Trump National Jupiter. Jupiter Florida, formerly Ritz Carlton GC/ Case Settled!

[Steve_ Shaffer]

Another sad story about a Trump takeover...


In this dispute, members say Trump, who in 2012 bought what is now called Trump National Jupiter from Marriott Vacations Worldwide, basically stiffed them out of their refundable deposits, many of which were in the range of $200,000. Some of the members had to swallow the loss (in return for some paltry benefits) because they had bought time shares or homes that were part of the resort development. Others negotiated settlements. Still others sued. One suit has gained class-action status, and if a federal judge doesn’t dismiss the case between now and June (unlikely), it will go to trial.



http://www.nytimes.com/2016/02/27/sports/golf/at-trump-club-in-florida-some-members-want-their-money-back.html

[JESII]

Steve - undoubtedly, Trump did not acquire these obligations from Marriot. I'm not the least bit a fan of his, but what happens to those initiation fees if he doesn't show up?

[Tom_Doak]

Steve - undoubtedly, Trump did not acquire these obligations from Marriot. I'm not the least bit a fan of his, but what happens to those initiation fees if he doesn't show up?

Jim:  Surely, the members were owed by the club, and if the club didn't go through bankruptcy, then the debt transfers to Mr. Trump.  Not that it precludes him from trying to renegotiate the debt ...


There's no way that Marriott signed off on assuming the debt themselves, in fact the debt was probably a big reason they wanted to sell [even at a low price] and walk away with something instead of nothing.  Wouldn't be as easy for them to shake down the members on what they're owed.  I have heard of clubs where the owners had to write a big check to pay off debts as part of the sale [essentially paying to get out of the deal], but it doesn't sound like that was the case for the Ritz.

[David_Tepper]

"Trump did not acquire these obligations from Marriot."

Jim Sullivan -

Reporter Joe Nocera certainly believes there is evidence that Trump assumed those obligations as part of his purchase of the property.

"The sale to Trump was completed on Dec. 4, 2012. Trump Golf paid $5 million — and agreed, as part of the sale, to assume the $30 million in debt resulting from the members’ refundable deposits."

DT

[jeffwarne]

all part of "making Florida great again"


at least the members don't have nuclear weapons.....


I watched several documentaries last night about WW2 pre and post war.
Young Adolph Hitler's mantra was..... you guessed it...
"Make Germany great again"....


37% (up from 3% only a few years before) of Germans were Nazi party members when he took charge

[JESII]

DT - he sure does. It's a funny article because it's well written and makes exactly this point (Trump did acquire the $30M debt).

In a vacuum this certainly sounds like all the horror stories on Trump. The reality is these people were never getting their money back. Two people had to join (likely $400,000 worth of deposits as opposed to two actual people) which quite simply isn't going to happen. Too many other great, and healthy, clubs in the area that wouldn't rely on new member money to keep the lights on.

Think about it, if you're 50th in the 150 person exit list, you need 100 new people to put up $200,000 in order to get your money back.

Also indicates Trump has the debt balance below $18M.

[Steve_ Shaffer]

How much did it cost Trump to buy down the debt from 30M to 18M?  50% or less is my guess.

[JESII]

Agreed...which is still a hell of a lot more than these people would have gotten under the actual term described.

[cary lichtenstein]

Funny how I was a member at the "Ritz" before it was acquired by Trump.


Here is what I know. I paid $210,000 to join and it is a terrific golf course, IMHO, better than the Bears Club next door, which I think is overly penal. One day, the old general manager of Admirals Cove appears and I said hi and asked if he was playing golf that day.


He informed me that he was just hired to be the new GM. We had lunch the next day and I learned he was hired by the Ritz to turn around last years previous $3.8 m loss. I told him that there was no way he could turn it around as there was a bifurcated membership of home owners, time shares and outside members and I thought even if you raised the dues by $10,000 per member, that was only $2m and their wasn't another $1.8 m to cut.


Anyway, a few days later I tended my resignation because I thought my $210,000 was at risk (I got it back about 9 months later), and I thought that the Ritz would just put the property into a Chapter 11 and wipe out the debt.


At the height of the pre 2008 bust, The Bears Club was $350,000 to join and the Ritz was $210,000. Last I heard, the Bears is now either $90 or 120,000 and Trump is $50,000.


Funny how the hit piece never addressed the Bears Club Members who were supposed to get back $175,000 but took various haircuts, so I'm told, significant haircuts.


I haven't seen the contract, but why would TRUMP assume the debt? It was Marriotts obligation and Trump knows only to buy assets and not to assume liabilities. Had he assumed them as this thread states, how at $50,000 a pop would those ever get paid off.


I can tell you that the members who stayed after I left all told me that they figured they would never get a penny back.

[Keith Phillips]

I was also a Ritz member, albeit a fractional member with less at risk.  I had been trying to exit prior to Trump's purchase but there weren't enough new applicants.  Trump's group definitely played hardball and their position with me was 'pay your annual dues if you want to stay on the redemption list, or we'll let you off the annual dues hook but you forfeit your $40k bond'...I opted to walk away but it sounds like maybe I should have joined the class action!

[cary lichtenstein]

you were smart to walk away

[John Kavanaugh]

Every grown up knows that when you join a course you get screwed if you walk away.

