Club Management for the New Normal
By Harvey Weiner & Mark Weiner
Partners of Search America®
PUBLISHED IN THE CLUB LEADERSHIP E-NEWSLETTER
Following a sobering analysis of what our industry is facing today we have come to see things differently than we would have expected and have arrived at some conclusions which, particularly for those who don't know us very well, may seem shocking. As many of you know we have been participants, observers, consultants, and advisors to the leadership of private clubs since 1974. Our firm has worked with and counseled the boards of directors, developers and management of some of best known golf, country, yacht and in-town clubs around the world. We've been privileged to have witnessed the ups and downs of a challenging but always fun industry. Having turned around underperforming private clubs for the better part of forty years we have been flattered to have been described as "Club Therapists". As such, it is imperative that candor trump personal gain.
Economic circumstances exist in the private club industry today that few could have predicted: Memberships rosters are hemorrhaging, real estate values plummeting, numerous second home communities are in foreclosure, baby boomers today critically evaluate every discretionary expenditure, developers and their lenders are failing, every luxury purchase is carefully weighed against financial realities, and billions in capital reserves have been depleted by clubs in a futile effort to delay the inevitable.
The psychographics, if not the demographics of the prospective private club Member have been forever transformed as a result if this tragedy. The usual prospective member is anxious about deferring retirement due to eroded investments, a miserable return from dividends and interest, depressed home values, aging dependant parents, elevated tuition. If s/he is a golfer it is likely that they will compare your club membership fees to playing at the local daily fee course. No longer is private club membership viewed as a privilege but as an entitlement with no or low entry fees. We're not talking about the honored, traditional, exclusive country clubs that remain uniquely capable of attracting and retaining the very wealthy. They'll always enjoy a relatively solid base. But, those who saw themselves as "wealthy", as recently as two years ago, today worry about everyday expenditures and feel insecure regarding their future earning potential. When you can't pay the kid's tuition it's hard to enjoy a round of golf with your buddies, followed by a round of drinks in the 19th hole.
Owning a vacation home in a gated residential golf course community not so long ago seemed to be a pretty safe bet. Real estate prices kept climbing as did the value of your equity in the club. Homes were turning over and transfer fees fed the reserve account sufficient to cover projected capital needs. Today, those same homeowner/members rail against not being able to escape their interminable dues obligations and assessment responsibility. There aren't any buyers waiting to take their place. Prospective homeowner/club Members are now faced with two or more years of their own bubble of deferred debt, home repairs, replacement of automobiles, appliances and other imperatives. They've got to play catch up before even thinking about a discretionary vacation home and/or private club membership.
The U.S. private club industry cannot count on Washington for a bailout. Politically, a bailout of those perceived to be affluent just will not happen, no matter how many club people join the ranks of the unemployed or how many club-dependant rural communities revert to farmland or become neglected weed havens. Many private clubs will simply go away, become daily fee courses, parks or parking lots. Countless former prospective club members will never join a club. Surviving communities will miss the amenity that was their club but those with insufficient remaining inhabitants to support a private club won't have anyone to even remember what was, or what could have been.
We must now prepare for the next wave of deferred retrenchment. Some club leaders are still in denial, hoping and expecting that they will actually benefit from the misfortunes of their competitors. Others overreacted last year by impulsively slashing expenses, services and Member value, terminating trusted managers and further eroding Member confidence. We see neither the end of the beginning nor the beginning of a winding down to this crisis. What evidence is there to indicate that the leadership of this industry fully appreciates the significance of the threat confronting our collective future? This is not a mere paycheck that's going to disappear; we could be looking at the diminution of a whole way of life for a significant percentage of the country's citizens, many of whom are prominent contributors to their communities in both time and treasure.
So, while four decades as a consultant to the private club industry should qualify us to make a few suggestions there is one in particular that cries out to be expressed: Club boards of directors must stop firing their managers! Your club's manager may well be the most indispensable force for your club's continued existence. A skilled, familiar leader can inspire confidence, solidity and stability. S/he might influence Member and human asset retention as nobody else can. The veteran GM is often the repository of institutional club memory. They facilitated your wedding at the club, were there to oversee your prom and saw that you got home safely, chaperoned your child's first dance and witnessed your spouse's hole-in-one. They oriented your committee, encouraged you to run for the board, advocated conserving funds when others sought to splurge on nice-to-have stuff instead of need-to-have reserves. Please listen to them. Respect their experience and wisdom.
Yes, we are headhunters and make our living by recruiting senior management for private clubs. But, there's always enough activity to keep us busy. We'd rather see our industry thrive than be a party to the blame game for the sake of an engagement. Nobody in your club caused this calamity yet everyone in your club has it within their power to reverse the results. Please don't compound the problem by injudiciously firing the manager.
Recognize and appreciate the importance of the club in your own life. Imagine not seeing the familiar manager at the door, at the bag drop or in the dining room. Ensure that the club delivers value to its current and prospective Members. Do your utmost to attract fellow Members who reflect your values as opposed to those who simply seek a bargain. They're the first to bolt in the event of a cash call. Believe that your club is a valuable, irreplaceable amenity to your community and to your lifestyle. Believe that your community will not attract the same quality residents if the club becomes a Wal-Mart parking lot. Support and protect the club. Support your club's manager.
© Search America
Harvey Weiner & Mark Weiner are industry thought-leaders and partners in Search America®. Since 1974 the firm has been acknowledged as the leading, trusted, international executive search and private club consulting firm representing the developers and boards of private clubs worldwide. www.SearchAmericaNow.com
For questions regarding our services, please click the Request for Information About Becoming a Search America Client Club
link. A Search America principal will contact you shortly.