Myrtle Beach area golf clubs get creative in tough economy

The golf business is tough when times are tough. But at least in Myrtle Beach, they are trying to do something! Here is a great article on the golf club memberships of Myrtle Beach, a great read for any golf lovers.

By Alan Blondin

Bradley Bennett would like his membership at the private Members Club at Grande Dunes to remain the way it has been, exactly the way it was written in the club's bylaws when he paid a $45,000 initiation fee in 2005.

"If I had a choice I would want it to be the same concept they signed us up under," Bennett said. "That would be a completely private club, they would grow the membership to 400, to 500, and they would aggressively go out and pursue memberships, and they haven't done that."

Policies are changing at the Burroughs & Chapin-operated Members Club, as they are at the handful of other private and exclusive semi-private clubs along the Grand Strand.

It can no longer be the way it has been - for decades in some cases.

The economic recession has caused clubs to lose members who are either unable or unwilling to pay hundreds of dollars a month in dues, and made it difficult to find new members willing to take on thousands in initiation fees as well as the monthly requirements.

"From my observation the recession hit the beach very hard," said Billie Hughes, membership director at the Surf Golf and Beach Club in North Myrtle Beach, which transitioned from semi-private to private status in January 2005. "We had members leave who had been here 20 to 25 years. With the economy it was very tough on people."

Without an influx of funding, some private clubs are in danger of failing. The Reserve Club in Pawleys Island is rebounding from a sale last spring out of Chapter 11 bankruptcy to McConnell Golf, an operator of seven private clubs in the Carolinas.

Rather than strain an already fragile membership base with assessments and increased membership dues to make up for lost members, clubs are getting creative.

They are cutting costs with measures that include the elimination of positions, reducing initiation fees and dues to attract new members, creating new varieties of memberships, and opening the gates to allow a minimal amount of non-member outside play to supplement club income.

There are seven private clubs stretching the coastline from Georgetown to Southport, N.C., and the members of the semi-private Dunes Golf and Beach Club own their course, making it the most coveted and expensive semi-private equity membership on the Strand.

The Members Club at Grande Dunes in Myrtle Beach, Wachesaw Plantation in Pawleys Island and the Surf Club are all allowing some minimal level of outside play this year.

Though the Reserve Club and two private courses at St. James Plantation in Southport, N.C., don't permit non-member play, members at the other six McConnell Golf clubs outside the area have limited playing privilege at the Reserve Club, and St. James' two private clubs are both in a development and share members with two courses that do allow outside play.

That leaves DeBordieu Club in Georgetown as the only club on the Strand that can be considered a truly exclusive single-entity private club.

"Fifteen to 20 years ago having outside play at your club was a no-no," said 12-year Dunes Club general manager David Shepler, who has been in private club management for three decades. "But this club has, and a lot of clubs are having to accept outside play and they're behind the curve on that a little bit."

A big hit to private clubs is the economy's effect on a sagging housing industry, leading to the resignation of members at a damaging rate.

The housing boom from the early- to mid-2000s produced a new wave and a younger generation of private club members consisting largely of developers, real estate agents, mortgage brokers, appraisers and construction company executives.

But they have departed clubs with the downturn and have added to the natural attrition a club endures from members aging, dying or moving.

"The economy is really based on real estate around here, and there's a trickle-down effect to construction, etc.," Hughes said. "Bigger cities have member bases other than tourism and real estate."

The lack of demand for memberships has caused them to depreciate in recent years, similar to the way housing and land have depreciated.

"It's all relative," Surf Club head pro Bill Campbell said. "At the time [longtime members] joined they paid what the membership was worth. ... In this market it's not worth what it was [even] two years ago."

The Surf Club employed the most radical promotion: waving all initiation fees and giving up to a $100 discount on monthly dues for a year to both new members and existing members who sponsor the new membership bid. Initiation fees had been between $7,000 and $10,000.

The policy has yielded 184 new members in the past four months, boosting club membership to about 560 total members, including more than 400 golf members.

"We had lost a significant number of members since the tail end of [2009] and start of [2010]," Campbell said. "You've got to have traffic to make it work and have to do things to promote traffic, and right now the way to affect traffic is pricing."

Many in the industry believe there are potential pitfalls to reducing initiation fees and membership dues, however. "It's a double-edged sword," Dunes Club head pro Dennis Nicholl said. "I see clubs panicking and lowering membership dues, and you get people in who can't afford the membership and you get into a tailspin."

Many club members are upset with the changing culture at their clubs, though many accept that change and sacrifice are necessary.

