[Ken Moum]

We've had some talk here lately wondering what happens when a bank takes over a country club. I am about to find out as the I have been a member of since 1998 has just been put into receivership by the bank.

How we got here is a long story, but the essence is that 22 years ago we got "country club disease" (CCD) and built a clubhouse that required a mortgage bigger than we were able to retire. Now, the loan's principal is nearly what it was 20 years ago, and the club can't afford the payments.

Personally, I think this could ultimately be a good thing for the people who play golf there, if the bank finds someone to buy the place and run it like a business.

I have hung out around golf clubs for about 50 years, and what's funny is that ALL of the three places I played at the most over that time have suffered CCD.

The first one, a nine holer where I grew up, was bailed out by a couple of rich members.

The second, a muni in South Dakota ended up as a muni after the country club who owned it went broke.

Now, my country club belongs to a bank.

I have recently come to the conclusion that there are two categories of golf courses which will, under today's environment, be under huge economic pressure.

One is the second-tier equity club--which is what my club is--because country club boards simply cannot make business-like decisions.  Even with the stress we have been under, my club has spent more money on improvements to the clubhouse than on improvements to the golf course. And we still have people making decisions who believe that the house is subsidizing the course.

The other is the CCFAD--with an exception for the top-end must-plays.  I just booked four rounds in Orlando, on decent courses, during Spring Break, and none of them will cost more than $45.  I don't see how that's sustainable with "modern" maintenance costs.

Now, the good news is that, as has been suggested here, this might bring maintenance back to something most GCA.com particpants will appreciate.

BTW, if anyone wants to buy a Donald Ross course at the bargain price of roughly $1 million, I'll see if I can get your name to the bank.

K

[rboyce]

Sorry to hear it. That last line is a stunner.

[Phil McDade]

BTW, if anyone wants to buy a Donald Ross course at the bargain price of roughly $1 million, I'll see if I can get your name to the bank.

K

Does the course come with the d_mn clubhouse?

[John Moore II]

Ken-Why is $45 not sustainable? All depends on how they maintain the course and how much money they spend.

[Bill_McBride]

Ken-Why is $45 not sustainable? All depends on how they maintain the course and how much money they spend.

........and how many rounds.   # rounds x $45 - maintenance - debt service - G&A = ?

[Chris Flamion]

One is the second-tier equity club--which is what my club is--because country club boards simply cannot make business-like decisions.  Even with the stress we have been under, my club has spent more money on improvements to the clubhouse than on improvements to the golf course. And we still have people making decisions who believe that the house is subsidizing the course.

As someone who has to deal with a "board" on a regular basis I can say that they very rarely work.  While it is not a club board I often feel like the "GCA style" Greens Chair up against a large number of build the house first type people.  It saddens me to see that this is so commonplace outside of my small community.  I wish you personally the best of luck on getting a favorable end to your scenario.

Chris

[Jed Peters]

My club was too.

Then it went public.

So I resigned, and I can play there in the saturday game for over $100 less per month than I was paying as a "member".

[Ken Moum]

BTW, if anyone wants to buy a Donald Ross course at the bargain price of roughly $1 million, I'll see if I can get your name to the bank.

K

Does the course come with the d_mn clubhouse?

It does.  I don't know what the bank is going to ask for the place, but the loan is less than that, and no other lender was willing to loan us enough to pay it off.

I think the place is probably only worth $600,000 - $700,000 in this market. Golf in Topeka is a tough business,

You have to remember that we have a management company that is offering a family membership that includes unlimted golf at seven courses, and unlimited fitness at five fitness centers for $29.95 a month. See http://www.greatlifegolf.com/

Yes, that is the correct number. For less than most country clubs charge for one month's dues you can get a family membership for a whole year at seven golf courses.

Here's another area club's latest offer http://www.lawrencecountryclub.com/request_info.php


K

[Jeff Shelman]

Ken,

That's a bummer to hear. Hopefully things turn out all right for you guys.

I'm afraid this won't be the last time we hear this.

[Tim Nugent]

BTW, if anyone wants to buy a Donald Ross course at the bargain price of roughly $1 million, I'll see if I can get your name to the bank.

K

Does the course come with the d_mn clubhouse?

Sounds like Shawnee CC.

What are the 7 other courses?  Only3 inTopeka come to mind (TCC, SCC, and Lake Shawnee).

With a price that cheap, said mgmt could buy it and add it to the monopoly.  Might even have enough of the market by then to raise rates everywhere to cover the purchase - they really lke it when they can get a course for free (or have others pay for it).

It does.  I don't know what the bank is going to ask for the place, but the loan is less than that, and no other lender was willing to loan us enough to pay it off.

