End of the line for St Andrews Beach

[Mike_Clayton]

Intereting quote from Graeme Grant - ex- super at Kingston Heath - in the Golfer Newspaper this week.

Paraphrasing it was something like ' I joined because I met Tom Doak when I was at KH and I thought he would design a great course - but he did not.There are too many blind shots and the walks are too long between green and tee'

We don't need to trawl over old ground but I there are a lot of blind shots if you drive into the wrong place - and not so many if you drive into the right place.

The tee to green walks have been commented on but they have never seemed to be an issue for me - aside from the walk to the clubhouse from the 18th green - which is a final memory.

[Mark_F]

Any update on this? Some suggestion of a creditors/shareholders meeting held this week to determine the path forward. What happened?

What exactly do you want to know?

[Mike_Clayton]

Mark,

Did you go to the meeting today?

If so, what happened?

[Mark_F]

Mike,

Yes, I went. 

The situation is that secured creditors holding various mortgages over the four titles at St Andrews Beach are owed $21 million. GCPL also a owe a further $21 million to secured creditors for their other developments, as well as around $2 million for leasing finance, and around $15 million to unsecured creditors.

There are four titles over St Andrews Beach.  NAB hold two of them, over relatively inconsequential parts of the property.

The title containing 9 and 10 Fingal, apartments, current and future clubhouse site and apartments, practice facilities, and approximately half of 1 and 18 of Gunnamatta is held by Capitol Finance, who are owed around $9 million I think.  There is a very real possibility that section may revert to a market garden.

The other title containing the rest of Gunnamatta and Fingal has three mortgages over it held by RMBJ, Westpac and Stirling finance.  It has been valued at around $7-8 million for use as farmland, since there are no permits for building.

A potential purchaser can secure the entire parcel by paying $21 million - less than that and it becomes complicated, as each secured creditor will argue over how much each of their mortgage is worth.

Alternatively, the title containing nearly all of the two courses could be secured for around $8 million, which would satisfy the three mortgage holders.

The development goes on the market next week, and there has been strong interest already.  I understand Amstel  may still be in the picture, are some South-East Asian interests.  I believe the directors of GCPL are also working on trading out and taking back control, but that is obviously pie in the sky stuff. 

The $500 they have asked us to pay is put into a trust account, so if the course does not remain open, or a member does not bring down enough guests, it will be refunded.  Unless the administrator receives a reasonable amount of interest in the next week, the course may be closed within the next two weeks, as the money trickling in is not enough to cover expenses, and GCPL don't have any assets that can be sold. 

Graeme Grant was quite vocal at the meeting, as a budget put forward by the administrators showed course maintenance costs of approx. $61000 per month, and he queried about how that could be so given the season.

Mick Gatto was a popular topic of conversation amongst many. 

[Shane Gurnett]

GCPL is comprised of a labyrinthine maze of companies, and that several of those companies were placed in administration last Friday. 

But none of those companies are the ones who have title over the Gunnamatta Course and Clubhouse. 

The property owned by the companies placed in administration is that of the apartments, the entrance road, and, I would assume, 9 and 10 of Fingal, as well as the apartments at Bass Coast.

There are four titles over St Andrews Beach. 

The title containing the rest of Gunnamatta and Fingal has three mortgages over it held by RMBJ, Westpac and Stirling finance.  It has been valued at around $7-8 million for use as farmland, since there are no permits for building.

A potential purchaser can secure the entire parcel by paying $21 million - less than that and it becomes complicated, as each secured creditor will argue over how much each of their mortgage is worth.

Alternatively, the title containing nearly all of the two courses could be secured for around $8 million, which would satisfy the three mortgage holders.

Mark,

The two quotes from you appear to conflict with one another. Could you please explain which is correct (or how both could be?)

Are there any GCPL entities that are not in administration / receivership?

What is the likley prognosis for the shareholder / members?

It would be a real shame if the course were to close or revert back to farm land.

Shane

[Chris Kane]

I played there a fortnight ago, and the place looks superb.  Will be a real shame if it shuts, never to reopen again.

Paul Daley's Golf Architecture Vol 3 is selling for $15 in the clubhouse.

[Mark_F]

Shane,

Sorry, the first quote was a mistake.  Back in February, the GCPL companies involved in the development of the title containing 9 and 10 Fingal, half of Gunnamatta 1 and 18 etc, were placed in receivership by Capitol Finance. 