"I think the membership realizes we should be running a break-even operating plan and private clubs are having a hard time doing that today," said Members Club member Pete Delle Donne, who is open to the idea of outside play as long as it doesn't interfere with member tee times.

Private club struggles aren't limited to the Strand. According to a National Golf Foundation study in 2009, 15 percent of the roughly 4,400 private clubs in the U.S. reported being at financial risk, and 400 converted from private to public status from 2000-09. The pace of conversions is predicted to increase in the current economy.

"The private club business is in a serious state of financial viability," said Dan Breneman, a regional private club management specialist hired by the Surf Club in September. "It's a time of crisis."

Some Strand clubs are making major changes, while others are only tweaking policies.

Members Club B&C sent a letter to club members in December that outlined policy changes scheduled to take effect early this year. The club has been entirely private since it opened in June 2005.

According to the letter, the primary changes are the creation of a non-refundable $12,000 initiation fee and the opening up of the course to limited outside play during non-peak member hours from resort guests and select golf package providers. New members will have the same quarterly dues as current members.

"I think we're in the same boat as all the other private clubs," said B&C resorts division executive vice president Bob Swezey. "We're doing similar things they are, and I suspect we'll try to continue doing those things to try and make it better for the members."

Swezey declined to go into further detail regarding the changes, and Lei Gainer of public relations firm LHWH, which represents B&C, said the company considers all communication with its members to be private.

The letter stated B&C hoped to have 500 members by 2011; right now there are less than 125. Bennett said those members generally paid between $45,000 and $60,000 for memberships that are 70 percent refundable after resignation. One refund is eligible for every three new members that join.

Bennett said B&C and Members Club executives told him in a meeting that the club has been losing approximately $1 million a year for the past couple years, and would need between 300 and 350 members to break even under original policies.

While Bennett acknowledges losses are expected in the current economic climate, he questions B&C's aggressiveness in recruiting new members. The letter states there have been only a "handful" of new members in the past 24 months. Bennett said he was told there have been only six in the past three years despite the Multiple Listing Service recording about 120 home sales in Grande Dunes developments in those three years with an average sales price more than $800,000.

"I understand short-term losses have to be made up and we've got to make some sacrifices too, but on the other side of it I want to know that B&C is going to these 120 new homeowners and seeing why they haven't become members of the club," Bennett said. He said his quarterly corporate membership expenses are $1,294 for dues, $200 for a locker and $125 for bag storage, and he has a $150 quarterly food and beverage minimum.

Bennett said the Members Club hasn't had a membership director since the spring. "How are you driving memberships without a membership coordinator?" he asked.

Delle Donne believes the club's future is ultimately in good hands. "I think we're fortunate to be affiliated with a good company, B&C, that takes pride in their brand and their logo, and I don't think they'll do anything to jeopardize that," he said. "I believe they'll try to retain the private atmosphere that is there ... and at the same time try to commingle a way to make a break-even operating plan."

The Reserve Club (Pawleys Island)

The Reserve Club peaked at about 400 members in early 2008 but memberships were dropping by the time the board at the then member-owned club thought they negotiated a deal to sell the course to McConnell Golf.

A lawsuit filed by resigned members who wanted to retain partial initiation reimbursements that were being eliminated in the sales agreement delayed the sale, and members eventually filed the club in Chapter 11 bankruptcy protection.

Despite reduced initiation fees and the institution of payment plans, memberships dropped to a low of about 325.

“Though we were able to continue operating at about break-even or a little better, the club was going on 12 years and there were some investments that needed to be made in the club and there was no way we were going to be able to internally generate those funds,” said past club president Mike Marino.

About eight months into McConnell Golf’s ownership, memberships are up to about 340. “We closed on the sale and life is very good here right now,” Marino said.

Initiation fees that were once as high as $32,500 are now $10,000, and were reduced to $7,500 through Dec. 31. Family golf membership dues are $470 per month, individual dues are $308 and extended-family dues are $546 per month. Unlike other area clubs, there is no monthly food/beverage minimum.

McConnell Golf, which recently purchased expanded to seven private clubs with the purchase of Sedgefield Country Club in Greensboro, N.C., closed the Reserve Club this summer for renovations that included the changeover of greens from bentgrass to Bermuda.

“We personally believe there is a market for private clubs in that Myrtle Beach-Litchfield area, and our goal to remain private with member and guest play only,” said company owner John McConnell. “That club is doing very well for us. I wish I could say the same about all of them. We are off to a good start there and we are very positive about it right now.”

