In most cases, any reasonable dues increase is affordable by the members…but to the club itself, it is a huge liability if the dues increase doesn’t pass. Over time, it sets the stage for club failure.
Just about now, most clubs will be voting on next year’s budget and the always-controversial question of a dues increase. In my travels across the club industry, I am always amazed at the resistance to any dues increase, big or small—this occurs at smaller clubs with relatively small initiation fees as well as large, iconic clubs with huge ones. Members will fight like the devil to avoid a $50-$100 per month dues increase, whether it is needed, justified, or not.
This is ironic because in most cases, any reasonable dues increase is affordable by the members. So in essence, this is an intellectual issue among the members, not a financial one. But to the club itself, it is a huge liability if the dues increase doesn’t pass. Over time, it sets the stage for club failure.
While fixed costs for a club can be manageable, the variable costs are much more difficult to control: wages, health care, fertilizers, and equipment are subject to the vagaries of the economy and the political environment. The ability to hire quality staff will be stifled as clubs have to restrict costs, and staffing costs are the most variable.
Soon, members form factions around reduced resources, with each side fighting for and demanding that their pet activities be spared or receive preference for increasingly scarce dollars. These battles reduce overall comity among the members, and cohesion is lost. The older members want to hold on to what they have at no increased cost to them, while younger members want to enhance facilities and are willing to increase dues, but get voted down by their older counterparts.
Members begin to leave because they are dissatisfied with their overall club experience, and those who stay are under increased pressure on dues, because costs have to be spread over fewer members. As these costs go up, there are more complaints and resistance to dues increases.
In order to control costs, clubs cut where it isn’t obvious, and certainly not on the golf course. But soon, enough corners are cut that small things begin to show wear and tear, such as frayed carpeting or upholstery, perhaps with some rips “temporarily” covered with duct tape. Because of housekeeping cuts, the bathrooms and locker rooms are not as impeccable as usual.
In the food-and-beverage operation, good employees begin to leave and there is a notable dip in menu items and quality, followed by the inevitable drop in food-and-beverage revenue, and eventually the notion of “club minimums” begins to be discussed.
The remaining members will then face necessary “assessments” over revenue shortfalls, which could have been avoided if dues were allowed to increase slightly. All in all, because resistance is essentially intellectual, the argument against a dues increase is a stupid one, and everyone suffers.
There is a great quote in The Sun Also Rises by Ernest Hemingway in which a character is asked, “How did you go bankrupt?” and he replies: “Two ways. Gradually, then suddenly.”
That’s how it happens.