglected, membership declines and then the cost of membership increases, sometimes dramatically. This can be the death sprial for clubs. Not only do revenues decline, but capital needs increase.
The reinvention of any club, along with the consideration of generating cash through the possible sale of excess land should be well-planned with market positioning, facilities and economics carefully analyzed in concert with each other.