FOR many executives, being a member of a country club has become part and parcel of their perks and privileges. Making use of country club facilities to entertain customers, government officials and business associates is quite common and has even become an expectation. There is also a great deal of prestige in companies to have their senior executives play golf in the more exclusive golf clubs.
Without a doubt, being a member in an exclusive country club is a plus in promoting the business interests of both the company and the executive plus has many advantages for his or her family, relatives and friends. The big question is, should you buy your own club share? Many people may take this for granted and just enjoy being the corporate representative or assignee of the said share. Why not? You don’t have to spend for acquiring the share and all the monthly dues and expenses are charged to the company!
There are a number of things you should think about. First is, unless you own the company yourself, it is a certainty that regardless of how high your position is in the company, your services will not be forever. In due time, you will have to retire from your job or some unfortunate event may end your employment with the company. This means that your membership in the country club will also end. A double whammy!
Second, there is a membership hierarchy that you may not be aware of. While there may not be any differences in membership rights, country club management and staff know your membership status. At the peak is the Proprietary Member, where the owner and member is the same person. Followed by the Corporate Member, where the company is the owner and the member is one of their directors or officers. Finally, we have the Assignee Member, where the owner of the share has assigned his rights to a third party to use the club facilities.
Third consideration is the appreciation of the country club share. While it is true that the price of any asset could go up or down, it would be nice if you can discern if something is undervalued and has a good upside potential. What this means is that you would be better off buying your own country club share if the share price will go up. More than 30 years ago I bought my Alabang Country Club share for P125,000 and the last transaction was at P7,500,000, which yields an annualized rate of return of 200 percent for the last 30 years!
Is it too late to buy a country club share? You do the math yourself. Typically, you just need to determine the current market value of the properties/assets owned by the country club, which will probably be mostly real estate and deduct all the liabilities and encumbrances. Divide this by the total shares issued and outstanding and you get a rough idea of what the country club share price should be. If you see that the current share price is in multiples less than the calculated per-capita share value, then you may want to consider buying that particular country club share and become a Proprietary Member.
Finally, having your own share allows you uninterrupted membership regardless of your employment or career situation. There are also many prestigious clubs that offer life membership for Proprietary Members that have kept their uninterrupted membership in the club for 30 or so years, so by the time you retire, you could transfer your share to your children or even sell it and still be able to use the club facilities you have grown accustomed to! Of course depending on the club, terms and conditions will vary.
This is potentially a great way to enjoy your investment and make a lot of money in the process as well! I wish all of you happy hunting and hope to see you in the golf course! Comments may be sent to firstname.lastname@example.org.