[David_Tepper]

"I haven't seen the contract, but why would TRUMP assume the debt?"

Cary L. -

Isn't it possible that Trump assumed the debt because a) Marriott insisted he do so to get the deal done and b) Trump figured he could simply stiff the members by refusing to pay the refunds when the time came to do so?

Clearly Trump has studied at the Al Davis school of business management.

DT
 

[Lyndell Young]

Numbers dont seem to make sense- If the course was losing that much money pre ID obligation it would not be worth 5 mill.add in the ID obligation and they should have paid someone 10 mill or more  to take it over. I agree that Bankruptcy would be the only way to proceed to avoid lawsuits..

[cary lichtenstein]

Numbers dont seem to make sense- If the course was losing that much money pre ID obligation it would not be worth 5 mill.add in the ID obligation and they should have paid someone 10 mill or more  to take it over. I agree that Bankruptcy would be the only way to proceed to avoid lawsuits..

Exactly, I always thought the $5 million number was just for publicity and he really paid $1 dollar for it as the only real value was in getting all the time shares to walk away and tearing those down and building homes


The only way to do that would be to increase the dues so that everyone walked away.

[cary lichtenstein]

"I haven't seen the contract, but why would TRUMP assume the debt?"

Cary L. -

Isn't it possible that Trump assumed the debt because a) Marriott insisted he do so to get the deal done and b) Trump figured he could simply stiff the members by refusing to pay the refunds when the time came to do so?

Clearly Trump has studied at the Al Davis school of business management.

DT

Its also possible that with global warming now moving at an accelerated pace, that this property will soon become ocean front property

[Jerry Kluger]

I recently read that Trump claimed that all of his clubs were full and all of his members were happy.

[SB]

It is extremely rare for the member liabilities to stay with the previous owner.  It can be done, but it's very risky because you'd have a seller entity with no operating business, doing nothing but paying people back for the next 30 years.  They would have to keep a giant balance of cash in a single asset entity, and they'd have every incentive to not keep enough money in there - many times you only legally have to fund the NPV of what you owe people. So, like an underfunded pension, you'd play with the expected rate of return and payout time period to keep as little as possible.  When the money runs out, they'd look to the current course owner and they'd probably have a decent case since the repayment method is based on new members joining. So the buyer had to pay extra to get the seller to take the liabilities, yet ends up stuck with them anyway.  That's why the buyers take the liability. 

I've looked at buying clubs like this and the only game plan we could figure out was exactly what Trump did - negotiate the liabilities down.  It's simple math, if you have a club where people are owed amounts well above what the club can pay back, then bankruptcy is not a matter of if, it's when.  And then the members get nothing.  Just google Cordillera and see how that works. 


Where it gets complicated is that there isn't one single debt owed.  If the entire debt were owed to a single bank, the bank would take one look and say, "yeah, 50 cents on the dollar sounds good.  Just get me out."  It wouldn't make the NY Times.  But when you have 300 individual members, someone or lots of someones will say no, in some cases just to make a point.  Heck, some of the strategy may simply be to let everyone else take the hit, wait until the debt is down to a manageable level, then try to get full repayment.   

I'll give Trump credit - saying "Hi, I'm the new owner, everything's going to be great!  Did I mention that you're going to lose a lot of money?" takes a lot of guts.  A lot more than I have. 


And yes, I have no idea what is going on with the font and can't seem to fix it.

[goldj]

I recently read that Trump claimed that all of his clubs were full and all of his members were happy.

Where'd you read that?  I can assure you that Trump Westchester isn't close to being full and they have a long list of people waiting to get out. 

[Dean Stokes]

Shortly after the purchase he then renovated the course by laying down new grass and "sod walling" approx fifteen bunkers. He also built on a banquet room/dinner hall/wedding room adding to the cost of the 'purchase'. The members I know seem to enjoy the club and I hear they had a fun member guest this past weekend.

[Jerry Kluger]

I saw the Donald on some show and he made that statement but I can't remember where it was.

[RussBaribault]

I just can't understand this anymore. This us supposed to be a website about golf course architecture and yet again I am seeing more posts about Trump. These post directly and indirectly bleed contempt for the man and, for the most part, are negative.  If you can't check your politics at the door there are plenty of liberals sits you can post your hate Trump stuff on.

[John_Cullum]

Numbers dont seem to make sense- If the course was losing that much money pre ID obligation it would not be worth 5 mill.add in the ID obligation and they should have paid someone 10 mill or more  to take it over. I agree that Bankruptcy would be the only way to proceed to avoid lawsuits..

Exactly, I always thought the $5 million number was just for publicity and he really paid $1 dollar for it as the only real value was in getting all the time shares to walk away and tearing those down and building homes


The only way to do that would be to increase the dues so that everyone walked away.

The purchase price for the real estate was reported as five million for document tax calculations.

[V. Kmetz]

Hello,

I know several persons who were members of the Ritz, who stayed on into the rump era, some who left at that conversion, and some who worked and/or caddied there.


One thing I never got a sense of was whether any changes (substantive or otherwise) were made to the course in the conversion...


Can anyone speak to that? and if so, who was the supervising Architect?


cheers


vk

[cary lichtenstein]

I heard just yesterday that there are giant renovations in the works. I have no idea if that is true