Faced with big losses, country clubs scramble to adapt

• Where do clubs make and lose money%3F
• Food sales%3A 57 percent profit%3B Beverage sales%3A 67 percent profit%3B Payroll%3A 14 percent loss.

These are tough times for country clubs, long a bastion of old money and gracious living.

Around Central Indiana, some of the oldest and best-known clubs have racked up huge losses in recent years and are scrambling to find ways to keep above water.

It's an uphill battle. Interest in golf is dwindling nationally, and there are more options for people who want to stay active, from marathons to volleyball, without requiring them to pay thousands of dollars in initiation fees and hundreds more a month in membership dues. The industry is overbuilt. And corporations are pulling back from funding expensive memberships for mid-level managers.

In response, many clubs are relaxing dress codes, adding family programs, restructuring fees and considering selling assets.

The goal is to attract more members by dropping the appearance of stuffiness and offering lots of activities.

Broadmoor Country Club, which lost a half-million dollars in 2013, has done away with its ban on jeans in the clubhouse and has added child care.

Woodstock Club, which lost $171,916 in 2011, has ditched its requirement for coats and ties in the dining rooms and now treats the partners of unmarried members as full members, not guests. That includes same-sex partners.

Hillcrest Country Club, which lost $266,102 in 2012, has added a small fitness center and rolled out fee discounts for members who recruit friends and family members.

Highland Golf and Country Club, which lost $114,712 in 2011, is exploring whether to sell about 8 acres of unused land near the White River to pay for improvements to its 100-year-old clubhouse.

"Ultimately, for all clubs, it comes down to really changing your products, relaxing your dress code, going more casual and doing more family things," said Derek Intinarelli, general manager of Broadmoor.

It's a tectonic shift in the way country clubs have operated for generations. But, increasingly, they have little choice.

The industry has been under pressure for a decade. The number of golfers in the U.S. dropped by almost one-fifth from 2003 to 2013, according to the National Golf Foundation. About 200,000 players younger than 35 quit the game in 2013.

And people sticking with golf are playing fewer rounds. Golfers in the U.S. played 462 million rounds in 2013, the lowest number since 1995, according to Golf Datatech.

The whole industry has felt a slowdown. Only 14 new golf courses (public and private) were built in the U.S. in 2013, while 158 closed.

Last spring, Dick's Sporting Goods wrote down $2.4 million worth of clubs, balls and apparel and laid off nearly all of its 500 in-store golf pros.

Around Central Indiana, there have been plenty of options to play golf without writing big checks to private clubs.

From 1997 to 2005, at least nine new public golf courses opened, including Prairie View in Carmel, Winding Ridge in Fishers and Hickory Stick in Greenwood. During the same time, The Fort in Lawrence was redesigned. Fox Prairie in Noblesville and Eagle Creek in Indianapolis added nine-hole courses.

The recession that hit in 2007 clobbered the industry as well. People hung onto their wallets and cut out luxuries.

Dozens of clubs across the country slid into bankruptcy or closed their doors. Many times, members didn't even see it coming.

In Greensboro, N.C., members of Forest Oaks Country Club found their club doors padlocked last spring after the management company declared bankruptcy.

"We heard rumors that things hadn't been paid for, but they were just rumors," member Gail Deal told the News-Record newspaper.

Last October, Minnetonka Country Club in Minnesota announced it was shutting down after nearly a century, citing increasing expenses and decreasing revenue.

In northern Michigan, the highly acclaimed Treetops Resort filed for Chapter 11 bankruptcy protection in November, saying it was burdened with debt.

Even affluent areas felt the pinch. Two weeks ago, the Malibu Golf Club outside Los Angeles filed for Chapter 11 bankruptcy protection after defaulting on a $47 million loan.

And bankruptcies are not unheard of in Central Indiana. Last year, the Hawthorns Golf & Country Club wound up in bankruptcy court after its lender filed a $4.8 million lawsuit and pressed to foreclose. In October, a California company acquired the club for $5.5 million.

It was another reminder to other clubs to get their houses in order.

Kevin Reilly, a club management consultant at PB Mares in Washington, D.C., said many of the nation's best country clubs are doing fine and have long waiting lists for new members.

But too many of the B-level clubs don't have as bright a future. They remain in a sharp competition for survival. Too many sprang up in the 1950s and afterward to appeal to corporate mid-managers. But with a retrenchment of corporate ranks in recent decades, many clubs have lost their base.

"You'll see four clubs in a five-mile radius, all competing for the same members," Reilly said. "There has been some consolidation, but there is still more consolidation to go."

Around Indianapolis, country clubs say they are beginning to stabilize after taking big steps to adapt.

Broadmoor Country Club added 76 new members last year and five so far this year. That boosted membership to about 280, from a low of 167 a few years ago. The club says it has stabilized its finances after cutting $125,000 in expenses last year and boosting revenue by $143,000.

One simple adjustment at Broadmoor made a big difference in the culture: dropping the ban on jeans in the clubhouse (although there is still a dress code on the golf course).

"If you're out with your wife and kids, and shopping or at a baseball game and you decide you want to go to the club, you shouldn't have to run home and change into khakis," Intinarelli, the general manager, said.

The Woodstock Club says it has added about 25 new members a year over the past three years, for a total of 488. One big draw: a trial 12-month membership with a lower initiation fee. New members who upgrade to regular memberships before the trial year ends can slash the normal fees by a hefty amount.

"The clubs in Indianapolis that are surviving are the ones trying to figure out exactly what they are and how to provide more of a family focus and offer a price people are willing to pay," said Susan Schenkel, general manager of Woodstock.

At Highland, the decision whether to sell about 8 acres of land probably will take several months, involving a full discussion with the members, said Paul DeCoursey, the club's president.

The money could be a big help in upgrading the old clubhouse. "We don't want to take on any debt to do this," he said. In the meantime, he said, the club has stabilized its finances, ending last year with a $75,000 surplus.

Some clubs were less willing to discuss their finances than others.

The general manager at Meridian Hills Country Club, which lost $59,710 in 2012 before eking out a $6,830 surplus in 2013, declined to comment for this story and hung up on a reporter during a brief interview. "This is a private club. We do not discuss our finances with anyone," Steve Roper said.

But others were more open, agreeing to interviews and sharing detailed information on fees, discounts and benefits.

Hillcrest Country Club, for one, touted its "Family & Friends" membership discount. Under the program, a member who brings in another member can get a 20 percent discount on annual dues — and so will the new member. Bring in two new members, and everyone gets a 25 percent discount. Bring in four or more new members, and everyone gets a 30 percent discount.

So after a dismal 2012, in which the club lost more than a quarter-million dollars, the company says it is back in the black and membership has climbed back to 215, from a low of 190.

"We think we've got a great story to tell," said Greg Sabens, club manager at Hillcrest. "We've turned the corner. We want to keep growing."

Call Star reporter John Russell at (317) 444-6283. Follow him on Twitter: @johnrussell99.

FOLLOWING THE MONEY

For every dollar a country club gets:

* 52 cents comes from dues.

* 31 cents comes from food and beverage sales.

* 13 cents comes from golfing fees.

* 4 cents comes from miscellaneous.

For every dollar a country club spends:

* 56 cents goes for payroll and related costs.

* 18 cents goes for food and beverage.

* 18 cents goes to other operating expenses.

* 5 cents goes to real estate taxes and insurance.

* 3 cents goes for debt service.

Source: North American Clubs 2015, compiled by PB Mares