Surf Club

The Surf Club had about 580 members at its peak a few years ago, and was down to less than 450 before waiving initiation fees beginning in late September. A non-refundable full golf resident membership fee was $10,000 and a non-resident golf membership was $7,000.

In addition to the 184 new members, more prospective members are awaiting approval by the club’s board and the promotion will be extended into February. More expensive equity memberships remain available at full cost.

“We decided to be very aggressive about getting new members,” Hughes said. “I think a lot of people were very nervous about spending $7,000 to $10,000 to join a club right now.”

Monthly dues are $380 for the full membership and $260 for the non-resident membership, and new members get monthly discounts of $100 and $70, respectively. If a new member isn’t sponsored, the sponsor credit goes to the longest tenured Surf Club member who has yet to receive discounted dues. The club also has a $150 per quarter food minimum.

Mitch Lennon is one of the golfers who joined under the waived initiation fee promotion. He had previously joined private clubs in other locations, and had played the Surf Club several times over the past few years as a guest of a friend who was a member. He liked the club, retired to the Strand on July 1, and joined a few months later.

“The elimination of initiation fees was certainly a plus, and reduced monthly dues put it in my price range and led me back into the private country club realm,” Lennon said. “I would have probably joined eventually, but the bargain now was too good to pass up.”

Campbell said at least 50 percent of The Surf Club’s golf members are area residents, and he anticipates member play to surpass 22,000 rounds this year after being down in 2010. He also expects up to another 3,000 rounds from outside play during off-peak hours, and said the club will accept a small amount of package play this spring.

Wachesaw Plantation

Like many clubs, Wachesaw Plantation enjoyed a jump in memberships in 2006 and 2007 that pushed active memberships to 465, including 400 with golf privileges. Total memberships fell to 424 in 2009 and 397 as of Sept. 10, 2010 – the end of Wachesaw’s fiscal year – and golf memberships dropped to 368 in 2009 and 344 through Sept. 30.

The club has created several new non-equity membership categories that have already brought in a handful of new members, and is accepting outside play in a couple forms in 2011.

Play from renters and guests in member-owned cottages on the property was allowed in the mid-2000s and was reinstituted in 2010. “It’s working out very well, we’re booking a lot of golf,” Wachesaw general manager Karen Karetas said.

The club has also entered into agreements with three package providers – Myrtle Beach Golf Desk, Coastal Golfaway, and Golf Packages of the Carolinas – for package rounds this spring on a trial basis. All rounds are more than $100 and Karetas said about 100 have been booked. The club played about 17,000 rounds last year and up to 2,500 package rounds will be accepted. Some hotels were allowed to book rounds several years ago.

The club has created new membership categories with “lower initiation fees and monthly dues to attract some younger people who are still working and aren’t in the country club life,” Karetas said. “We’re trying to find the right niche here.”

The book value on a Wachesaw full equity membership is $20,250, though owners can negotiate a lower price, and corporate equity membership are also available. An additional initiation fee of $2,500 is required, though that has been reduced to $1,000 for limited-golf and social memberships.

A new Honors non-equity membership for residents of Horry and Georgetown counties has an initiation fee of $500 for the first year and a $250 annual renewal fee, and monthly dues are similar to those of equity members – between $415-$420 for family memberships and $340-$370 for individuals. All members pay an $18.50 cart fee per round, unless they walk, and food and beverage minimums are $200 or less per quarter.

A new limited golf membership for golfers 55-and-under carries a $250 initiation fee, no renewal fee, and between $200-$250 per month in dues. These members are limited to 60 rounds per year, plus any tournament rounds.

An unlimited golf national membership for residents outside Horry and Georgetown counties has a $500 initiation fee, $220 in monthly dues and a $400 annual food minimum. Two junior memberships for players under 13 and 13-23 offer unlimited golf with initiation fees of $100. Monthly dues are $99 for players under 13 and $193 for players 13 and older.

The club has also cut costs with eliminated positions. About 18 months ago Karetas, who was then director of business services, took over general manager duties after GM Michael Kahler left the club and membership marketing director Cindy McLaughlin was let go.

The Dunes Club

Member dues and initiation fees at The Dunes Club have for years been supplemented by both outside play and catering/wedding services.

“I think with the economy like it’s been, I think what’s really helped us is our catering and wedding services,” Nicholl said. “We’ve actually been hanging in there pretty well.”

The course’s founders included hotel owners that allowed playing privileges to their paying guests, and approximately 60 hotels through more than 20 hotel groups now book rounds there. Nicholl said about an equal number of member and outside rounds are played at the club annually, though members have the majority of the premium tee times. Rates for outside rounds are generally between $100 and $200, depending on the time of year.

