Response to Comments:
Proposal to Eliminate Social Golf Category;
Impose New 275 Non-Proprietary Golfing Member Cap
From the Long Range Planning Committee – June 2016
In May, the Long Range Planning Committee (LRPC) sent an information
package to every member (via mail and/or email) presenting its proposal for the
phased elimination of the Social Golf category by capping Proprietary members
at 400 (instead of the current 350) and capping non-Proprietary golfing
memberships at 275 (there is no such cap today).1 We invited member comments
and questions via email and personal communications with LRPC members. We
also conducted a town hall meeting on June 15th that was attended by
approximately 30 members other than members of the LRPC and the Board.2
About 1/3 of the attendees were non-Proprietary. Our purposes here are to
briefly re-summarize the proposal’s benefits and potential risks, to place the
proposal in the context of our Long Term Strategic Planning process, to report on
the relatively few substantive questions and comments we received, and to
provide our responses to them.
Summary of the Proposal
The proposed Bylaws amendments (to cap Proprietary membership at 400 and to
cap non-Proprietary golfing members at 275) would allow the Club to:
o Merge Social Golf into Proprietary over about 3 years and permanently
eliminate that category;
o After the transition period, reduce the path from Social to Proprietary
from 10-12 years to about 6 years, something we believe is essential to
improving the Club’s attractiveness to potential new members in light of
the partial disincentives created by our excessively long wait for
membership entrance and progression to Proprietary status (a total of
1
These materials may be viewed on the Club’s website in the Resource Center Section. The
proposed amendments require Bylaws revisions, which in turn require membership approval.
Changing the Proprietary cap to 400, for example, requires approval by 2/3s of the voting
members.
2 The slides presented at the town hall are attached as Exhibit A.
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about 15 years today), increased initiation fees and no return of equity
policy;
In the near term, quicken the progression of existing Social Golf, Associate
and Social members into the Proprietary membership;
Help resolve the inequities that exist in the present system which only
requires Social Golf members to pay one-half the initiation fees and 15%
lower dues than Proprietary members for nearly the same privileges;
Prevent future membership expansion beyond 675 golfing members
(maximum of 400 Proprietary and 275 non-Proprietary) without member
approval;
Accumulate an additional $1.6 million in capital during the next 3-4 years
above that which would otherwise be collected, and reserve those funds
for future capital projects;
In the near term, accumulate more dues than otherwise would be the case,
as a result of the expedited progression of 58 Social Golf members into
Proprietary status;
Implement the proposal in a phased manner so that corrective actions can
be taken should unexpected consequences arise (there is no mandate that
we achieve 400 Proprietary or 275 non-Proprietary golfing members, for
example);
Accomplish the foregoing without material adverse impacts on first tee
access or tournament sign-ups, and without any dues increases or
assessments.
The Relationship Between the Proposal and the Long Term Strategic Plan
As emphasized in the materials we distributed and again at the town hall
meeting, the LRPC sees this proposal as an essential first step in restructuring the
membership, without which other potential actions might not be advisable or
economically feasible. We want to assure you, however, that the LRPC, the
Board, other Committees and Management will evaluate other potential aspects
of membership restructuring as part of the Long Term Strategic Planning Process
(Plan) that the Board has asked the LRPC to begin after a vote is taken on this
proposal. That outcome will materially affect the flexibility we have in future
planning with regard to all aspects of the membership experience. Other highly
successful precedents such as the MacKenzie Restoration, the 15-year capital
plan and our sanding and building programs will be incorporated into the Plan,
which will set forth our long-term vision for every desirable and necessary
aspect of the Club, including: membership structure; facility and course
maintenance and improvement; long-term capital and operating fund
requirements; desired social and golfing aspects of the membership experience;
our environmental stewardship objectives, etc. Further refinements to our
membership structure will clearly be evaluated as part of that process.
Response to Comments
Of the twelve (12) personal communications and emails we have received (about
1/3 of which were from non-Proprietary members), some involved clarifying
individual member misunderstandings of the proposal, others expressed
unqualified support - particularly from past Presidents, Board and Committee
members who have confronted membership structure issues over the past two
decades - and others which stated overall support for the proposal with an
intention to approve but with some reservations. The following summarizes the
sum and substance of the significant comments we have received through those
communications and at the town hall meeting, and provides our responses to
them.
A. Comments on the Proposal and Possible Alternatives:
1. Comment: A number of commenters stated their support for the
proposal, which they faulted only for not going far enough. More
specifically, a number of members expressed the view that the proposal
should result in a significant reduction in the overall size of the
membership.
Response: First, we appreciate the support for the proposal expressed by
these members. Second, we also agree that further reductions in the
overall size of the membership may be appropriate. In fact, the first plan
the LRPC presented to the past Presidents this February included the
increase in the Proprietary cap from 350 to 400, but also proposed a
decrease in Associates from 58 to 50 and a decrease in Social members
from 100 to 80. We also had several alternatives for the period of time
over which such changes would be implemented. Reducing the size of the
membership has important implications for dues (they will generally
increase) and capital infusion (which will generally decrease after
completion of the transition period, assuming a constant initiation fee).
The presentation of all of these alternatives and different calculations was
extremely complex, and could divert member attention from the critical
elements of the only matters requiring a vote – i.e., capping the number of
Proprietary members at 400 and the total number of non-Proprietary
golfing members at 275.3 Since other membership structural changes do
not require a vote, and since they might not be recommended if this
proposal is not approved, we decided to focus the proposal solely on the
issues requiring a vote.
