New clubs for wealthy car lovers

This article first appeared in The Edge Financial Daily, on December 19, 2018.

Otto Car Club has drawn such corporate partners including Penske Automotive, Ducati North America, Singer Vehicle Design, Black Swan Racing and Porsche of North Scottsdale. Source: Otto Car Club

Otto Car Club includes 32,000 sq ft of climate-controlled storage.

Special cars at Kogan’s debut included something for everyone, like a Porsche 934.5, a Mercedes-AMG GTR, a Ferrari 559, and a 1955 Mercedes-Benz 300SL Roadster.

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Last month in the Arizona desert, Eli Kogan opened a car club.

His brainchild, a 47,000 sq ft space lined in reclaimed barn wood and expensive modernist artwork, is not what you may expect to find nestled in Scottsdale saguaro. Otto Car Club has a theatre in its 4,000 sq ft members lounge, a library, full bar and private dining room, an indoor car-only elevator, and climate-controlled storage for 185 cars. Its state-of-the-art mechanised stacker can hold 75 cars set on top of each other like million-dollar blocks.

At the opening party, guests who had flown in from New York and Los Angeles ate shrimp lollipops and teetered in stilettos. Kogan, 24, in spectacles and his girlfriend Britni Sumida, a blonde bombshell model and fellow car enthusiast, held court while their 450 guests mingled between the Singer DLS Lightweight, a McLaren P1, and a LaFerrari, among other six- and seven-figure vehicles.

With a social calendar that includes track days, private rallies, and whisky nights, Kogan seems to have thought of everything for the 175 members he hopes to attract.

What he does not have is a track.

“If you’re a car person or car-centric and love design and art, there’s nowhere central to go meet with friends and spend time besides the racetrack or a cars n’ coffee,” said Kogan, who estimated he spent US$10 million (RM41.8 million) on the club. “But not everyone likes to go to a racetrack. As one of my collectors said, ‘Why would I go at 6am in the morning to stand around in a parking lot where I feel uncomfortable?’”

Kogan’s club is the latest example of new business cropping up around car culture. Whereas past private car clubs from Palm Springs to Miami have historically centred around racetracks, both literally and culturally, a new group is focusing on the clubhouse and garage. These entrepreneurs are betting that storage and a social life, rather than direct access to a track, will be enough to attract wealthy clients.

“We refer to it as a safe space,” said Kogan. “We are in the convenience business — all you have to do, if you want, is arrive and drive. You’re not coming here to get cars sold to you.”

The clubs are often located in the centre of rather more cosmopolitan areas than racetracks, which must be located miles out of town due to noise and usage ordinances. Some, like the Classic Car Club in New York and London, come with a built-in collection of classics owned outright by the club; others store members’ six-figure toys as well. Others, like Caffeine & Machine in England’s Cotswolds region, do a little of both.

The idea is to combine the best elements of a social club with the practicality of storage. And to make it easily accessible to young and young-at-heart car lovers who live nearby.

“I am building this space because I am the target customer,” said Matt Farah, who broke ground on West Side Collector Car Storage in Los Angeles last May. “In LA, especially the beach cities, folks are not limited by money, only by space: You see US$5 million to US$10 million beach townhomes and condos with one- or two-car garages and literally no driveway. I have been looking to be a customer of a place like this for at least five years, but it just didn’t exist at all, so I decided to build it myself.”

Farah designed his club to cater to the particular logistics of handling special cars in an urban environment. For instance, the basement was measured such that a Corvette ZR1 — one of the longest sports cars you can buy — will be able to drive straight on down without having to turn on an angle. The facility will be built from the ground up atop a 31-inch (79cm) concrete slab to withstand earthquakes, fires, and floods. It will have the first indoor quad-stacking system in Los Angeles, and the first quad-stacking system built over a basement anywhere in the world.

Inside, member benefits will include social activities, on-site food and drink, and a members’ lounge filled with warm wood tones and leather seating. Farah will begin taking deposits for his club in March, at rates ranging from US$800 to US$1,500 per month per spot, depending on frequency of usage and whether the member feels okay about staff shuffling their cars. Doors open in summer 2019.

“While I can’t say I’ve thought of every single thing, so far no one has had a question that I haven’t been able to answer,” Farah said.

Across the country, Jonathan Lloyd-Jones had the same idea. His Hudson Stables is a five-minute drive from the Lincoln Tunnel in New Jersey. Inside, club-owned white 1980s-era Porsche 928s sit in 15,000 sq ft of storage spaces in “climate-controlled luxury”. There are well-stocked refrigerators and dual racing simulators. Club members travel to ice-driving races together and gather to screen daredevil motorcycle rallies on multiple cinema projectors in the clubhouse. Members can sell rare and collectible cars on consignment there, or just hang out. Entrance fees are US$495 per month.

Classic Car Club in New York set the tone for the trend. Though it does not offer the storage capacity of Kogan’s Otto club and others, it has been a social club fixture in the city’s car culture for more than a dozen years. In 2016, it relocated uptown from a warehouse in Tribeca to the old police stables on the West Side Highway — a move that eased the drive from Manhattan to upstate and into good driving roads in New Jersey, said co-owner Michael Prichinello.

Owned and operated by Prichinello, Zac Moseley, and Phil Kavanagh, CCC Manhattan’s 1,000-plus members pay a combination of US$180 in monthly dues and then purchase “points” that buy driving days for the car of their choice. A year of driving (35 days behind the wheel) costs US$9,000.

The club has a full restaurant, bar and lounge, multiple US$70,000 race simulators, and boat storage with direct access to the Hudson River. It includes a garage for working on members’ cars along with some limited storage potential. Weekly cocktail hours, Halloween parties, and runway shows during New York Fashion Week are also on the docket. The 38 club-owned cars include modern McLarens, BMWs, Lamborghinis, and classics such as the 1966 Ford GT, a 1991 Acura NSX, and 1989 Lancia Delta rally car. Not to mention a handful of Porsche 911s all tuned to varying degrees.

It sounds like rarefied air because it is, though Prichinello said he works daily to make it relatively accessible. “Club memberships” offered at a discount price allow those members to visit the restaurant, use the simulators, take photos on the gallery-esque warehouse floor, and drool over the sensuous machines — everything but drive the cars.

The same goes for Kogan, whose Otto club boasts members from ages 30 to 70.

“A lot of our younger members are here for the social side of it — they’re wealthy enough to have disposable income to do something like this and have a fun car, but they don’t want or need to have their own facility and staff it,” Kogan said. “It’s about feeling comfortable in a space.”

He offers two tiers of membership, 100 slots for executive members who want to store and drive their cars (rates include US$1,000 per month for a private two-car garage space), and 75 slots (US$400 per month) for social members who want to enjoy the club’s events like wine tastings, watch debuts, and farm-to-table meals. The driving is almost beside the point. — Bloomberg