PRIVATE CLUBS

• Four Major Categories:Country ClubCity ClubCity Athletic ClubYacht Club

Country Club

• Usually refers to a club in the suburbs with:ClubhouseGolf Course(s)Tennis courtsSwimming pool(s)Other recreational activitiesRecent 5 year trend ….. To have a fitness and health

center

City Club

• Is typically a dining club located in the city:May be in a free-standing building by itself

or in an office building, etc.Main dining room, meeting rooms, lounge,

and maybe a ball room.Very formal service and upscale menus for

business entertainment.

City Athletic Club

• Is the same as a city club, but with athletic amenities such as:Tennis courts (indoor and outdoor)Swimming poolFitness/athletic area including weights & aerobic

equipmentRacquetball, squash, basketball, etc.Workout/aerobic class areaLocker rooms with full amenities

Yacht Club

• Same as country or city-athletic club, but with marine activities and usually no golf.Located on body of waterPowerboat or sailboat dockingMarina services

What is the purpose of a private club?

• It is a specific place where one may associate with one’s peers or those with similar interests: athletic, social, industrial, intellectual, etc.

• It is a selected group of people who gather in a specified place for social and recreational needs that are provided through professional management.

Why do people join private clubs?

• Networking for business contacts

• Social status

• Fine dining

• Athletic facilities

Two underlying reasons always exist:

• To be recognized

• To have fun

Characteristics of a Private Club

• Club has an established, stable clientele:Deal with the same customers day after day, week

after week, year after year.Fixed clientele requires that menus be changed

more frequently than restaurants, and there are a variety of holiday celebrations.

Inventory in the pro shop must be turned over regularly.

• Privilege of using club facilities is obtained through payment of dues. Therefore, food must be outstanding or better than fine

dining restaurants for city clubs and be priced competitively or lower than 4 star restaurant quality.

The F&B operation is subsidized in part by the dues. Expectations at a 4 star restaurant include: table cloths,

linen napkins, special china, fresh flowers, better than average service, immaculate grounds, and a unique menu.

Characteristics of a Private Club

• A Club Manager is expected to know a variety of things in club management:F&B operations for fine diningCost controlsMembership relationshipBoard of Directors politicsGolf course agronomy and operationsTennis programming and maintenanceSwimming pool safety and sanitation

Characteristics of a Private Club

Club Ownership Types

• Member owned (equity)The members own the assets, they have

rights to the club’s equity, like shareholders.Governed by a board of directors (typically

10 to 12), but some are as low as 4 and as large as 50 directors.

A membership has one vote on issues that are mandated by the club’s bylaws.

• Member owned (equity) - cont.Depending on the state’s legal climate for ownership

in a business, some clubs issue a bond to members and those with bonds can vote or redeem it for a set value.

Most of the old established clubs are of this format. In order to maintain a club’s tax exemption, the IRS

measures whether a club is a true private club by seeing if it allows non-members to use the facility by paying an admission fee.

Club Ownership Types

• Proprietary (for profit) Owned by an individual, partnership or corporation. Members have no equity interest or actual control over its

operation. Developer built clubs and CCA clubs are examples of this

type. These clubs pay income tax and don’t have abatements or

lower rates on local taxes such as property tax. Some developer clubs revert to member owned when a

certain number of homes are sold (e.g. 75%)

Club Ownership Types

Types of Private Club Memberships

• Regular (resident, stockholder, bond, full) Full access to all club facilities Equity owner and voting privileges in member owned clubs Right to hold office (board of directors) Highest dues and initiation fees Usually, entire family included in the membership (spouse

and dependent children, e.g. under 21 or full time student, or still living at home, etc.)

Membership in the name of one individual (easier to say who owns in divorce, etc.)

• Junior (intermediate, special) Membership for individuals under a certain age (30 or 35

usually) No voting or equity privileges Very low fees and dues [increases in increments, e.g. from

21 to 25 (1/4 of regular fees and dues) then from 26 to 30 (1/2 of the F&D) and from 30 to 35 (3/4 of F&D) at 35, must pay last 1/4 of fees and pay the regular dues structure].

In some clubs, one must be a son or daughter of a regular member.

