Country Club Woes

Business Times - 14 Jan 2006
S'pore leisure clubs battle to stay relevant
The search for niches is on as the market in club membership flounders
By VEN SREENIVASAN

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Keppel Club membership is going for a mere $21,000 now, versus $26,000 a year ago. Raffles Country Club, Seletar Country Club and Orchid Country Club
memberships have slipped by around $5,000 from their 2004/2005 levels.

The decline is even worse compared with a decade ago.

The BT Golf Club Index, which tracks the indicative open-market prices of Singapore-based golf clubs, is hovering around 123 points. In January 1996, it was about 200 points.

Even SICC, TMCC and Sentosa are way below their mid-1990s highs. SICC used
to command a secondary market price of around $200,000 a decade ago, while TMCC was changing hands at over $180,000, and Sentosa was well over $150,000.

The picture is even worse for the social and recreation clubs.

The Tower Club, which targeted well-heeled executives a few years ago, now has an open-market quote of just above $8,000 - less than half of its $20,000 launch price. Meanwhile, the indicative open-market prices for The British Club and Raffles Town Club (RTC) are around $6,000 to $7,000, while that of Singapore
Recreation Club (SRC) is around $8,000.

The only exception seem to be the Singapore Cricket Club and the American Club, whose secondary market prices have been holding up and even edging higher over the past year.

But by BT's estimate, people who invested in clubs could have lost more than $250 million in the last 10 years. And that does not include the unrealised paper losses by those still holding on to memberships bought a decade ago.

While oversupply and economics have played a large role in diminishing the appetite for clubs, the failures and headline-grabbing controversies haven't helped.

Raffles Town Club (RTC) hit the headlines as a third of its members sued it for breach of contract. Then Raffles Marina hit the headlines as it sought to restructure some $27 million in debentures it owes some 1,700 members.

Meanwhile, across the island, debenture-holders of Laguna National Golf & Country Club continue to haggle with the proprietor over $116 million in 30-year unsecured notes, though the notes are not due for redemption for another two decades.

Then there are the club failures.

Members of the now-defunct Alliance Technology-owned Fort Canning and Pinetree Club collectively lost over $140 million, while hundreds of Ponggol Marina members lost millions more when it collapsed under $18 million of debt. Another $9 million in membership collections were lost when Ban Hin Leong's Green Club failed to take off in 2001.

The club membership scenario today is a far cry from the economic heyday of
the late 1980s to the mid-1990s, when yuppies pursued the trappings of prosperity represented by the 5Cs - cash, credit cards, cars, condos, and clubs ...

Some years ago, my wife wanted to purchase a country club membership. I said that I thought it was a stupid idea. She disagreed with me. I said, "I think it's a bad idea and I'm not paying a cent for this." She said, "Hrrrumph" and went ahead to purchase it with her money. Well, I'd said that it was a bad idea and I was right.

It's not just that our country club membership has slid significantly in market value over the years. In fact, that's not the main point. The main point is that nowadays we hardly ever go to the club anymore. We hardly ever use the facilities. Which is exactly what I had predicted years ago, at the time she first came up with the idea of buying the membership.

Sure, when we first got the membership, we went frequently. We brought friends and relatives along too. We used the pool, the tennis courts, the driving range, the gym, the spa, the jackpot room, the karaoke facilities, the restaurants .....

But before you knew it, the novelty value had worn off. And we now hardly ever go any more. Maybe once in three, four months. So we are paying good money (monthly subscription fees) for approximately nothing.

But my deepest insight into the woes of country clubs came not through being a member. It came professionally, in my capacity as a banking & finance lawyer. I was acting for a certain local bank in a certain matter. The bank had lent millions and millions of dollars to a certain country club and the club couldn't quite pay back. (Oh yes, this particular financial disaster is one of the tragedies referred to in the BT article above).

It was utterly pathetic. To see how the bank desperately wriggled to get its money back. And to see how the club desperately wriggled to cough up money for the bank. Gloom and depression for all parties involved. Utterly nauseating, even though I was just the lawyer.

If anyone ever tells me to "invest" in a club today, I will probably puke. It's better to keep your money under your bed.