A sign in the lobby greets members and guests with the latest promotion: bring in a new member and get 30 percent off dues for an entire year.
And as an added bonus, the new member can take advantage of the same 30 percent discount.
Sounds like a promotion for the local gym? Yes, but it’s actually an offer from City Club on Bunker Hill, a members-only social club perched on the 54th floor of the Wells Fargo Center in downtown Los Angeles.
Private social clubs exclusive haunts for some of L.A.’s most well-connected bankers, attorneys and real estate investors haven’t been immune to the down economy.
That’s because penny-pinching businessmen, civic leaders and companies are taking a hard look at the hefty initiation fees, monthly dues and triple-digit dining bills that come with being a member.
“Without a doubt, people are dropping out of the membership,” said Larry Ahlquist, general manager of the City Club for 15 years. “That’s why you become more aggressive in your marketing. It’s sad to see people leave, but you just have to try and outsell what you lose.”
Membership at the City Club is down 4 percent from the same time a year ago; it claims nearly 1,200 members. And the area’s other prominent private clubs, the California Club, Jonathan Club and Regency Club, are hurting as well, sources told the Business Journal.
Initiation fees at these clubs range from $750 to $30,000, depending on the club and the age of the members. Monthly dues can be hefty too, running from $125 to $425.
In an effort to shore up their ranks and retain current members, the clubs are offering discounts and other innovations, such as fixed-price dinner specials.
The Jonathan Club is offering as much as 93 percent yes, 93 percent off its Jonathan Town Club membership. The Town Club allows members access to its imposing Italian renaissance facility in downtown, but not the more popular Santa Monica beach club.
“I have the impression that there is a new push on (Town Club membership) currently,” said Nancy Iredale, a club member. She is a partner at Paul Hastings Janofsky & Walker LLP and was the first female president of the Jonathan Club’s board of governors from 1996 to 1997.
The local clubs are in good company. According to industry insiders, private clubs throughout the United States are taking a hit from the weak economy. That’s because the membership pool is mainly middle-age executives whose net worth has declined.
“Clubs and club managers are anxiously attempting to do everything they can to retain club members,” said Michael Robinson, president of executive search firm Robinson Goslin in Granby, Conn., which specializes in recruiting private club managers. “The vast majority of clubs appear to be readjusting the large initiation fees downward as opposed to upward.”
Business elite
The Business Journal interviewed at lease a dozen members of L.A.’s elite social clubs, and most spoke on the condition of anonymity.
Many members take pride in belonging to one of these exclusive clubs, which offer opportunities to network with the best in business. It’s said that members of the California Club own Los Angeles, members of the Jonathan Club run it, members of the City Club are the face of it, and members of the Regency Club bring it together though not everyone would agree with that characterization.
The recession appears to be taking its toll on all of them to different degrees.
Members of the Jonathan Club, which was founded in 1895 and is L.A.’s second oldest private club, said there’s been a noticeable decline in the number of new members joining in the last six months. The special offer for Town Club membership was designed to address that decline.
A membership with access to the downtown Jonathan Club typically pays $7,500 in initiation fees and $325 in monthly dues. However, a recently launched special available to the first 100 applicants lowers the initiation fee to $2,009 and monthly dues to $200.
The deal gets even better for those between 21 and 34 years old “junior” members. The standard initiation fee for junior Town Club members is between $1,500 to $3,000, and monthly dues range from $163 to $203. By comparison, the special reduces initiation fees to $209 and monthly dues to just $100.
Meanwhile, at the City Club, which is offering the 30 percent discount for new members, the regular initiation fee ranges from $750 to $2,500, with monthly dues running $125 to $310.
Those costs are less than the Jonathan Club, but then the City Club is L.A.’s youngest private social club. It was founded in 1989 by businessman Walter Beran, and a group of L.A. professionals and government leaders who were outside the traditional, old boys’ network.
It prides itself as being the most ethnically diverse, but unlike the other clubs that are owned by members, City Club is part of a larger corporation; the club is owned by Dallas -based ClubCorp, which operates private social, golf and country clubs throughout the United States.
However, the club is governed by a board of governors composed of members. James Blancarte, chairman of that board, said he is highlighting the numerous benefits offered by the club in an effort to retain members.
“It’s become important to the board that the membership is getting value for paying dues,” said Blancarte, a partner in the downtown L.A. office of law firm Adorno Yoss Alvarado & Smith LLP. “Because it was brought to our attention that we needed to let members known what they were missing.”
For example, Blancarte developed a “discover your club” program that details the numerous benefits offered by the club, including a free Continental breakfast each day of the workweek, and half off the club’s appetizer menu.
Other clubs also are offering specials to boost member dining.
The California Club, Southern California’s oldest private social club, is promoting a business-casual bistro night. For $38, members can enjoy a three-course meal of delicacies including Dungeness crab salad, braised Sonoma rabbit and French Valrhona chocolate-banana triangles at the club’s Flower Street building.
Dropping rank
The Regency Club joined L.A.’s private club ranks in 1981, when billionaire and Dole Food Co. Inc. Chairman David Murdock founded it as Westwood’s premier social club.
The Regency Club’s general manager declined to comment for this story. However, some members said they’ve seen others leave or take a temporary break due to money issues.
“There have been people who I know who have dropped out for financial reasons or some who have been put on sabbatical to get their business back in shape economically,” one member said.
The member added the Regency Club is taking a closer look at prospective members’ credit scores and finances as result of the economy. It wants to make sure that admitted members can keep up with the fees, which are $5,000 for initiation and $270 for monthly dues.
What’s more, the club may be at a disadvantage compared to the other clubs since it offers few other services aside from an elegant dining and meeting space. Most of the other local clubs are fully equipped with gyms, pools and overnight guest rooms.
“Dining clubs have a tougher row to hoe,” said club recruiter Robinson. “When people belong to two clubs, and have a choice between retaining membership at a dining club versus a country or golf club, they give larger scrutiny to how much usage they are getting out of the dining club.”
