Stone Eagle Closes

[cary lichtenstein]

If anyone can find the link, I heard that Stone Eagle has closed, is refunded members pro rata dues and looking for a buyer

[Dale Jackson]

here is more information on the sad news

http://www.mydesert.com/article/20100311/BUSINESS/3110362/Stone+Eagle+Golf+Club+in+Palm+Desert+shuts+down

[jonathan_becker]

I read that link this morning. 

I don't even know what to think. 

There are lots of opinions about Stone Eagle on this website, but I absolutely love the course and loved my experience playing there in 2008.  This course is too good and too unique to be closed.

[Sean Leary]

I am guessing that this will be just temporary. Somebody will buy this place....

[Steve Strasheim]

What a bummer.

[Thomas Patterson]

I hope someone buys it and changes the model to allow public play...always wanted to play a round there!  Very sad day indeed.

[Patrick Hodgdon]

Man that's really bad news. Feel bad for Pete Ferlicca, hope he lands solidly on his feet somewhere soon.

[Jim Nugent]

Afraid we will see a whole lot more of this.  Hope I'm wrong. 

[Bob_Huntley]

"If anyone can find the link, I heard that Stone Eagle has closed, is refunded members pro rata dues and looking for a buyer."

Why am I not surprised? Surely the land and  carrying costs of the newer upscale clubs was a bubble waiting to burst. Many of the courses in the desert are in some sort difficulty, no matter how good the product.

It would seem as though the older establishments such as Eldorado and Tamarisk, with land costs that seem laughable now, will motor on. 


Bob

[RJ_Daley]

I was just trying to imagine what the carrying costs (or whatever you call them) could possibly be to keep the course within boundaries of re-opening in playable conditions, in such a difficult environment and resource area.  I wan't fortunately enough to be able to attend that KP gathering a few years ago.  But, while it looks a little extreme in terrain and such, the look of the design from many photos appears it will be very high 'hiatus period maintenance'. 

But, wouldn't it be somewhat feasible to keep it open to public and current members, on some sort of arrangement where 100 public golfers a day are charged $100?  Wouldn't there be population enough within 2 hours drive to support that?  That is over 2 million revenue for a 7 month season.  That is only 25 tee times-4somes per day, leaving many times still for members.  I'd have to believe in that market something could be done to keep it going.

What a pity, eh Boab? 

[jeffwarne]

I was just trying to imagine what the carrying costs (or whatever you call them) could possibly be to keep the course within boundaries of re-opening in playable conditions, in such a difficult environment and resource area.  I wan't fortunately enough to be able to attend that KP gathering a few years ago.  But, while it looks a little extreme in terrain and such, the look of the design from many photos appears it will be very high 'hiatus period maintenance'. 

But, wouldn't it be somewhat feasible to keep it open to public and current members, on some sort of arrangement where 100 public golfers a day are charged $100?  Wouldn't there be population enough within 2 hours drive to support that?  That is over 2 million revenue for a 7 month season.  That is only 25 tee times-4somes per day, leaving many times still for members.  I'd have to believe in that market something could be done to keep it going.

What a pity, eh Boab? 

the days in the winter are short-not too many people are going to $100 to play it in the summer.
25 tee times to the public, throw in a frost and you've got no time for member play-who'd continue to pay dues?

[RJ_Daley]

I really have no idea Jeff.  I'm not familiar with that part of the country.  I was just thinking they have at least 200 days a year that they can play, even considering the summer heat.  What kind of yearly rounds do the more busy places out there experience.  I'd have to imagine (no basis to know) that they do 40K rounds a year.  If so, in what I was saying, that is half to public and half to members.  I figure a $100 to play would draw people from many miles out there.  Not in my neck of the woods so much... 

I was just trying to imagine what it will cost to keep it marginally maintained anyway, and if keeping it open at reduced rounds, even to the public, would be more beneficial to the current members, than total closure. But, I understand that 'just keeping it open' under sparce operations may be diminishing returns.  It is just sad to see a highly regarded design like this go to fallow or uselessness.

[Ben Sims]

I hope Peter finds a great place.  He was a great host, has a sterling reputation at the club, and knows his stuff.  In fact, if all goes well, maybe he can stay at Stone Eagle.

In my opinion, that course cannot survive in it's current state as a public course.  A resort? Maybe.  But where do you put the guests (and how could you afford it?) 

