When he started looking for land in 2001, Jeff Warne thought he’d be a pioneer in what is now the booming Aiken, S.C., golf scene. Now he’s hoping he’s not too late to the party as private destination clubs proliferate in the area.
There’s Old Barnwell and Tree Farm, which have garnered significant national acclaim. The 21 Club is set to open. A bit farther afield is Broomsedge, which will host this year’s Carolinas Mid-Amateur. Then there are the traditional membership clubs—like Chechessee Creek Club and Congaree—and the resort courses at Kiawah Island and Hilton Head.
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It’s a great time to play golf in South Carolina, particularly at national membership rates, which can be four- or five-figures in a six-and seven-figure world.
But to some more economically bearish golfers, it’s not crazy to ask: what happens to these private destination clubs when the next recession hits? Is there enough money to keep them running at the level members and guests have come to expect? Could they close? A lot of this will be determined by whether national members, who might only visit a handful of times each year, want to keep stroking the checks that make these clubs possible.
Warne, a native of Augusta, Ga., and the long-time director of golf at The Bridge, a private club in Sag Harbor., N.Y., is building New Holland Golf Club as a cross between the 130-year-old Palmetto Golf Club, where he has been a member since the 1980s, and British golf clubs that allow visiting golfers to play. He is bullish on the area and hopes to begin member preview play later this year.
“It’s like buying Google 10 years ago when you thought it was overpriced and it’s still growing,” Warne said. “We’re getting Palmetto, Tree Farm, Old Barnwell and 21 Club members sending their friends to us, and they’re thinking home and home.”
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A perfectly solid thesis in good times. But what happens if AI takes more jobs than expected or inflation rises or disposable income simply contracts? Also, many of these courses are not easy to get to on a commercial airline—take all the great golf in western Nebraska. Private jets make getting there much easier, but that’s precisely the sort of luxury that gets curtailed in a downturn.
“We’re at a price point where for some it will be the first thing they’ll drop. For others it will be the last thing.”
-Nick Schreiber
Nick Schreiber, the founder of Old Barnwell, has thought through this scenario. Admittedly fortunate that he had personal wealth and family backing to start OB debt free, he said he designed the club with a long-term view and a price point meant to attract people who believe in the club’s mission of giving back to the game.
“My dad will joke, Why don’t you get those dumb rich people who will pay a premium and come one time a year,” Schreiber said. “That’s what we’re trying to avoid.” The fees are commensurate—$5,000 a year for people over 40 and $4,100 a year for people under 40—a far cry from the $1 million-plus initiation fees at clubs like Apogee in south Florida.
“When the bubble inevitably bursts, as it will, we’re in a good position,” said Schreiber, who has opened a children’s course and is building a third course at OB. “We’re at a price point where for some it will be the first thing they’ll drop. For others it will be the last thing.”
A financial squeeze is also something that Zac Blair, the PGA Tour pro and founder of Tree Farm, has thought about a lot. His club has been plagued by rumors that it is being sold or going bankrupt. “We’ve never been for sale,” Blair said. “Virtually every month it was a new rumor going around that someone is buying the club.”
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The club tried to quash the rumors in a member letter last year, which only stoked further speculation.
Part of the reason for the rumors, Blair and the general manager Eric Dietz said, is its unusual dues structure. The club operates through a usage fee, similar to Ohoopee, where in this case, a member puts up $5,000 at the start of the season and then replenishes that amount as he comes on property, plays, stays, eats, etc. If you don’t plan to come one season, you can skip paying the usage fee and won’t forfeit your membership—something that could prove problematic in a recession.
At Broomsedge, Cody Sunberg, who is leading the investor group, said they had not modeled out the impact from a future recession. “We’ve been optimistic,” he said. “There’s been a supply-demand imbalance in the Carolinas. Everyone has been moving here.”
The bigger issue could be for investors in these private destination clubs.
Ryan Rafter, vice president of golf and resorts at Hilco Global, a brokerage, said many new clubs that took on private investors are “doing good but not great.” In other words, most investors aren’t getting any sort of return. That may be fine for friends and family. But private equity investors who are expecting a return that’s a multiple of their investment could force changes.
Another challenge with these golf-only private clubs is they’re not family resorts by design. Selling the family on a trip to a Cabot Citrus, with Disney a short drive away, might prove easier than one of the Aiken clubs where winter can be chilly and gray.
Public resort competition is also real. Michael Keiser, Jr. is set to open Rodeo Dunes, some 40 minutes from Denver. He built the course with founding members who paid initiation fees from $65,000 to $105,000. These members get access to preferred tee times and avoid the scramble to secure tee times at top resorts years in advance.
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One strategy to keep revenue coming in when members aren’t visiting is the British club model. “The ones that open up for unaccompanied guest fees are going to do well,” Rafter said.
Warne plans to keep space open for unaccompanied guests. He also wants to make New Holland a club where members can find a game, whether they’re flying in from New York, making a trip from Charlotte or driving down the street.
“It’s about golf and relationships and being able to find a game,” Warne said. “That’s going to take work. I want people to show up as a single but not go off and play as a single.”
Such an approach could keep people coming when times get tough.
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