Owen
At the Heritage they take 10% on the way out, as well as another 10% for the taxman in GST. This is as much or more than most joining fees at a prestigious club. The smart thing to do would be to find a membership to lease. You could probably lease one for less than the annual fees off a membership holder looking to defray some of his costs. You then play there whilst you progress up the waiting list of your sandbelt club of choice.

MatthewM
You don't need to buy a share in the parent company to be a member, you can take the mush more flexible and cost efficient route and lease a share.

As for being able to justify it, well

$2300 annual fees
$500 food and drink levy
0.07°30k = $2100 (for most people the foregone earnings on the membership would be the mortgage they could otherwise pay off. In other cases an even higher rate might be applied).

= $4900 before you even hit a ball. Then there is the 2 1/2 hour round trip from the city, costing an absolute motza in time and fuel. Doing these sums I soon realised that I was better off paying the $60 guest rate every now and again. A serious golfer would also have the cost of a membership at a more accessible metropolitan club on top of this. The cost also results in a failure to play elsewhere as there is a need to get some value from this large investment. Indeed, I've heard of National members who have never played Portsea. :wink:

Of course, what goes up must come down, and I wouldn't be surprised to see some lower prices in years to come when the economy isn't firing on all cylinders.

You're right about the lease Jim,
Sorry to have forgotten about that.

That does make it a little more affordable for some...

Can't imagine that there are blokes who play the Nash, who haven't played Portsea. It's a very enjoyable course, and so close too. I have very fond memories of driving the 13th when I last played there...

MM

MatthewM,
From memory, you had been a member of The National for five years before I managed to drag you (kicking and screaming :mrgreen: ) out to Portsea.

Jim,
You're spot on. Transferable memberships, despite looking very attractive at first glance in comparison to traditional membership structures, are not so pretty. Based on a $22.5k share, you're looking at a net cost of around $27k in the first year of membership. By contrast, a typical sandbelt club is around $10k. Factor in the loss of about $1600pa because the money is invested in shares and not your house, and the traditional club becomes much more attractive financially in the long-term.

Henry,

You are correct, as long as the transferable share doesn't appreciate. If it does, as it has in Matt's case then the sums are vastly different. Oh and before I hear a chorus of "they won't increase again" I don't think anyone can make that call given the typical length of time a member would hold them, probably in excess of 10 years (yes some will get out after a year or two but others will hold them for 30 or 40 years).

JJ

John J Jones,
Assuming that one holds the membership for thirty years, they're losing 7% of its value in each of those years, which is the opportunity cost of investing that money in the golf club instead of a house. I think its highly unlikely that the shares will appreciate enough in those thirty years to cover that significant cost.

I'm not saying that holding a transferable membership is a bad thing, what I'm saying is that they are very expensive, and cannot be rationally justified as an investment. Its a lifestyle decision, nothing else.

henry - do you happen to be student of economics? Not many people these days use the term "opportunity cost" (and after teaching it for a whole semester, some of my students still don't get it!)

amanda_wong,
"Opportunity cost" is one of the first concepts covered in the VCE Economics course (Year 12 in Victoria), which I did last year. I'm doing my best to sound as intelligent as Jim!

Henry,

my share value tripled in three years, and is now an asset I may choose to borrow against, which is something I would not have been able to do to the same extent, had I elected to simply plough the principal into a managed fund etc. I also get the side benefit of playing golf at a good club, and meeting great people.

You may also wish to consider the benefit of managing your own super fund, with the portfolio including such a share, as the lifestyle benefit as you refer to it is significant, and the performance in the last few years would have far exceeded any of the major houses results, with respect to super fund growth.

Matthew

Fair point MM.

and the performance in the last few years would have far exceeded any of the major houses results, with respect to super fund growth.  

You were fortunate enough to have made a wise investment however, apart from The National, which other clubs have significantly increased their share value?

On the subject of value, 30K is a ludicrous amount for Heritage.

MatthewM,
in the medium to long-term, they cannot be expected to outperform something like a managed fund when you take into account the price of maintaining the investment (almost $5k/pa now).

Your share price tripled in three years, but is now worth significantly less than what it was eighteen months ago. I remember in mid-2002 when the going price was almost $40k - I think I could pick one up for low-20's now without a problem. If the housing bubble bursts sometime soon, I can see the share price falling even further, well below $20k. The demand just isn't there anymore for rapid growth in the share price.

