Structural changes seen in club industry
By Sam Waltz
A Chester County, Pa.-based national lender in the private club industry called the purchase of the University & Whist Club by entrepreneurs John Hynansky and Thomas Hatzis “in principal the best of all possible outcomes.”
“The truth is that private clubs across the country have been suffering for a decade, perhaps longer,” said Greg Lewis, managing director of the Leisure Financial Group LLC of Alpharetta, Ga.
For 20 years of his career, Lewis worked full time nationally as one of just six or seven financial executives financing private club deals, many of them private golf clubs. The massive collapse in the golf club industry about 2007-08 prompted him to change banking focus.
Recently, he’s returned to financing higher-end commercial and industrial properties, including so-called “trophy buildings” like Delaware’s Hercules and DuPont buildings, for Leisure Financial.
“Clubs faced a double whammy. One part of it is demographics, the aging boomer population, many of whom are not where they thought they’d be financially as they arrived in their 60s. The other part of it is driven by changes in both the nature of work (less formal, smaller) and by Gen X and millennial interests.
“Both golf clubs and private membership city clubs, presumably like the University & Whist Club and the Wilmington Club, even the Union League in Philadelphia, have had to adjust to those changes.
“You see it in club customs and conventions, e.g., more casual attire, including nice jeans in some, and even emphasizing club social activities and happy hours over the really high-end fine dining, which seems to be diminishing in importance a bit.”
More specifically, in the golf industry, Lewis said that golf property analyst Larry Hirsch reports that the US today has 1,000 fewer golf clubs today than in the early 2000s. “That’s led to both declines in memberships, as well as declines in dues and membership prices,” Lewis said.
The Brandywine Country Club and Delaware National Country Club (formerly the Hercules Country Club) have closed in recent years, two others (the former DuPont Louviers course owned subsequently by MBNA and Bank of America and Garrisons Lake near Smyrna) were rescued by the State of Delaware which is subsidizing them, and the futures of two others are at risk via development, the DuPont Country Club along the Brandywine and the Cavaliers Country Club adjacent to Christiana Mall.
“With that being said, private clubs are very much like real estate. It’s all about location, location, location. Most private club members live within 10-12 minutes of their club. Private clubs — like politics — are local.”
“Every market has different demographics, economics, and supply and demand characteristics. Subsequently, while national trends are down, each private club market should be viewed on a micro not macro basis,” Lewis added.