Giligan Oakmont Country Club Case

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Gilligan oOakmont Country Club 1
Thomas W. Gilligan
University of Southern California

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t is the summer of 1996 and management must decide whether or not to alter the process used to trade the club’s 450 memberships. The current fixed price system, in which management sets the transfer fee for club memberships, offers some degree of financial certainty for existing and prospective members as well as for the club’s financial planners. However, the fixed price system promotes chronic imbalances between the number of members wishing to leave the club and the number of eligible candidates wanting to enter the club. These imbalances create frustrations for eligible candidates, hardships for long-time club members, difficulties in developing suitable new members and problems for club planners. Management is considering several alternatives.

THE CLUB
Oakmont Country Club is a private golf and social club located along the Arroyo Verdugo in northern Glendale, California. Established in 1922, Oakmont has long provided the kind of relaxed social life prized by many Southern California families. Oakmont’s mission statement reveals the club’s goals and orientation. . . . to provide its members with a premium golf and country club experience that includes a well maintained, highly respected and competitive golf course; an attractively designed and efficiently operated clubhouse that meets the membership’s requirements for excellent service, top-quality food and beverages and ample meeting and banquet facilities; and the maintenance of the Club’s unique atmosphere of a strong and friendly family orientation. All contemporary management issues at Oakmont are evaluated through the lens of this mission statement.

This case was prepared by Thomas W. Gilligan, University of Southern California, as a basis for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 1997 by South-Western College Publishing. For information regarding this and other CaseNet® cases, please visit CaseNet® on the World Wide Web at casenet.thomson.com. 1

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Oakmont Country Club ISBN: 0-324-03152-1

Oakmont’s major assets reflect the club’s values. Oakmont’s challenging 18-hole, 6,736-yard golf course is a tough test for golfers of any ability. The course was designed by Max Behr, architect of many local courses including the one at Lakeside Country Club, and modified by William Bell, Sr., creator of courses at the Riviera and Bel Air Country Clubs. Oakmont’s course is currently the site of an annual Ladies Professional Golf Association (LPGA) tournament and over the years has hosted many important professional and amateur events. Among the notable winners of golf tournaments held at Oakmont are Ben Hogan and Al Geiberger. Oakmont’s clubhouse, which was renovated in 1995, is a 42,000 square foot, single-story structure characterized by an elegant reception area, formal dining room, private meeting and banquet rooms, a member’s grill, a casual dining room and a terrace grill for indoor and outdoor eating. In addition, there is a fully equipped state-of-the-art exercise room and men’s and women’s locker rooms. A competitive short course pool, with toddler swimming area, is open from Memorial Day through Labor Day each year. Oakmont’s assets are valued at nearly $13 million while its annual operating expenses are more than $3 million. Tables 1 and 2 are statements of the financial position and activities of Oakmont Country Club for fiscal years 1995 and 1996. Oakmont is organized as a non-profit corporation under the laws of the state of California. According to its bylaws, Oakmont’s membership is fixed at 450 regular members each with an equal proprietary interest in the club’s assets (Oakmont also has several non-equity membership categories). Regular members govern Oakmont through the...
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