Private golf clubs are facing a tidal wave of challenges, from the prolonged economic downturn, to an aging population unable to continue playing the game, to a general decline in demand for golf, to financial hardships facing many of their members.

Additionally, many private non-equity golf clubs have on their books a relatively large liability from refundable membership deposits. In many cases, this liability is an anchor that drags down the club economically and causes it to be viewed by potential members as tainted and undesirable.

Historically, private non-equity clubs structured membership initiation fees as refundable deposits in order to attract members and enjoy certain tax benefits. However, refundable deposits now represent an economic burden that most clubs and buyers want to avoid. As a result, many private non-equity clubs are exploring ways to rid themselves of, or at least minimize, this economic burden.

Originally Published in Golf Inc. on July 2013.