I think the place is probably only worth $600,000 - $700,000 in this market. Golf in Topeka is a tough business,

You have to remember that we have a management company that is offering a family membership that includes unlimted golf at seven courses, and unlimited fitness at five fitness centers for $29.95 a month. See http://www.greatlifegolf.com/

Yes, that is the correct number. For less than most country clubs charge for one month's dues you can get a family membership for a whole year at seven golf courses.

Here's another area club's latest offer http://www.lawrencecountryclub.com/request_info.php


K

[Ken Moum]

Sounds like Shawnee CC.

What are the 7 other courses? 

Only 3 inTopeka come to mind (TCC, SCC, and Lake Shawnee).

It is Shawnee CC, the other courses Great Life operates in the Topeka market are Berkshire CC, Western Hills and Prairie View. They also bought Chisholm Trail in Abilene from Ron Whitten about a year ago.  And, they operate Lake Perry CC, Maple Creek in Kansas City and River Oaks in Grandview, Mo.

I don't think anyone here is going to schedule a trip to play them, but they are consistently busy, and provide affordable golf for thousands of members.

[Tim Nugent]

Ken, have you ever play Chisholm?  I haven't but remember reading about it about 10 years ago ias a minalmist venture.  On Google earth, he wrinkled topography of the area looks very condusive but I was wondering about the bunkering (and lack thereof  - while what is there seems to have been better applied elsewhere than where it is).

[Jeff_Brauer]

It will be interesting to me to see how Firekeeper affects this whole mix.

Their feasibility study noted that no public course in Topeka exceeded 6350 yards in length, and predicted great success just by offering a course that wasn't too difficult, but fit in with people's expectations of modern length.  I don't know what they plan to charge, but think it will be reasonable for quality offered.

I know that Sand Creek Station in Newton faced similar challenges in the similar Wichita market (lots of play, no one seemingly willing to pay much for golf) but actually increased play last year even though they were further away and at the high end of the public greens fee price structure.

[Michael Huber]

Sometimes I wonder how and why rich, successful businessmen can buy clubs and then proceed to run them into the ground.  If you have enough money to buy a private club, you probably did something right in some other line of business.  How is it that all these good businessmen get the country club disease and end up with a mortgage they cant afford?  These are smart people. 

[Tim Nugent]

M.H.  - Perhaps it's because with their business - it's their money they're spending, but put them on a Board with 250 Other Peoples Money members that all want "something" from the Board and, to keep them happy (and not contantly bugging you) they take the easy way out and just vote to spend whatever it takes.  Just a small version of DC these days.  What until the Subject Line reads: My COUNTRY is in receivership!!!

[Ken Moum]

Ken, have you ever play Chisholm?  I haven't but remember reading about it about 10 years ago ias a minalmist venture.  On Google earth, he wrinkled topography of the area looks very condusive but I was wondering about the bunkering (and lack thereof  - while what is there seems to have been better applied elsewhere than where it is).

No I haven't played it, but did stop by one time and bumped into Ron W. who was there working in the "clubhouse," which was a house trailer--or something like it. It was built by a local dentist (?) who liked Prairie Dunes and wanted one of his own.

It looked great and about as minimal as it gets.

Haven't been back since Ron sold it.

[Ken Moum]

It will be interesting to me to see how Firekeeper affects this whole mix.

Their feasibility study noted that no public course in Topeka exceeded 6350 yards in length, and predicted great success just by offering a course that wasn't too difficult, but fit in with people's expectations of modern length.  I don't know what they plan to charge, but think it will be reasonable for quality offered.

I know that Sand Creek Station in Newton faced similar challenges in the similar Wichita market (lots of play, no one seemingly willing to pay much for golf) but actually increased play last year even though they were further away and at the high end of the public greens fee price structure.

It will be interesting.  Since the busiest course in town measures ~5950 from the white tees, and 90% of the people who play there do it from those tees, one would expect that yardage isn't going to be a factor.

I expect that Firekeeper will draw a pretty good crowd in the beginning, and will continue to do well if it offers decent conditions at a decent price. But the market here is REALLY skewed by Great Life's $360/year deal.

K

[Jason Hines]

Hi Ken,
I played Shawnee CC about 5 years ago, had lots of character.  Do you think it would make it as a semi private?


What are you personally going to do?  What side of town are you on?  You could make the LCC offer work if you are 25 miles away, I like the changes they have made to the course.

J. 

[Bill Gayne]

Not to go to OT of the thread but there's no reason a semi-private club can't have an active and well organized membership. There's plenty of clubs in the GBI that are essentially semi-private with great memberships.

[Ken Moum]

Hi Ken,
I played Shawnee CC about 5 years ago, had lots of character.  Do you think it would make it as a semi private?


What are you personally going to do?  What side of town are you on?  You could make the LCC offer work if you are 25 miles away, I like the changes they have made to the course.

