Overbuilt? GOLFWEEK reports Grenelefe CLOSED

[John_Conley]

"BANKRUPTCY CLOSES GRENELEFE

Grenelefe Golf and Tennis Resort, a 54-hole property that has hosted four PGA Tour Qualifying School Finals since 1985, was closed Feb. 18 after its owner, filed for Chapter 7 bankruptcy.

Grenelefe's demise occurred precisely two weeks after its parent company in Japan filed for bankruptcy. According to the Kyodo News Service, Sports Shinko, one of Japan's largest golf operators, was saddled with $2.24 billion in debt.

Soon after, Polk County, Fla. deputies escorted federal bankruptcy trustee Traci Strickland and her assistants into the resort to take over the property, prepare it for liquidation and lay off most of the workforce."

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I got this in a daily e-mail from Golfweek a moment ago.  I wanted to share it to illustrate what is going on in my market and what may be coming soon to others.  This is a bit sad for anyone who has seen Grenelefe in its prime.

Japanese ownership became involved in their heyday 80s because they were willing to pay above-market prices for such properties.  Grenelefe consists of WEST: a RTJ-ish (exact pedigree confuses me) layout that is well suited for tournament golf (hence the PGA Tour qualifiers) and was in Digest's Top 100 - SOUTH: a very enjoyable Ron Garl course that I prefer to the West because of a better variety of challenges - and EAST: a course too tight for golf car traffic that has only one redeeming feature, you can tee off from atop the clubhouse to play the first hole!

A small group within the membership developed a course across the street called DIAMONDBACK about 8 years ago.  Ron Whitten likes it and has a review up on Golf Digest under his Course Critic feature, but I don't care for it at all.  Anyway, the course was targeting a high tariff and able to get it for a little while, especially in the winters.

Nearby are BULL RUN, a low-end but enjoyable 9-holer, and SUN AIR, which gives me the creeps.  Expand that radius out to ten miles and you pick up a ton of Polk County courses, including SOUTHERN DUNES and RIDGEWOOD LAKES.

Grenelefe was at one time a "destination" resort.  Tennis, golf, pools, dining, and more.  Snowbirds could rent condos or buy homes, or just stay at the lodge.  If you've been there in the last few years, you know it is just a shadow of what it once was.

What will happen when Grenelefe comes out of bankruptcy?  I imagine it will still be a golf resort.  Hard to fathom it going back to groves or being developed for more houses.  One of the courses might be shuddered, since it hardly makes sense to maintain three courses if you aren't busy enough for two.

Once travel patterns stabilize, Grenelefe will still have a hard time attracting visitors.  Put simply, the conditions are past the point of no return.  Will a new owner want to plow money into a hole, uncertain as to whether a return will ever be generated?  Doubtful, when places like Palm Coast and Innisbrook are still viable, and newer destinations like the World Golf Village and Champions Gate are coming online.

There are many similarities to this and Red Mike Ranch.  They are both remote, although one takes that to an extreme.  They both are not held back by the quality of their layouts.  They both are victims of an oversupply - too many people invested in courses erasing profits for nearly everyone.

** Do you think this will be more common going forward?
** Would you be interested in buying a course in bankruptcy in a crowded golf market?
** Would you have done something differently as the prior owner that could have avoided this?

[SPDB]

I would wait to see what happened to the parent co. in Tokyo. This whole closing/liquidation could be totally unrelated to any financial problems experienced by Grenelefe (if, indeed, there are any in the first instance).

Most Japanese owners would love to have american property, or anything with decent value. Japanese asset values (of all classes, type) are so depressed it is frightening.

[Coral_Ridge]

I was going through some old magazines to do some "spring cleaning" and noticed that the 1984 Florida Golfweek Magazine called Grenelefe's West Course the best in their annual reader's poll.  The chief criteria being "If it's your favorite, then it's the best."  

Many new courses have been built since the mid-80's, but I'm sure it is still a good design.

Another quote from the old article.

"Some call it magnificent, some call it madening.  Some call it devastatingly long, some call it delightfully lush.  It is said that it has no distinguishing holes but everyone seems to remember the times he has played there.  It is castigated by some and enjoyed by most.  A strang phenomenon Grenelefe West has become."

[Brad Klein]

Grenelefe West was in Golf Digest's top-100 in the late 1960s. It's an astonishingly dated golf course, as is the entire facility. Bad land plan, inadequate conference center, and three golf courses that are all okay but certainly not worth more than about a $40 green fee or traveling from beyond 60 miles.

