City Club: Investing in provincial middle-class dreams
 
 
Source: Promotional video posted to City Club’s Facebook channel.
 

You may have seen City Club’s ad on television this past Ramadan. It starts off with a father of a middle-class household singing about his wish to be a member of a club that’s “not expensive.” The other family members chime in, each expressing their desires for a club that fulfills their needs — such as the football-loving son who wants a real coach not some “bike mechanic” to train him. The ad ends with the father talking about eating escalope panée at City Club “without having to pay LE1,000.”

نادي سيتي كلوب نادي مش عادي

احجز مكانك بسرعة في المرحلة الأولى من سيتي كلوب#سيتي_كلوب#نادي_مش_عادي#نفسك_فنادي_فيه_أيه

Posted by Estadat on Monday, 4 May 2020

The ad, which targets people from the upper-middle classes living in rural areas and smaller towns and cities, sells the dream of a sophisticated Cairo lifestyle without actually being there.

While many smaller towns and cities have social clubs for the middle class, the class segregation between the middle and lower classes is not as distinct as in the larger, older clubs in the capital, where most of the country’s wealth is concentrated. Factors such as relatively cheap membership fees, discounts for members of professional syndicates, and the push to grow membership in order to boost revenue, helped create a more diverse member base that lacks such a clear class distinction.

This has been going on for decades. What is new, however, is that some provincial upper-middle-class club members believe there is a correlation between this absence of class segregation and the poor quality of service in these clubs — a place like the Geriza Club in Zamalek has high-quality service because its membership is very expensive and exclusive to certain segments of society. Being in a high-quality club that is class distinct becomes an aspiration.

The dream of creating a Gezira Club outside of Cairo is complicated by the fact that the purchasing power of the middle class in the countryside and smaller cities is unlike that in Cairo. Enter City Club, which promises the “Gezira” quality without having to pay “Gezira” membership fees.

How can we understand this development in consumption patterns? What is the role of privatization? And what role does the state play in creating these class enclaves — not only because City Club is reportedly affiliated with a “sovereign” government entity but also the wider absence of public investment in this sector?

The main driver behind increasingly distinct class enclaves in Egypt has been an absence of public investment across the board and a turn towards privatization. Poor investment in public education has driven private education across the country. Similarly, a lack of investment in the development of social clubs and recreational spaces that integrate different social classes eventually led to their deterioration, prompting segments of the middle class to migrate towards higher quality services available in the private sector.

The interplay between increased privatization and the creation of class enclaves in Egypt grew out of the distorted management of public resources beginning in the late 1970s. This in turn created distorted patterns of consumption that eventually became normalized: We have to pay huge sums for a decent education. We have to pay huge sums for decent housing. And we also have to pay for recreation. 

Eventually, those who could afford certain benefits began distancing themselves from those who could not. Society turned into an archipelago of islands, some class enclaves replete with quality services while the majority stuck with bad education, bad housing, and bad recreation. Advancing past the majority to join the minority that enjoys a bare minimum of these services became the hallmark of social aspiration.

This pattern is most evident in the areas of recreation and sports. According to official data, there are 74 public parks in Egypt as of 2017, which translated into one park for every 1.5 million residents. Their geographical distribution is also skewed. Cairo alone has 39 public parks, while the rest are distributed among the rest of the country’s 27 governorates. Sports facilities across the country numbered 84 across all governorates in 2018, the equivalent of one sports facility for every one million citizens.

This paucity of public parks and the poor state of social clubs in the provinces create demand for establishments like City Club.

Private investment in social and sporting clubs like City Club has been promoted as a way to bypass inefficient state management, and — as in City Club’s case — the citizenry is excluded from the process of establishing or privatizing clubs. Many cannot afford memberships in City Club or entrance fees to the football clubs they support which run somewhere between LE32,000 and LE62,000.

Investors only pursue those who can afford such services: middle-class families who aspire to build ties exclusively with their socioeconomic counterparts and eat escalope panée without having to pay LE1,000.

These social clubs were the first step toward creating social enclaves in Egypt. They became the expression of a desire to construct a social bubble with people of similar status while any perceived threats to this perceived social harmony were filtered out.

Even those who can afford to pay the high fees associated with more upmarket social clubs still have to meet certain standards of class distinction in order to join the rich in their walled-off enclaves. 

Historically, upscale social clubs practiced a form of complex social exclusion based on income and education. This exclusion was directly linked to the political economy of wealth accumulation in Egypt following the 1970s which produced a new class of newly rich Egyptians who worked in the Gulf or relied on rentier activities such as real estate. Meanwhile, economic liberalization drove medium-scale farmers in the 1970s and 1980s toward Cairo to work in real estate or other sectors.

The creation of a newly affluent class threatened the exclusivity of old money elites where educational background and family lineage are paramount. This paved the way for complex patterns of discrimination and exclusion by old money against new money. This pattern began nearly five decades ago, but it is still very prevalent in the urban middle-class imagination today. It is expressed in many forms, even among the younger generations who mock provincial “fellaheen” (peasants) on social media.

Manifestations of these complex exclusion patterns are clear in social clubs. Most of them have two membership packages, one for those with higher educational degrees and another for those with medium-level qualifications. Many conduct interviews with membership applicants. 

There is also internal exclusion between different branches of the same club. For example, Ahly Club’s Gezira membership costs LE750,000 and varies according to payment method and educational level, while membership at the Sheikh Zayed branch only costs LE250,000. The Gezira Club is notorious for its exclusivity. Membership to its main Zamalek branch costs up to LE1 million, while membership to its 6th of October City branch is four times cheaper at LE250,000.