J. 

FWIW, I am no fan of LCC. It's virtually unwalkable for me due to the steep hills, and it is WAY too difficult for my taste. Since they did the reno they've lost some member who simply couldn't play the course.

In fact, playing SCC for 12 years has made me a bit of snob about course routing. If I were forced to play any of the courses within 50 miles of Topeka, or give up the game, I'd be sorely tempted to quit playing completely.

Re. your semi-private, that's a good question.

It doesn't look like the Topeka golf market needs another course offering green fee play. Of the two local public courses only one has been breaking even in recent years, and SCC would need to get a decent rate to make it worth the trouble. With our current new-member dues at $99 a month, getting someone to pay $35+ for green fees might be tough.

Ken

[Jason Hines]

If I were forced to play any of the courses within 50 miles of Topeka, or give up the game, I'd be sorely tempted to quit playing completely.

I see your predicament, tough break for SCC.

[Ken Moum]

If I were forced to play any of the courses within 50 miles of Topeka, or give up the game, I'd be sorely tempted to quit playing completely.

I see your predicament, tough break for SCC.

Actually, I currently have fairly high hopes for the course. For the first time in decades it is going to be operated as if it's business and not a hobby.

I have believed for several years that, except for the more elite clubs, equity country clubs are an unsustainable business model.  Everywhere I look there are equity clubs whose boards have spent millions of dollars on clubhouse renovations that will never pay for themselves.

Or the spend millions on renovating the course into something that none of their members can play. (Part of this is due to stubborn golfers who refuse to play reasonable length tees.)

The net result is that these clubs end up carrying a huge debt load and it either kills or cripples them.

Only A-list clubs are completely immune from this, as their members either can afford the ludicrous assessments required to support bad decision making, or they are so tied up in the status of being a member at the A club that they won't quit even if it pinches them hard.

Ken

[Jason Hines]

Agree, would love to see more true golf clubs out there, I would join one in a minute if it were possible.  Business is tough today no matter what industry, keep us posted and good luck.

J.

[Paul Stephenson]

Actually, I currently have fairly high hopes for the course. For the first time in decades it is going to be operated as if it's business and not a hobby.

I have believed for several years that, except for the more elite clubs, equity country clubs are an unsustainable business model.  Everywhere I look there are equity clubs whose boards have spent millions of dollars on clubhouse renovations that will never pay for themselves.

Or the spend millions on renovating the course into something that none of their members can play. (Part of this is due to stubborn golfers who refuse to play reasonable length tees.)

The net result is that these clubs end up carrying a huge debt load and it either kills or cripples them.

Only A-list clubs are completely immune from this, as their members either can afford the ludicrous assessments required to support bad decision making, or they are so tied up in the status of being a member at the A club that they won't quit even if it pinches them hard.

Ken

I completely agree with this statement.  It's like looking into a crystal ball into the future of my equity golf club.  We're still paying off our course redesign of 4 years ago and our board is plowing ahead lining up the other albatross...a new club house.  The member survey taken in the first half of 2008 (before 20% of retirement savings or income went up in smoke) in which there was wide support for a new clubhouse in 2011 or 2012 is their constant reference.

According to our recent monthly newsletter equity clubs are also not run like a business.  Here is an excerpt:

in 2009, between the hours of 6-7am, our total food sales equaled $122.50 (for the entire year!).The cost to have a cook and one
wait staff person onsite for the year for this same time period was $720.00. With these numbers under a restaurant business model, you would quickly
make the business decision to change your hours of operation; however under the private golf club model, it makes sense to run at a loss in some
time periods to provide members with the services they desire.

With the club open for roughly 200 days last year that amounts to $0.61 a day.  Coffee costs over $1 a cup.  It's no wonder that in 2009 we lost money on F&B for the first time in club history (including bar). I wonder just how many members would be put off if the restaurant opened at 7am?

I understand that members of a private club require a certain level of service.  I've been at this club since 1981.  But when 99% of the membership would not notice a change in hours of operation do you really need to cater to the 1%???

[Tim Nugent]

Paul, I find that logic incredible.  Whoever wrote that newsletter should be  looking for a job - in a different business!
Insult to injury, it was food SALES, not profit.  Which means you lost even more $$$.  Plus wait staff works for tips.  Who even wants to wake-up at pre-dawn to come to work - for what, a couple of bucks?  How demoralizing.

I would suggest having whoever wrote the newsletter be there  (I would guess he/she is not currently there at 5:30) make a pot of coffee (as it seems that is all anyone wants anyway) and not charge anything for it.  You'ld come out  money ahead, as Mr. GM is already on salary (and he doesn't seem to think someone coming in @ 5:30 for nothing is such a big deal).

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