Types of Private Club Memberships

• Senior (retired) Usually for individuals over a certain age (e.g. 60, 65,

or 70) Sometimes one has to be a regular member for a

minimum period (5, 10 or 20 years) Dues may be 10 to 50% less than a regular member A major concern about this membership is that they

may overload or monopolize the golf course while providing less dues dollars and don’t spend less time at the country clubs than other members.

Types of Private Club Memberships

Private Clubs

• NonresidentLegal residence and/or regular place of business

is a specified number of miles away from the club (50, 100, 200) or by counties.

Meant for ex-regular members who have moved away or non-residents of the area who frequently travel to the area for business or pleasure.

Northland CC was difficult to regulate.

• FounderMembers who provided the funds to build or

purchase the clubSame privileges as regular membershipUsually most influential membersMany times the monthly dues are reduced or

they have special privileges as in tee times at country clubs

Private Clubs

At a Country Club, you may have:

• House (clubhouse, social)Can only use the F&B of the clubhouse,

not entitled to use sport facilitiesInitiation and dues are lower than regularMay or may not have equity and voting

privileges

• Athletic (tennis, pool, T&P, sports)Have same privileges as house plus

the additional sport(s) except golfInitiation fee and dues structures are

between regular and house

At a Country Club, you may have:

Membership Application Procedures

• Generally must be sponsored by at least one current member

• Current member gets the application form and gives it to the prospect

• Prospect completes it, sponsor signs it or writes a letter of recommendation to attest to the applicant’s character

• Application, initiation fee and support materials reviewed by the membership committee

• If viewed favorably by the membership committee, the applicant’s name may be posted for a period of time, or a letter with the applicant’s name may be sent out to members for feedback

• At the monthly board meeting, the board votes on each applicant after the person’s credentials and feedback from the membership are discussed. This could be a hand, verbal or written vote. The “old black ball system” consisted of board members given two marbles, one white and one black to vote. The voting consisted of dropping one of the marbles in a box. One black marble would usually bar the individual from joining.

Membership Application Procedures

The Commerce Club

• Membership Guidelines and Committee Activity The club By-Laws dictate the following procedures for

membership. Members are proposed by a current member in writing to the membership committee which in turn evaluates the candidate and issues a recommendation to the board to accept qualified prospects. After approval from the Board of Directors, an invitation to join is sent to the qualified prospects. There are eight membership categories. There is a limit of 2,000 resident members and 100 intermediate members. There are no corporation memberships, all memberships are individually owned. The membership allows the spouse and children of the member to use the club.

• The membership committee currently requires the following in evaluating prospects: Completed personal information form on the prospect Letter of proposal from the sponsoring member Two letters of endorsement from current members Introduction confirmation card by a Board of Directors

member The initiation fee

The Commerce Club

The Commerce ClubAnnual Dues and Initiation Fees

AnnualDues

Initiation Fees

Resident $960 $3,000Intermediate I $480 $600/1,200/1,200Intermediate II $720 $1,500/1,500Resident Retired $432 N/A

The Commerce ClubAnnual Dues and Initiation Fees

AnnualDues

Initiation Fees

Non-resident $480 $1,200Non-resident(retired)

$240 N/A

Privileged $60 N/APublic Sector $480 $1,200

Private Club Discrimination

• Throughout history, clubs have practiced racial, sexual and religious discrimination. They have been allowed to do this based on the First Amendment of the Constitution. This amendment states that individuals have the “right of free assembly” with peers they choose to associate with. This interpretation of the constitution is gradually being eroded.

• In 1988, the Supreme Court of the US upheld a NYC local law prohibiting any club in N.Y.C. from discrimination against women or minorities if the club had over 400 members, offered regular food and beverage service and had any employers paying a member’s dues.

• Minnesota in 1989, changed its property tax laws so that golf clubs that were nonprofit and filing for the lower tax rates on property value had to meet non-discrimination criteria.

• Michigan in 1992, amended the state’s civil rights act. It stated that all clubs are places of public accommodations if it was classified as a country club, city club, athletic clubs, etc. Clubs with a religious affiliation were exempt.

Private Club Discrimination