“If someone asked me my biggest challenge it’s balancing member rounds with guest rounds, and I think that’s the case at any private club that allows any amount of outside play,” Nicholl said. “Sometimes our members dislike the outside guests, but for the most part they understand why they’re here. One is to see and showcase the club . . . and the other is for the revenue. It keeps the dues lower and keeps us in a better financial position than a lot of other clubs.”

Shepler said The Dunes Club is down about 45 members from its peak of 650 in 2007. About 475 of the 605 members are full members with golf privileges, and about 150 play regularly. Shepler said the club added 28 members in 2010 and lost 35.

“So we’ve seen it take a toll on us,” Shepler said. “You’ll lose 5 percent usually through moving or health, and the inflow of new members has not been there. But we feel fortunate we’re ahead of other clubs and haven’t lost more members.”

The price of shares in the club fluctuates, and they are approximately $28,000 for one full equity golf membership from another member. A full golf non-equity initiate membership is $18,000, and all golf members pay monthly dues of $370 and have quarterly food and beverage minimums of $150. There are also less expensive social memberships, and rates have been reduced for the past 10 years for members under 35.

The Dunes Club opened in 1948 and is the oldest private club in the area. “The Dunes Club has a very loyal membership,” Nicholl said. “There are some second and third generation members, so we have a good corps of members and those are the ones we lean on when we need to.” The club has engaged Club Mark Corp., a national marketing-membership firm based in Palm Desert, Calif., to consult on long term plans to gain and retain members.

DeBordieu Club

Because of the affluence of its membership, DeBordieu Club is the area club probably least affected by the economic downturn.

Only DeBordieu property owners can become members, and according to member David English, 70 percent of the club’s members aren’t full-time residents. All DeBordieu memberships are equity memberships.

“There are so many second homes out there it’s a different model than the normal club,” English said. “They get the income from folks who aren’t there year-round. For the guys we have there year-round like myself, they keep the cost down pretty low.”

DeBordieu general manager Lamont Teeples declined comment and said the club’s bylaws don’t allow board members to publicly discuss club policies.

English said he purchased a founding membership in 1988 for $25,000, and the initiation fee has increased to $44,000. English pays $900 per quarter in dues for a family membership and the club has no food and beverage minimums.

Despite the rise in initiation fees over the past couple decades, there have been no appreciable assessments or dues increases.

“I’ve been a golf member there since 1988 and nothing has changed since I’ve been there,” English said. “No costs have been increased because of a lack of membership. [Recent membership loss] is minimal at best and nothing has been passed on to the golf members.”

Like The Dunes Club, DeBordieu’s income is supplemented by successful catering/wedding services, and all weddings and functions are member-sponsored.

DeBordieu head pro Shawn Roper said the club has opened itself up a bit by encouraging members to invite a group of business associates or friends for small tournaments.

English, who lives on the course, believes there has actually been an increase in rounds played in the summer, when the most members are in town. “Last year was the most play I’ve ever noticed,” English said. “I’m sure some [members] have dropped out but it’s minimal at best.”

St. James Plantation

Only St. James Plantation property owners can be members at its two private clubs – the Reserve Club and Members Club. The 6,000-acre, 81-hole property also contains the semi-private Founders Club and Players Club layouts.

St. James general manager John Brown said the property has about 3,000 members, including about 1,000 golf members, 850 of which are members at all four courses. Social members have access to golf at set prices.

Brown said golf memberships have reduced slightly, but golf revenue has not decreased and total memberships are static. Newer members include people who bought property in recent years and were about to have the grace period on accepting memberships expire.

Golf revenue has been buffeted by stay-and-play packages involving member-owned condos and rounds on all but the Reserve Club, and a Northeast Initiative.

Under the initiative, the club has hired a sales agent based in the Northeastern U.S. to focus on members at 150 private clubs from Virginia to Maine, seeking to add them as residents and members when they retire. St. James has hosted pros and members from Northeast clubs for “vacation clinics,” and St. James members can also sponsor stay-and-play packages through the initiative.

“That has become a nice pipeline for our sales department,” Brown said. “The stay-and-play stuff is a marketing opportunity for us. A lot of what we’re doing is with an eye on the future but I think in these tough times you have to be a little creative.”

St. James is a Troon Golf-managed property, so the club hosts some reciprocal rounds from members at other Troon private clubs for marginal prices at the Reserve Club, which became private in 2007, and Members Club, which became private last January.