The Capital Challenge: Protecting, preserving and growing club assets is every board’s key challenge and opportunity.

These are the days for private clubs, even a Golden Age. It’s been quite a turnaround. Only a little more than a decade ago, less than 10 percent of private country clubs had a waiting list for membership. Clubs were in decline, with some industry experts suggesting a death spiral.

Today, more than half of not-for-profit private country clubs report having a waiting list for membership. Dues and initiation fees have increased significantly, and it is common to hear calls from some member segments to reduce membership and activity because their club is “too busy.” 

The pandemic may have been the catalyst that sparked this turnaround, but demographics, changing values and evolving lifestyles suggest these good times may last through the remainder of the decade.

The vanguard of the Millennial Generation is in its early 40s, when most new members join a club. Privacy is back in vogue because there is a sense that the broader society is falling apart, positioning clubs as a refuge of safety and rules-following in a discordant world.

And despite CEOs calling for everyone to get back in the office, a distaste for lengthy commutes and an embracing of technology has given workers newfound flexibility. With more job openings than available workers, the people remain in control. With an expanding addressable market, no indication of an outbreak of civility anytime soon and personal well-being prioritized over the old nose-to-the-grindstone expectations, private clubs, barring exogenous events, are in a sweet spot.  

Beyond this rosy scenario, however, challenges still exist for the industry. One is a lack of workers. Tight immigration policies and work that requires people to show up every day at all hours, including nights and weekends, make this a tough nut to crack.

The other is that club business is a capital-intensive industry—one of the highest. Success depends on high service levels and first-rate experiences, neither of which clubs can deliver without a tuned-up physical plant.

The largest challenge now facing clubs is the capital challenge—generating enough funding to maintain their facilities, catch up on depreciation and develop the amenities that make clubs relevant and successful.

Unfortunately, because they are only now emerging from a two-decades-long period where they were capital-starved due to a lack of members and money, clubs have a lot of deferred maintenance to address. Additionally, many of the current members, and most of the future ones, don’t want the stuffy club of the past.

You can’t compete in golf today without great practice facilities, a golf performance center with the latest technology and simulator rooms in the clubhouse. This is after you’ve renovated the course, replaced the irrigation system and invested in a better course-maintenance facility. 

Elsewhere, club dining facilities can’t look like the formal spaces of the past. Food and beverage is the cornerstone of member gatherings, and upscale casual indoor and outdoor dining spaces, even quick-casual facilities, are in high demand.

Fitness, which used to be a nice-to-have component of the experience, is now also front and center. Then there is the need to invest in aquatics, tennis and pickleball (growing and controversial). Padel, anyone? You get the picture.

It all adds up to a lot for club boards to handle, but it is their key charge. Fortunately, there are clear signs that industry leaders now “get it.” Capital fees to augment initiation-fee revenue are now in place at most clubs. The use of reserve studies to establish the annual capital budget has increasingly become a regular practice, and clubs are investing record amounts of capital for aspirational projects.

But we aren’t finished and, quite frankly, won’t be any time soon. Boards should continue to set the strategy and hire the best executive teams they can find and empower them to run their clubs.

With these building blocks in place, they must dedicate themselves to protecting, preserving and growing club assets through comprehensive capital planning that addresses obligatory and aspirational improvements within a unified facilities master plan.

Once that plan is developed, they must rally their members to prioritize, fund and implement the most important projects. Now is the time for clubs to extend the benefits of the pandemic bump and position themselves to offer the member experience that plays well with new lifestyles.

Frank Vain is president of McMahon Group, Inc. , a consulting and planning firm serving private clubs. He can be reached at fvain@mcmahongroup.com