1) The conditioning would be tough to maintain.  It is the best turf I've ever played on...ever. 
2) Amenities like taco shack at 10 and the Aerie would add another cost to an already expensive to maintain infrastructure. 
3) How popular would it get?  Most tourists aren't coming to Palm Springs to play that course.  They're coming for the PGA courses.  My father-in-law asked why I was playing Stone Eagle (a course he'd never heard about) and not the famous PGA West Stadium course.

Let's face it, exclusivity is what keeps the money rolling in.  Aren't Bill Gates and the CEO of Exxon Mobile members?  My poor Silverado was parked haplessly between an S600 and a 911 Turbo.  The guys that drive those cars won't be coming around much more if guys like me are given access at $100 a pop. 

And furthermore, it shows how much the quality of architecture doesn't always mean financial success.  I hope the course survives.

[Scott Warren]

My poor Silverado was parked haplessly between an S600 and a 911 Turbo.

You'd have had them covered if you'd brought the jet instead!

[Jerry Kluger]

I have thought about the maintenance costs for a course like Stone Eagle and I believe that it should be lower than most.  The reason I say that is that it was created in a desert environment so the typical tree and rough maintenance costs aren't there.  The turf/soil had to be brought in so the base is designed for golf and the watering system was created with the course so it should be well designed and last a long time.  I don't know about the cost of water and if they have wells but if they don't then that would probably be a significant portion of the cost to maintain the course.  What I have seen as a good working model is offering annual memberships to get a base revenue and then reasonable greens fees.  Yes, a luxury, high end course is not going to work in today's world.  The bank does not want to own the course and it is certainly not a great piece of property for any other kind of development.  They will have to write it off and paying the cost to maintain it and the property taxes is not an attractive option.

[Tim Nugent]

Yes, the bank probably doesn't want to own it as it would be a resource drain along with being an unproforming asset.  My guess is that they will end up selling it at a steep discount.  Hopefully, those 60 members will still kick in $6m and make an offer.  Since the houses looked like they were priced at $1,000/sf, makes the course look really cheap.

This just spotlights what I always questioned, "why would someone pay a huge initation fee for a non-equity position?"  You get none of the upside but take all the risk on the downside.

I feel for Tom.  Is this his 4th course in recent time to be in trouble?  I hope people realize how much of his sole is put into these places.

This is too good of a course not to get picked up.  We can only hope the next owners are better stewards.

[Tim Leahy]

Marriott or another resort company should step in and buy it. I think it is the best course in the whole Palm Springs area and would draw people if it were public or a resort.  Marriott used to shuttle people out to Desert Dunes before the Faldo course opened and I think they could do the same thing with Stone Eagle.  I would love to see the course on the Hope rotation if it gets back on its feet again. It could be great TV. Maybe Trump will step in, he doesn't have a course in the desert yet does he?

[Kyle Henderson]

I was lucky enough to play Stone Eagle on 3 consecutive days at the end of February, but I wasn't aware it would be shut down so suddenly at the time. I hope something is worked out before the course is incinerated by the desert sun.

Good news: Mr. Ferlicca is bound for Tumble Creek.

[cary lichtenstein]

With the surrounding area so high end, I would think someone will step up and buy this. I wonder about the land above the property. Is it developable at some point in time?

[jkinney]

here is more information on the sad news

http://www.mydesert.com/article/20100311/BUSINESS/3110362/Stone+Eagle+Golf+Club+in+Palm+Desert+shuts+down

The above article is fair and accurate. I was directly involved as part of the group of members attempting to purchase SE from the bank. We came very close to a deal, but in the end the bank didn't take our bid.That's all I am going to say on the matter.

[Ulrich Mayring]

I believe the group of core members, who were making that bid, and perhaps a few others as well would stay on as members, even if public play were allowed. Of course, some of the high-profile members would leave, as it was less about the golf for them. But those, who simply love the course, wouldn't mind sharing it with others, I'm sure.

This "private course" vs. "public course" dichotomy in the US is not sensible. There is a lot of room in-between, actually most of the world operates on a hybrid model.

I'd say cut all the non-Golf amenities and make the greenfee low enough, so that everyone starts flocking to the place. $50 would be a good number, advertise it as a "special price for a limited time only". If it gets crowded, raise the greenfee. See if some of the guests, who show up regularly, might want to stay on as members. Offer a non-initiation fee, subscription-based membership.