GCPL placed the rest of the maze of companies involved in the development into administration a few weeks back.

The second quote from last night is correct. 

The confusion over the bold section "But none of those companies are the ones who have title over the Gunnamatta Course and Clubhouse."is because we had always been told that the Gunnamatta Course and potential clubhouse were on their own title, when, in fact, they are not, as explained on Wednesday.

Everything associated with St Andrews Beach and Bass Coast Resort is in receivership/administration.  At this stage, Kennedy Bay is not.

Prognosis?  I guess if it reverts back to farmland we would expect a discount on veggies, but I won't be holding my breath.

[David Kelly]

There was also a bust up, for reasons unknown, with Inform, who designed and were to build the first lot of apartments starting at the beginning of 2005.  This delayed the start of construction on that aspect of the development until 2006, with a new, mostly unsatisfactory in house design that did nothing to encourage people to purchase them. 

The Gunnamatta course was wonderful but driving onto the property I was shocked at the design of the apartments.  I think you would be hard pressed to design apartments that were less inviting for golf course living. With all that land available why would someone want to live right on top of their neighbor? It was like urban living on a golf course.

[Chris Kane]

http://business.theage.com.au/administrators-tee-up-st-andrews/20080410-25cf.html

I am interested in Mark's opinion on the quality of journalism in this piece.

[Mark_F]

There was also a bust up, for reasons unknown, with Inform, who designed and were to build the first lot of apartments starting at the beginning of 2005.  This delayed the start of construction on that aspect of the development until 2006, with a new, mostly unsatisfactory in house design that did nothing to encourage people to purchase them. 

The Gunnamatta course was wonderful but driving onto the property I was shocked at the design of the apartments.  I think you would be hard pressed to design apartments that were less inviting for golf course living. With all that land available why would someone want to live right on top of their neighbor? It was like urban living on a golf course.

David,

There were original plans to subdivide the land for housing, but there was no way to get a permit through council and other avenues, hence the apartments.

I haven't been in them, and apparently they are quite well done, but they look absolutely horrific, and you are right, for the price - $500,000 to $600,000 - you would expect something better, and perhaps a little less neighbourly.

http://business.theage.com.au/administrators-tee-up-st-andrews/20080410-25cf.html
I am interested in Mark's opinion on the quality of journalism in this piece.

Cliched, inaccurate drivel. 

When you can't even get the first ten words of a piece correct, you are in very dire straits indeed.

[David_Elvins]

The tee to green walks have been commented on but they have never seemed to be an issue for me

I think it is valid to list the tee to green walks as a negative of the course (the walk to the 3rd, 6th, 11th, 14th, and 16th tees would all be over 100m) , however I am not sure they could ever be considered a valid criticism of the architect as I struggle to see how 18 (36) holes could have been routed other wise. 

[Mike_Clayton]

Dave,

I think that is right - and there are some very short walks as well.
1 -2, 3-4, 4-5,6-7, 7-8, 8-9, 9-10,, 11-12,13-14 and 16-17.

[Chris Kane]

Intereting quote from Graeme Grant - ex- super at Kingston Heath - in the Golfer Newspaper this week.

Paraphrasing it was something like ' I joined because I met Tom Doak when I was at KH and I thought he would design a great course - but he did not.There are too many blind shots and the walks are too long between green and tee'

Mike, its an interesting debate - did the golf course end up being an asset or a liability (as Graeme Grant is suggesting).  It is without question the most polarising golf course in Victoria.  There are people I respect who absolutely hate it.  Others think its fantastic.

IMO, if "great" was the measure of success, then its a failure, but I don't think the golf course had to be great for the project to work.  The business model failed, not the course.

[Tom_Doak]

Heck, the golf course was rated in the top ten in Australia the year it was finished -- I almost said "opened" but technically, it has never opened!  That's a failure?

I'm not sure if it was the business model that failed, either.  I think it is the clients themselves.  They got a bad reputation for their financial dealings, and from then on no one trusted them enough to join the place.

[Mike_Clayton]

Chris,

Its a similar question to the ' Was Greg Norman a great player?'

It depends on the definition of great - obviously.

Arguably Royal Melbourne is the only truly great course in Australia - if the top 10 or 15 in the world is the measure of great.

For me the golf course is not the problem.

[Chris Kane]

It depends on the definition of great - obviously.

Arguably Royal Melbourne is the only truly great course in Australia - if the top 10 or 15 in the world is the measure of great.

