Equity vs. Non-Equity Golf Club Memberships
by Lew Sichelman on January 15, 2019
Are you considering joining a private golf club but having trouble deciphering the different club membership types? We can help!
Essentially, there are two types of private membership: equity and non-equity. These terms relate to the ownership and financial structure of the club and the associated membership.
Equity Golf Membership
The equity membership structure is typically defined as one in which the member owns a portion of the golf club along with other members. Member-owned golf clubs are the most exclusive and the most expensive, but they usually offer amenities not available at non-equity clubs.
Depending on the number of members and exclusivity of the club, the initial membership fee can range from about $5,000 to more than $250,000. However, with the equity club structure, the entire membership fee, or at least a portion, is refundable upon resignation from the club. The typical program provides for 100% of the initial deposit to be refunded minus a transfer fee, which in most cases is between 10% and 20% of the original fee paid. If the membership fee has appreciated in value, the equity member benefits from that appreciation—because they own it! Keep in mind that if there are no new members on the waitlist, the outgoing member may have to wait for the refund unless the club is willing to buy it back and reimburse the member immediately.
In addition to membership fees, most equity clubs require you spend a minimum amount each year on food and other course and clubhouse amenities (golf cart, locker room, club storage usage, etc). If the minimum is not reached, the member is charged for the difference.
As “owners” of the club, equity golf members elect a Board of Directors to handle operation and maintenance of the club—which usually employs an outside resource to handle the day-to-day operations.
With fewer members/players and higher fees of an equity club comes perks like better maintenance and upkeep, less course wear and tear, no wait tee-times, and higher-quality facilities and food.
Non-Equity Golf Membership
In the non-equity model, the club and all of the amenities are owned by an entity other than the members. This could be the developer, or an organization that specializes in owning and operating club facilities. So, rather than depending on equity members who may lack the skills and operating expertise of a private club, or having the additional headache of managing an outside firm, the onus of running a non-equity club shifts to industry-specific professionals who dedicate all their time to the operation, maintenance, and management of the club. In short, non-equity members pay their fees and are free to show up and play a round while enjoying the clubhouse lifestyle without any of the “ownership” responsibilities.
Speaking of fees, non-equity membership was traditionally a non-refundable program. We say was, as it has evolved in recent years to provide for a percentage of the initial deposit to be refunded. That said, any appreciation realized at the time of the non-equity member’s resignation typically goes to the benefit of the club and/or its owner(s).
Equity or Non-Equity: Which Golf Membership is Right For You?
As you may have already gleaned, the difference in membership types really comes down to the member’s mentality. If you don’t mind the additional obligation, equity membership could be for you. Some retirees prefer the extra control and influence that comes with “running” a club, and welcome the extra work and activity that’s involved. Plus, the added bonus of more exclusivity and potential financial gains also makes equity club ownership an attractive option for many.
On the other hand, those looking for a more relaxed and stress-free golf retirement find non-equity the way to go—all the advantages of country club living without the added responsibility.
Find Your Private Golf Community
While these membership parameters are relatively typical, each club is set up quite specifically and membership, resignation, transferability, and refundability can vary greatly—in both equity and non-equity membership models. To find your perfect golf community with a membership model that suits your needs, budget, and lifestyle, consider PCR your teeing ground.
