My club is a 501c7, and while it's the right call for us, it's not without potential issues. First and foremost, your revenue needs to come only from members. Outside income cannot exceed 5% of your annual amount. In practice this means you can't raise any money from public events, or sell merchandise outside of your membership. If you run a competition, entry fees from non-members are"outside income". Sponsorship is also. It's brutal staying under that 5% limit.
You're probably going to need a lawyer to draft all of the documents you need to satisfy the IRS. I don't remember them all but there's about half a dozen. We spent just over $1000 in legal fees.
I think you meant 35%, not 5%. Below is a quote from IRS Pub 557 on 501(c)(7).
A section 501(c)(7) organization can
receive up to 35% of its gross receipts, including
investment income, from sources outside of
its membership without losing its tax-exempt
status. Income from nontraditional business activity
with members is not exempt function income,
and thus is included as income from
sources outside of the membership. Of the 35%
gross receipts listed above, up to 15% of the
gross receipts can be derived from the use of
the club's facilities or services by the general