Why Raising Dues by CPI Leaves Clubs Falling Behind

Dr. Jim Butler and Ray Cronin on why club costs outpace inflation, why spending more often builds a better club, and how boards can set a dues increase they can defend.

For years, many boards have set dues by a simple rule: raise them by the Consumer Price Index and move on. Club Benchmarking's data says that convention costs clubs ground every year.

Part of the problem is structural. "The members are the owners, and in their role as owners, they effectively have the ability to set the cost of belonging for themselves," says founder Ray Cronin. "That's an inherent conflict of interest."

Why doesn't a CPI-based dues increase keep up?

Inflation isn't uniform. CPI tracks a basket of consumer goods, but about 56 percent of the average club's expense is labor, which follows the Employment Cost Index instead. When wages outpace consumer prices, as they did after COVID, a club that budgets to CPI falls behind by definition. Skip an increase, and the gap compounds the following year.

What does it mean to budget to your vision?

CEO Dr. Jim Butler points out that most club vision statements are interchangeable: the best golf club in the state, the best residential club in the market. A useful vision is data-driven and specific about where the club wants to compete, and the budget should fund it. Because the median club breaks even on operations year after year, asking for more dues isn't about making money. It's about delivering a better member experience.

“What's the best version of who you can be? And then let's fund it.

Can a club price itself out of the market?

Not according to the data. The clubs with the highest dues and highest expenses are the most financially successful in the country, regardless of region. Cronin reviews the finances of the 7 to 10 member-owned clubs that close in a typical year, and the pattern is consistent.

“Those clubs didn't go out of business because their expenses were too high. They went out of business because their expenses were too low.

That doesn't mean doubling dues overnight. On the margin, when a board is choosing between slightly higher expense with a better experience and slightly lower expense with a lesser one, the data consistently favors the better experience.

How should a board set a dues increase it can defend?

Start with data. CB can predict a club's dues revenue with roughly 90 percent accuracy from two variables: the size of its campus and the total subsidy it puts toward amenities. "The setting of dues is not a mystery," Cronin says. "It's a science."

CB recommends beginning with a free net worth report, then benchmarking several years of financials on an apples-to-apples chart of accounts. From there, the board's role is to bring an open mind, trust its management team, and steward the long-term health of the club rather than any one member's wallet.

Quotes are lightly edited for clarity.