The quality of design and resort development has improved so dramatically in a few years, as have expectations. And the competition for top dollar means that everything is rendered obsolete quickly, which is why "older" places (Doral) look so out of touch so soon.

[Richard_Goodale]

Brad

A slight nitpick, but one which might be of interest.  Grenelefe was in the GD Top 100 until 1984.  It dropped off in the 1985-86 rankings to be replaced by, among others, a sporty up-and-coming course called National Golf Links of America, which made it's GD debut on that list.

Rich

PS--www.golfdigest.com has a complete listing of all ranked courses since 1966, for those who are interested in following rankings' fickle finger of fate.....

[Paul Richards]

Brad:

I agree completely with your assessment.

[John_Conley]

Bad land plan, inadequate conference center, and three golf courses that are all okay but certainly not worth more than about a $40 green fee or traveling from beyond 60 miles.

I agree with much of what you say, but would like clarification of the "bad land plan" comment.  The resort as a convention center is obviously a problem.  But in its prime, Grenelefe flourished with a mixture of permanent residents, second-homeowners, and seasonal condo dwellers.  That removes the 60 mile burden.

In that light, was it still a bad land plan?  My impression is that it is hard for developments to thrive past one generation of retirees.  So many new places come on line over 15 years that it is hard to compete.  One example is John's Island compared to Bonita Bay.  Both nice places, but one is more modern than the other.

If it could happen to Grenelefe, could it happen to Black Diamond?  That's even more remote.  Even the new toll-road doesn't change things much.

As mentioned, West earned accolades from the Stine-era Golfweek you now write for.  Thanks for doing away with criteria that annually saw Grenelefe, Copperhead, Doral, and Bay Hill at the top.  Alas, that same list is alive and well at the Stine successor rag Florida Golf News.

Rich pointed it out; it wasn't that long ago that Digest was still trumpeting the praises of West (a course I never really cared for).

Spiderbite:

You must not be familiar with Grenelefe.  A cursory glance at any piece of the property over the last 5 years would tell you they've had woes of their own.

[BillV]

John

Fear not BDR Quarry's demise.  The experience and photo opportunities for players as well as the sizable course rentals as Nike et al do commercials there will keep the Quarry afloat for quite a while yet.

Don't fret.  The experience will save the day!

[Brad Klein]

Rich - nitpicking is fine. That's what I do every day as an editor and/or writer. Amazing to think that G-West clung to the list until 1984.

John: In this case, Grenelefe's bad land plan means you can't walk the place or even drive it without a map in hand lest you get lost. The flow of houses, golf courses, building structures is indistinguishable. That's partly because the site it flat but also because the buildings all look the same. So there's no center, no flow, so particular way to identify space and location. That's a problem endemic to many properties, not just Grenelefe.

[John_Conley]

That's a problem endemic to many properties, not just Grenelefe.

Brad:  

That's fine.  We see it the same way.  The Grenelefe model is common here.  The routing maximizes the amount of golf-front property.  Clearly, the number of units at Grenelefe was built projecting continued good times and not what materialized in Polk Co.  All of the development closer to O-town hurt the traveler and all of the retiree communities throughout the SE hurt the seasonal resident traffic.

If the layout didn't necessitate so many houses it could have afforded closer access to the tees from the prior green.  I assume your point is more pertinent to the South and East.  West is actually very walkable - not that anyone did.

BillV:

How is Black Diamond that much different from what Grenelefe was?  Stan Olsen is bankrolling one and a Japanese company another, and I don't know the depth of either's pockets.  But the courses are both well-regarded in their prime, very remote, and cater to residents.  What if the Quarry courses becomes passe and another generation of resident/members isn't there to satisfy turnover of homes?  Like Grenelefe, the 2nd and 3rd courses - at one time considered a plus - will become a negative for Black Diamond.  More to maintain than needed.

What if upscale housing developments for retirees targets Citrus Co.?  A resident can choose from El Diablo, the Dunes, World Woods, and many more without the commitment required to join a private club.  Housing developments like that could dilute the value of Black Diamond real estate.

I'm not predicting this, merely asking WHAT IF?  Seems like it could happen.

Before you say that Black Diamond is a good enough course to warrant its continued survival, remember the same was said about fabled Grenelefe West when that style was in vogue.