Mike, I was using your definition of great - at a global level.  In the Australian context, it sits somewhere between "great" and "near great"!!

[Matthew Mollica]

I'm not sure if it was the business model that failed, either.  I think it is the clients themselves.  They got a bad reputation for their financial dealings, and from then on no one trusted them enough to join the place.

Tom, what financial dealings gave them the bad reputation?

Matthew

[Mark_F]

Tom, what financial dealings gave them the bad reputation?
Matthew

Matt,

The fact that they are $59 million in debt without having built much more than 2 1/2 golf courses would be first indication?

At least The National has a clubhouse and other facilities to go along with their 2 1/2 courses.

[Matthew Mollica]

Mark, I know they're in huge debt, have wronged many many people, and they have run things very poorly to say the least. I asked my question because Tom posted the folowing -

I'm not sure if it was the business model that failed, either.  I think it is the clients themselves.  They got a bad reputation for their financial dealings, and from then on no one trusted them enough to join the place.

Tom's post seems to imply that dealings PRIOR to the drive for members led to GCPL having a bad reputation. Which in turn cost them credibility. Or have I misread Tom's post?

MM

[Mark_F]

The business model failed, not the course.

This again.  The business model was not the reason it failed.  A very small percentage of the many prospective members I took around at the club's behest in 2005 were querying the business model. 

Most wanted to know why the clubhouse and second course hadn't been built yet, and weren't about to join until there was much more development.  It was simply a golf course on the ground, with no other amenities, and the Three Stooges simply refused to listen to anyone about such matters.

A lot of construction finance was involved with the sale of apartments - the bust up with Inform led to a fatal delay that meant nothing happened for over a year. If the bust up hadn't of happened, there would have been finance to construct the clubhouse, Fingal course and perhaps other elements of the development.

The constant rumours of its impending demise from a certain member of The National didn't help, either.

For me the golf course is not the problem.

Mike,

Much as it pains me to admit, Chris is correct in one instance.  The course does polarise people.  A significant proportion of the prospective members I took around - maybe 30%? - hated the course.  Of course, a few of these were people who thought Metropolitan was a better course than Royal Melbourne, but still... 

Although I disagree with Graeme Grant's assessment, his views are an accurate representation of what people didn't like about the course.   

One of the other reasons was the overwhelming difficulty of certain shots and holes.  An obviously difficult course like National Moonah may have a couple of easier moments, which leave a player thinking he has conquered the beast. On a short, wide course perceived to be easy, but which isn't if you don't have your wits about you, the half dozen or so difficult shots simply lead to a struggle they didn't understand why they were having.

It's a course that demands a very good short game to score well on, and the average player simply doesn't have one, concerned as they are with 460CC, MOI and such.

Mark, I know they're in huge debt, have wronged many many people, and they have run things very poorly to say the least. I asked my question because Tom posted the folowing -

I'm not sure if it was the business model that failed, either.  I think it is the clients themselves.  They got a bad reputation for their financial dealings, and from then on no one trusted them enough to join the place.

Tom's post seems to imply that dealings PRIOR to the drive for members led to GCPL having a bad reputation. Which in turn cost them credibility. Or have I misread Tom's post?
MM

Matt,

No, I sort of read it that way too.  I wonder what he knows...

As I have reiterated in previous posts, it was 2005 that killed them.  They had a great course - albeit one that a reasonable number of people didn't like - open, but nothing else.  There was no way anyone was going  join until significant other development took place.  I don't believe there was that much negative talk around then, at least in the wider community, but by 2006 there definitely was.

For all intent and purposes, although St Andrews Beach was not the success at this stage it had been hoped, the current situation is not due to the relative lack of success in that project so far.

The land at St Andrews Beach was one of the few assets they had, which they used to raise finance for their other projects.  Kennedy Bay, for instance, was losing $400-500,000 per year.  They spent millions building Bass Coast, were warned there wasn't the water supply to enable it to work, went ahead and built it, then watched it blow into the ocean.  Then had to spend more money again last year to finish 9 holes.

A proposed development at Taggerty took substantial time and money.  No development was happening at either Kennedy Bay or Bass Coast, and to complete the development required significantly more capital from the lenders, as last year's financial report stated in fine print.

From what research I gathered, many of the contractors involved at St Andrews Beach - aside from Tom Doak and the course staff, obviously - were paid, if not all of their fees, the vast majority of it.