You can do a couple of years with that model and then decide, whether you are in a position to go fully private again. But chances are you wouldn't even want to. A truly great course would attract a semi-membership, even if it were fully public.

That's basically what the owner of my (commercial) home course does. Initiation fee zero, I am paying monthly dues and the greenfee started as a sensible number a few years ago, but meanwhile it is severely overpriced. Those guests, who still come and pay the inflated price, are a benefit to us members as well, because they keep our dues in check. Yes, the course can become crowded, but there are several courses owned by the same group, where I can play as a member as well - so I always find a place to play. The owner is quite an innovative thinker in some regards. For example, he says that 18 holes make no sense at all, when he opens a new course he always goes for 27 from the start. So he can host societies and company outings on 18 holes and still have 9 holes for the members.

Ulrich

[Tom_Doak]

I appreciate the comments of everyone who wishes the best for the course.

It's a complicated situation now and I have no idea how it will turn out.  The bank will obviously be looking for a buyer, but it is a buyer's market and it's hard to know how low of an offer the bank will take, considering it will be taking a large write-down in the process.  It's strictly a golf course and a bit of real estate at the bottom of the hill ... the land above is all off limits for development, which is the only reason a golf course made sense there.

Stone Eagle is one of my favorite projects that I've built ... I just love playing golf in that setting.  However, from the time I found out the budget for the project -- a full 18 months after I was hired -- I wondered how it could possibly succeed.  The total expense for Phase I [land costs, permitting, design fees, course construction, buildings, etc.] was somewhere around $70 million ... of which the course construction was only about $12 million.  Once the economy turned, there was no possible way they could make the numbers add up.  The client, their private investors [including some pretty famous ones], and the members have all taken a huge financial hit.  Now it's the bank's turn.  I think the loan was something over $20 million, and they will be lucky to get more than half that from a new buyer.  Even then, Ulrich, I doubt a new owner is going to charge $50 green fees.

I would like to think it is a good enough golf course to survive this situation with a new owner, and the bank has a fiduciary duty to get SOME of its money back, so it will probably be sold.  We'll have to wait and see what happens then.  Somebody will wind up owning a project they never could have afforded to build.

P.S.  I did get a call from Mr. Trump's office about the course almost a year ago, when the developer was about to default.  But he is rarely a big bidder to a desperate seller.

[jeffwarne]

  Somebody will wind up owning a project they never could have afforded to build.

I think that sums up the state of the golf industry in many markets.

Let's hope the housing market never gets to that nationwide

[SL_Solow]

Does anyone know the size of the bank debt?  If so, respond or send me a private message.  Thanks.

[Bill_McBride]

I appreciate the comments of everyone who wishes the best for the course.

It's a complicated situation now and I have no idea how it will turn out.  The bank will obviously be looking for a buyer, but it is a buyer's market and it's hard to know how low of an offer the bank will take, considering it will be taking a large write-down in the process.  It's strictly a golf course and a bit of real estate at the bottom of the hill ... the land above is all off limits for development, which is the only reason a golf course made sense there.

Stone Eagle is one of my favorite projects that I've built ... I just love playing golf in that setting.  However, from the time I found out the budget for the project -- a full 18 months after I was hired -- I wondered how it could possibly succeed.  The total expense for Phase I [land costs, permitting, design fees, course construction, buildings, etc.] was somewhere around $70 million ... of which the course construction was only about $12 million.  Once the economy turned, there was no possible way they could make the numbers add up.  The client, their private investors [including some pretty famous ones], and the members have all taken a huge financial hit.  Now it's the bank's turn.  I think the loan was something over $20 million, and they will be lucky to get more than half that from a new buyer.  Even then, Ulrich, I doubt a new owner is going to charge $50 green fees.

I would like to think it is a good enough golf course to survive this situation with a new owner, and the bank has a fiduciary duty to get SOME of its money back, so it will probably be sold.  We'll have to wait and see what happens then.  Somebody will wind up owning a project they never could have afforded to build.

P.S.  I did get a call from Mr. Trump's office about the course almost a year ago, when the developer was about to default.  But he is rarely a big bidder to a desperate seller.

Tom, if the total cost was (an astonishing) $70 million, and the course construction all in was $12 million, that means the development cost and and initial non-golf infrastructure and buildings was $58 million.  If the note was $20 million, the developers must have put up $50 million.   Those numbers don't really compute.  I hope something can be worked out but it doesn't make a lot of sense.