These levels of exclusion were more difficult to recreate in the housing sector. Housing is a basic need whose economics are linked more closely to market forces. A real estate company must sell its product to make quick profits, leaving less room to handpick clientele. Gated housing communities do practice de facto exclusion by virtue of their pricing, with the majority unable to afford an apartment for LE1 million or LE2 million, but they cannot practice the same, complex social discrimination that social clubs often do.

Although social clubs look to make profits just like real estate companies, memberships account for a small part of their revenues. In 2018, memberships made up just seven percent of Ahly’s revenues. The same goes for Wadi Degla, where membership made up nine percent of annual revenues and the Shooting Club at four percent. Social and sporting clubs instead profit from broadcast rights and the sale of players, or transform into retail centers, renting out large spaces to restaurants, cafes, and clothing stores.

Nevertheless, membership costs at these clubs have increased significantly over the past few years. In 2016, a member at Al-Ahly with a higher educational degree paid LE250,000. Now, membership at the Gezira branch costs up to LE750,000, a threefold increase in just four years. Most other clubs saw similar increases.

The sharp increase in membership rates may not be driven solely by economic concerns but rather to exclude the newly moneyed middle class and threaten to upend a carefully constructed social bubble.

This brings us to City Club. Who is this project’s target audience who aspire to eat escalope panée and are willing to pay some money, but not LE1,000? 

City Club’s parent company Estadat recently announced an increase in the number of memberships it is accepting in Phase One from 500 to 800 members per branch due to huge demand. The obvious questions in this context are: Who are these applicants? And how many are there?

Official figures and statistics do not offer a clear picture. The average income of the top ten percent of spenders in Egypt is LE100,000 per year, which translates to around LE8,300 per month — a very low average for the top ten percent of earners in the country. Therefore, according to official figures, even the richest ten percent in Egypt cannot afford a City Club membership. So which segment is City Club targeting?

The simple answer is that this segment does not show up in income and spending research or in much of the data the government gathers about income. There are indicators that this segment exists in other figures and statistics, but there are no clear numbers about its income level.

This higher income “phantom” segment exists specifically in urban provinces as indicated by the greater annual consumption of the richest urban segments to their rural counterparts. Actual spending of the richest segment is up to LE61,000 per year in rural areas, while that same segment spends about LE101,000 in urban areas. Meanwhile, spending on recreation and cultural activities make up 3.5 percent of annual consumption in urban areas compared to just 1.2 percent in rural areas.

All of this points to the existence of a demographic willing to pay tens of thousands of pounds to join a club in peripheral urban centers — be it in Upper or Lower Egypt — and to receive services City Club officials say will be of the same quality as in Cairo’s biggest clubs.

This segment has not been entirely deprived of social clubs targeting the middle class. There are already social clubs in these governorates, some of which are affiliated with the private sector, including professional syndicate clubs, and others affiliated with the Ministry of Youth and Sports. According to official figures, as of 2018, there are 5,148 total sports facilities, including youth centers, in Egypt. 

The table below illustrates the abundance of social clubs without youth centers. For example, here are the available clubs in the governorates where City Club is establishing branches:

 

Governorate Government sector clubs Clubs affiliated with public sector companies and the public business sector Private sector clubs (syndicate and private company clubs and social, investment clubs) Total
Suez 2 5 5 12
Sharqiya 7 1 21 29
Beheira 3 18 21
Kafr al-Sheikh  5 16 21
Monufiya  1 2 32 35
Damietta 5 9 14
Beni Suef 5 1 12 18
Sohag 3 4 33 40
Minya 5 4 12 21
Assiut 3 2 20 25

 

If all of these are available, why would this demographic be drawn to City Club?

Membership to most of these clubs is open to anyone and they often offer attractive payment plans. According to the 2018 sports activity bulletin published by the Central Agency for Public Mobilization and Statistics (CAPMAS), there are 3.2 million private club members in Egypt distributed among 560 clubs. This translates to an average of 5,600 members per club, an extremely high number, especially since most of these clubs are small and lack basic facilities.

More importantly, these clubs are selling a different kind of product. They do not offer the same level of class distinction and upmarket facilities as clubs in Cairo.

Middle-class aspirations have grown beyond having access to a place where children can learn how to swim, for example. Who the swim coach is also matters. Do they speak English? How do they deal with children who oftentimes attend private, foreign schools? Is there a varying assortment of games and sports children can enjoy? This transformation in consumption standards is not confined to social clubs, it extends to everything: from fancy beaches in the North Coast to education in foreign schools with astronomical tuition fees. 

These deep changes in consumption patterns came hand-in-hand with the privatization of public spaces and services over the past few decades. They created social enclaves that began with the upper class followed by segments of the middle class that scrambled to create similar, cheaper patterns of consumption if they found themselves unable to access the upper social enclaves.

This is precisely what City Club is trying to sell. These segments of the middle class presumably cannot spend hundreds of thousands of pounds to join the Gezira Club, but that does not mean that they cannot receive similar services. At City Club, the service is not related to the product’s actual quality, but rather to the social prestige surrounding the product. Your child can be trained in a swimming pool by an English-speaking coach, regardless of whether the training is top-notch or not. You can eat escalope panée in any restaurant in the provinces but now you’ll be eating it with your social peers behind the club’s gated walls, just like those at the Gezira Club — and you don’t have to pay LE1,000 to do it either.

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Mohamed Ramadan 
 
 

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