As summer starts winding down, several of us here at Denver Private Wealth Management have enjoyed some time on the links this summer. For our fellow golf lovers out there, you know it’s a great excuse to get outside and either build frustration or release it while spending time with friends and colleagues. 

If you’ve spent some time on the course, you might be wondering if it might be worth your while to invest in a club membership. Our answer to that is a very definitive… 

Maybe. 

Having a country club membership could be a great way to enjoy extra time on a course that you love and even find a community of other members that you enjoy playing with. Ultimately, what you’re paying for is access to a course that’s readily available and is usually in better shape than many public courses. 

However, financially speaking, you should know what you’re getting into before you sign on the dotted line. 

 

The Different Types of Membership 

First, it’s important to know that there are two different types of memberships: equity and non-equity. Let’s take a look at both. 

 

Equity 

Historically, equity memberships were common as a way to attract members with the understanding they could get a portion of the money they put into the club if they were to leave. The membership has largely shifted away from this model over the last 10-20 years to one of non-equity ownership. 

Make sure to understand that equity and non-equity ownership differ from who runs the club. While equity members certainly run the club, some non-equity memberships also have their members still make the decisions on how the club is run. 

Non-Equity 

In the non-equity model, the “initiation” and “dues” you play to the club will not be reimbursed in any way once you leave the club. Sometimes, this model has third party professionals manage the club on your behalf while other non-equity models still have a membership committee making decisions on how the club will be run. 

 

Additional Fees to be Aware Of 

Keep in mind that above the initiation fee (which could range anywhere between several thousand dollars to hundreds of thousands) you’ll also have a monthly membership fee. With most country clubs you’ll also have a food and beverage minimum, and carts could cost extra. 

If you’re planning on participating in club tournaments, those are also additional. And keep in mind that should the club decide to make improvements or things of that nature, you could be assessed and required to provide funds above your membership fee. 

 

Down to Business 

Golf memberships can no longer be written off as business or personal expenses. There could be some write offs that you should talk to your tax professional about, but the overall membership is not something that will benefit you tax-wise. 

Be fully aware of what it takes to get out of the membership, should you choose to down the line. It’s quite possible that you can end the membership, but lose the money you initially put down. This also depends on whether you’ve invested in the equity or non-equity model. 

You might also want to discuss or pay close attention to how the membership will be treated as part of your estate plan. 

The relationship between a club and a member is contractual in nature. Therefore, the club membership agreement typically controls the method by which the membership is transferred upon the death of a member, even if testamentary documents contain a conflicting disposition. Further, the club’s decision with respect to who is entitled to an equity refund or who becomes the successor member will likely control because a club’s decision is subject to judicial reversal only upon showing that the club’s interpretation of the club membership agreement is arbitrary, unreasonable or done in bad faith. (Source)

 

What do We Think? 

As with anything that has to do with finances, it’s a very individual decision.  

• Do you have the discretionary funds to take this on? 
• Does it make sense to compromise in one area (like driving an older car) in order to make this work for you? 
• Do you want to play the same course, making the expense more worthwhile, or would you like more variety? 

When it comes to working a golf membership into your retirement plan, it’s important that you discuss this with your financial advisor. At Denver Private Wealth Management, we’re not only focused on creating your current financial plan, we want to make sure we understand your post-retirement lifestyle goals. This means taking things like travel, second homes, and, yes, golf memberships into account so that you know you have the funds to cover the fun stuff.