The other projects killed St Andrews Beach more than St Andrews Beach suffered a fatal wound.

[Shane Gurnett]

Mark, I think Matt is talking about the $50k membership model, which when you can join The National for about $35k less (and get 3 courses, built clubhouse etc etc) was always going to struggle.

Where are you going to join when the place folds? Do you hold any hope of seeing a return on what you paid to buy into the place?

[Mike_Clayton]

Mark,
I understand the course polarizes people - and in that sense it is a problem with people who were probably never going to join anyway.

I think it would have garnered more love if it had been oversown with fescue - in line with the original plans. The success of that program at The Moonah Course is unquestioned.

I suspect those who didn't like holes like 3 and 13 like their golf to be very predictable - like it is at Metropolitan. (not to be read as a criticism of Metro - there is just very little quirky stuff there)

[Mark_F]

Mark, I think Matt is talking about the $50k membership model, which when you can join The National for about $35k less (and get 3 courses, built clubhouse etc etc) was always going to struggle.

Shane,

The directors shot themselves in the foot with the prospectus by stating that the shares would rise to $55,000 upon opening the course, and were afraid - or so I have been told - that if they changed the share offering, people would be able to get out of the deal. 

They originally came up with the $50,000 price when The National's shares hit $35,000, figuring it was a no-brainer to pay $50,000 and have no fees, than pay $35,000 plus $3000 a year for time immemorial. They, of course had no idea The National's shares would fall so far so quickly.   Clearly, people had been expecting Brian Walshe to vacate The National, and when he didn't, panic set in.  Just as clearly, they didn't join St Ab because I was there, so a whole generation has been lost to the game.

Where are you going to join when the place folds? Do you hold any hope of seeing a return on what you paid to buy into the place?

I still hold out some hope that it won't become a market garden.  If it remains a golf club, I have always said that a new owner would allow us to stay as members without having to join again - but paying annual subs - because the market simply would not invest in the project if they didn't.  You have to doubt whether there is much of a market for shares in a golf club that far away now, given the increases in petrol and increasing demands on time in the lst few years, and especially given the current economic climate. 

If it doesn't, or if I decide I can't be bothered, I will probably head for Settler's Run if it is a decent track.  Much closer to home, and it undoubtedly has really, really big greens to provide lots of strategic options. Have you seen it?

As to a return, I have a definite plan for getting it back.  I just have to work out the details first.

Mark,
I understand the course polarizes people - and in that sense it is a problem with people who were probably never going to join anyway.

Mike,

That's probably a fair point, and I also think that if the Fingal had been constructed, offering a slightly different experience - three par fives that aren't blind, and three par threes that aren't woods or hybrids for most players - that would have been enough to get a lot of the people who were hesitating in, especially if Gunnamatta had been oversown. 

I suspect those who didn't like holes like 3 and 13 like their golf to be very predictable - like it is at Metropolitan. (not to be read as a criticism of Metro - there is just very little quirky stuff there)

It was always fascinating for me to compare the differing reactions of the people I took around. It always tended to be the better players who hated holes like 3,4, 10 and 13, generally because they felt the greens to be unfair, with the drive on 13 being far too harsh.

Average players didn' t like the blind shots, the long shots required into the par threes, and the fact that the ball seemingly never ended up where it should have once it hit the ground, which is pretty much a standard complaint of average players everywhere, I guess.

One of the other members who I played with always insisted the walk from 18 back up to the clubhouse cost them a ton of members.

[Chris Kane]

Mark, does that definite plan involve Mick Gatto? 

[Chris Kane]

They originally came up with the $50,000 price when The National's shares hit $35,000, figuring it was a no-brainer to pay $50,000 and have no fees, than pay $35,000 plus $3000 a year for time immemorial. They, of course had no idea The National's shares would fall so far so quickly.   Clearly, people had been expecting Brian Walshe to vacate The National, and when he didn't, panic set in.  Just as clearly, they didn't join St Ab because I was there, so a whole generation has been lost to the game.

Mark, there is a fundamental difference between the shares at The National and those which were sold at St Andrews Beach.  Members at The National own a share of the underlying asset, while St Andrews Beach was in effect a playing right.  It is an apples to oranges comparison.

The project can't have been helped by that maniac who was posting under a series of aliases on iseekgolf.com a few years ago.  You told me that you know him.  I'd be interested in hearing in his views on his own contribution to the demise of his club (he was true believer, after all).