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Converting Daily Fee to Private Membership: Insights from PGA Orlando’s Transformation

This comprehensive overview explores the complexities of converting a daily fee golf club to a private membership model, drawing on case studies and market analysis. With insights from seasoned PGA professionals, it covers key considerations like timeline, capital improvements, membership structure, and potential pitfalls. An actual legacy conversion example reveals a successful transition that expanded membership significantly. The report also addresses the importance of strategic planning, member communication, and maintaining competitiveness in a crowded market.

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Converting Daily Fee to Private Membership: Insights from PGA Orlando’s Transformation

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  1. Converting From Daily Fee to Private PGA Orlando, 2011

  2. Gary DeeExecutive Vice PresidentHeritage Golf Group • 6 Yrs: Apprentice (High End Private) • 5 Yrs: Head Professional (Resort/DF) • 3 Yrs: Gen. Manager (DF & High End Private) • 4 Yrs: Exec. w/ PGA TOUR • 17 Yrs: Exec. w/ CGG & HGG • 1978 Elected to PGA Membership • Team Member Involved in Approx. 75 Clubs

  3. Overview • Executive Summary • Key Considerations

  4. Executive Summary • Conversions = Tricky Business • 3 Actual Case Studies • 2 w/Excellent Results • 1 Stalled (1/2 Pregnant)

  5. Key Considerations • General • Market Analysis • Timeline for Conversion • Capital Improvements • Transition Plan • Membership Related • After the Conversion • Pitfalls to Avoid • P/L Comparison

  6. General • Zoning • Restrictive Covenants • Developer Agreements • Statutory Restrictions

  7. Market Analysis • Private Club Competition • Within 5 miles • Within 10 miles • Sales Potential • Price Points

  8. Timeline for Conversion • How Long Will a Conversion take? • Will Improvements Need to be Added at Certain Membership Levels? • The Quicker the Better

  9. Actual Legacy Conversion Process • Initiated Process in September, 2004 • Completed Conversion in June, 2006 • Total Elapsed Time: 21 Months • Went From 225 Members to 400 Members

  10. Capital Improvements • Improvements Needed to be Competitive ? • Clubhouse • Locker Rooms • Golf Course • Careful Not to Overspend • Add Upgrades Only to the Level Necessary • Avoid the Natural Tendency to Make it “Too Nice” • Essential to Identify “Members Only” Space FOR SALE

  11. Actual Legacy Club Improvements • Added New Men’s Locker Room • Expanded Ladies Locker Room • Expanded Clubhouse Grill Area • Added New Free Standing Golf Shop • Expanded Clubhouse Dining • Enhanced Practice Area; Bunkers; Greens • Total Upgrades Cost @ $3.2 M; 3 Phases

  12. Transition Plan • How Many to Sell? • “Triggers” Along the Way • Blocks of User Times • “Phasing” of Times • For Improvements • Fully Private When? • Member Communication • Member Referral Programs • “Members Only” Space Essential

  13. Membership Specific • Types of Memberships • Pricing • Initiation Fees • Monthly Dues • Accompanied GF Rate • Refund Rules • Resign List Procedures • Documents Needed • Application • Bylaws • Feature Sheets • FAQs

  14. After the Conversion • Consider Complexity • Private Segment is No Picnic • Member Advisory Board • Bylaws • Marketing Materials • Potential for Litigation

  15. Pitfalls to Avoid • ½ Pregnant • Serving Two “Masters” • Daily Fee Cutoff Point • The Blame Game • Over Upgrading • Delusions of Grandeur • Watch Private F/B Like a Hawk • Securities Violations for IF Uses

  16. P/L Comparison • Improved Operating Results are Possible When Everything Works Right • The Next Slide Shows Actual Results

  17. Placeholder – Shad’sP/L Comparison Slide

  18. What if You Miss? • Selling Initiation Fees at $5 k Instead of $15 – $20 k • Dense Real Estate Surrounding but “House Poor” • Locker Rooms Not Added Prior • Sluggish Economy • Other Private Clubs Nearby • Now Serving Two Masters

  19. Questions?

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