As stated above, however, serious evaluation of other membership
structural issues will occur as part of the Long Term Strategic Plan process
that will begin after this proposal is resolved. Among other potential
considerations, we note in passing that reducing the size of the
membership is generally seen as a proxy for increasing first tee access. As
a point of interest, 35 of our most active members play more rounds
annually than all Social Golf and Social members combined. It is therefore
possible that reducing the size of some classes may not have a meaningful
impact on first tee access, and that other actions could be more effective,
either independently or in combination with reductions. Consideration of
all the alternatives would best be considered in the context of a
comprehensive planning process that begins with a clearly stated vision of
what we believe the Club should be. We will do that.
2. Comment: Why not resolve the Social Golf issue by allowing existing
Social Golf Members to advance into Proprietary status under the present
scheme of progression while not advancing any Social members into
Social Golf?
Response: On average, the present rate of Social Golf member progression
into Proprietary membership is about 12/year. It would take nearly 5 years
for the 58 existing Social Golf members to advance, and we would be
freezing Social members in place for an additional five years. These are
not acceptable outcomes since they prolong and in some ways intensify
the present structural problems. Additionally, we would reduce dues and
minimums that could be collected under the proposal by about
$500,000/year and lose the approximately $1.6 million in increased capital
infusion that might otherwise be gained during the transition period.
Although increased revenues are not a primary motivating factor for the
proposal, simply foregoing that much income is not a viable alternative,
3
All Bylaws amendments require member approval. Changes to the Club’s Rules & Regulations,
however, may be made in the Board’s discretion.
especially in order to implement an alternative that does not adequately
address our current and future concerns.
3. Comment: Will any accommodation be made for those Social Golfers
who are not ready to move up to Proprietary during the next three years?
Response: Since historically almost all Social Golf members move up to
Proprietary when it is offered, we suspect that trend will continue under
the proposal. Nevertheless, the typical wait period in Social Golf has been
5 years, and the proposal would shorten that period to about 3 years. A
few members may be unprepared financially in that timeframe.
Accordingly, the proposal would allow a Social Golfer who requests it to
drop back to the bottom of the Social Golf class one time.
B. Comments Regarding Impacts on Play:
1. Comment: One commenter expressed disbelief at the accuracy of the
play impact analyses conducted by our Head Golf Professional and the
Golf Committee.
Response: We can only repeat that an extraordinary amount of attention
was focused on this issue, which was analyzed on the basis of a robust,
multiple- year data set on the number of rounds played each day, at what
time, and by which class of member. Jim O’Neal and the Golf Committee
evaluated these data from several perspectives, including the historic
trend of changes in play patterns by Social Golf members when they
covert to Proprietary. (There is limited change, if any.) This is an
important issue, however, and as one protection against potential adverse
impacts on Proprietary weekend play, we are now opening the course on
Saturday and Sunday before 7:00 AM during the prime golf season to
provide additional openings. (The impact of this schedule will be
evaluated and may be changed if it is not providing a meaningful benefit.)
The phased implementation of the program will also provide the
opportunity for corrective actions should there be an unanticipated impact
on Proprietary play.
C. Financial Comments/Questions:
1. Comment: The plan appears to be focused on increasing dues and
capital funds to address funding shortfalls. Other means could be used to
address such matters, including increased dues, assessments and initiation
fees.
Response: The premise of the comment is incorrect. Our primary
motivation is to help assure the Club’s long-term health by improving its
attractiveness to potential new members. Although we have long wait
lists today, there is some softness to them (not everyone on the list decides
to become a member) and we have seen such lists evaporate quickly
during past economic downturns. There also is anecdotal evidence that
some highly desirable potential candidates decide not to apply because of
the extended wait for admission and advancement to Proprietary status.
Our increased initiation fees and no return of equity policy may be further
disincentives to new recruitment.
We believe that shortening the path to Proprietary status is critical to
maintaining a healthy stream of new members. We also believe that the
elimination of Social Golf members having similar privileges to
Proprietary despite paying less will improve internal member
relationships. The bottom line of our response to this comment, however,
is that the Club is in sound financial condition, and that while increased
capital funds and dues revenues would certainly be welcomed, they are
not necessary nor are they primary motivating factors for the proposal.
2. Comment: What will be done to prevent “foolish” spending of the
increased capital intake?
Response: The potential $1.6 million increase in capital funds would be
received over the course of 3-4 years. The intention is to reserve all of
these funds for important future capital projects (irrigation system
improvements, building maintenance, equipment purchases, etc.).
3. Comment: Why does the proposal not focus on containing costs instead
of increasing revenues?
Response: Again, the proposal is not motivated by financial
considerations. In any event, we believe the Board and Management are
appropriately focused on cost control. Last year, for example, the Club
retained a cost control expert who reviewed all of our expenses, found
almost all to be reasonable, and made suggestions for cost savings only in
a few areas such a trash disposal, linen service and electricity usage. All of
these recommendations have been implemented. We are also seriously
evaluating a solar project that could dramatically reduce our future
electricity costs without direct capital expenditures by us.
Further Proceedings
As you know, we originally intended to conduct two town hall meetings, but
adjusted that schedule in light of the unanticipated Warriors’ playoff schedule.
Given the number and nature of the comments received and our responses
above, we now intend to provide our recommendation to the Board at its June
28th meeting. We still encourage you, however, to contact any LRPC member or
submit written comments to [email protected] on or before then which
we will consider before making our final recommendation. Once the Board
receives the LRPC’s recommendation, it will determine what further steps are
appropriate.
Our thanks to all of you for the time you have spent considering the proposal
and for the feedback you have provided.
Respectfully, 2016 Meadow Club Long Range Planning Committee
Adam Tracy, Chairman LRPC
Jack Goodman, President
Clyde Ostler
Kevin Kobalter
John Landers
Henry Pilger
Rich Tuohey, Jr.
Chris Morrison
Guy Benstead
Scott Littman
Jerry Ackeret
Karl Lytz