Once again, I'm not saying that transferable memberships are a bad thing - but they're a lifestyle decision which cost significantly more than any return you're likely to make. Just like joining any other golf club, you do so for the golf, not because you're going to reap financial reward from doing so.

Ahhh - ok henry - we cover it in NSW Y12 economics also but most students have memories like sieves!

Matthew M,

I'm leaning toward's henry's argument.

Even if we were to assume that ALL of these style memberships were guaranteed good investments, 90 out of 100 avid golfers cannot dream of getting together $25-30k for ANYTHING, let alone a golf club membership. One doesn't merely have to decide it's a good investment, one has to have a few more dollars in their pocket too.

Bumped !
Lots of changes ! Interesting reading.

I wonder if MM could spruik about his brilliant investing skills now?

Considering that Matt has added one or two other sandbelt club memberships to his CV since 2003, then yes I’d say he was investing his money quite well :)
Jon…

Jon out of interest what’s the share at National these days, love to join down the track. Is it about 10k?

Think it was $11 or 12 last I heard. Easy,,,,,

Think it was $11 or 12 last I heard. Easy,,,,,

What is this golf game you talk of?

I know you can lease around 3.5k per year but too bloody far right now….

Think it was $11 or 12 last I heard. Easy,,,,,

What is this golf game you talk of?

I know you can lease around 3.5k per year but too bloody far right now….

There’s many a slip ’tween a cup and a lip.

http://www.golflink.com.au/...

And Stab are apparently going to build a second course…..Peter Thomson designed…...with membership at a reported $100k…..I didn’t think you could commit suicide twice?

Nikey spot on. you’d have to be a ducking moron togo forthat.

can anyone point to a club with the share or debenture structure that has actually been a good financial investment?

Ppretty much allare merely lifestyle choices forthe rich and shameless. I wish I was rich as I would definitely be shameless :-)

Nikey spot on. you’d have to be a ducking moron togo forthat.

can anyone point to a club with the share or debenture structure that has actually been a good financial investment?

Ppretty much allare merely lifestyle choices forthe rich and shameless. I wish I was rich as I would definitely be shameless :-)

There’s many a slip ’tween a cup and a lip.

http://www.golflink.com.au/...

Agree.

I do t live in Melbourne / Vic but at the prices the Nash is going for its unbeatable.

You have guys selling memberships they paid $24k for in 2004-5 for $10k now….great investment…..

But in saying that…..at$10k if you live in close by its am absolute steel…...and tats why I can’t see a new top shelf course at $1ook joining working.

The Nash these days is cheap…..

The Nash is not cheap b’cos you will need to buy a holiday ppty. too :-(

Meanwhile, am playing at Cape Schanck perhaps twice a year.

The Nash is not cheap b’cos you will need to buy a holiday ppty. too :-(

Meanwhile, am playing at Cape Schanck perhaps twice a year.

ellimb

What’s wrong with driving there to play. Geez I know if we had that type of facility here in Sydney 45-50 mins from the CBD there’d be many making the trip weekly. You guys have it too good down there!

The Nash is not cheap b’cos you will need to buy a holiday ppty. too :-(

Meanwhile, am playing at Cape Schanck perhaps twice a year.

ellimb

What’s wrong with driving there to play. Geez I know if we had that type of facility here in Sydney 45-50 mins from the CBD there’d be many making the trip weekly. You guys have it too good down there!

All depends on your time constraints. Makes a long, long day travelling an hour plus each way. Its at least that for a lot of people to The Nash. Plus if its your only membership where and when do you practice? Those facilities arent readily available for quality facilities.

The Nash is not cheap b’cos you will need to buy a holiday ppty. too :-(

Meanwhile, am playing at Cape Schanck perhaps twice a year.

ellimb

What’s wrong with driving there to play. Geez I know if we had that type of facility here in Sydney 45-50 mins from the CBD there’d be many making the trip weekly. You guys have it too good down there!

All depends on your time constraints. Makes a long, long day travelling an hour plus each way. Its at least that for a lot of people to The Nash. Plus if its your only membership where and when do you practice? Those facilities arent readily available for quality facilities.

There’s many a slip ’tween a cup and a lip.

http://www.golflink.com.au/...

Agreed. I’m talking from a potential second club membership. It would be a luxury but from a golf tragic’s point of view having a three course facility is unheard of.

Lucky I’ve got reciprocals.