Skip to content

Clubs are under increasing pressure in a very competitive environment to enhance their facilities to retain and attract new members. Equally challenging in a tough economic environment is securing funding for the facilities improvements.

The traditional options to fund club improvements for member owned clubs have been member assessment and bank loan. Recent variations of these options include:

  • Refundable assessment or bond;
  • Bank loan, combined with member assessment to fund loan debt service;
  • Capital component to dues; and
  • Loan from club member group, with benefits afforded to member lenders.

Local banks are increasingly willing to fund club improvements. However, they often condition loan approval on club members approving assessments to fund debt service, combined with club covenants and pledges regarding the assessment. The club’s assessment power is sometimes more important to the bank than a mortgage of the facilities, especially if the club is in a private gated residential community. A location in a private gated community may limit the market for a sale of the club assets if the bank is forced to foreclose on the mortgage.

Clubs should carefully plan the financing program for the improvements, including consideration of the ability to repay bank loans without creating a material burden for the club and the impact of any assessments on the marketability for memberships. Financial modeling should be based on conservative assumptions for membership sales and resignations.

Clubs that have succeeded in obtaining member approval of assessments and/or bank loans have developed an effective communication strategy, which often includes member committee involvement, workshops, member input on the design of the improvements, effective communication package including frequently asked questions and attractive renderings of the improvements, information meetings, proactive “information leader” group contact of every member, and prompt response to email questions and postings.

Clubs need to stay current in the facilities offerings to stay competitive. Successful implementation of an improvement program requires effective design and planning, and communication with and solicitation of members.