Will Any High Profile Courses Go Bust in This Downturn??

[kconway]

If one assumes the current downturn is long and deep, will any well known courses go under??

[Jonathan Cummings]

In the DC area Presidential went under, Lowes Island is for sale as is Pete Dye Club.  Vitually all clubs are looking for members.  With a check you can get into the likes of Caves, RTJ, Burning Tree, and Avenel tomorrow.  I don't know about Columbia, Chevy, 5 Farms or Wash Golf.  Congressional is the only area club I know with an advertised waiting list.  J

[Jim Franklin]

Five Farms is doing fine. People still need to go through "the process", but that will never change.

You could always get into Caves by stroking a check.

[Jeff_Brauer]

Here in Texas, there is actually a bill pending that requires golf courses in real estate to remain golf courses.  It was spurred by a course going under and eventually the city bought it out.  I know there is a course in FL that had legal troubles for going out of biz among houses.

All of that, and the last and past recessions, where stand alone chunks of 150-200 acres in nice inner neighborhoods became prime real estate targets, suggests that the courses we lose will be some of the ones we hate to lose the most.  I am thinking of courses like Tam O'Shanter in Chicago getting dozed under, even though it had the history of the first televised golf event.

Close in golf courses have always gone out in recessions, moving golf more and more to the perimeter of the city.  At $3 gas, this doesn't bode well for getting youth into the game.

[Sam Maryland]

based on what I hear Pound Ridge is going to have an extremely tough go of it.

Sea Island may not actually declare bankruptcy but it's looking highly likely that a change in ownership and/or restructuring will take place such that the Jones family will lose control.

hell, I wonder how Pebble is going to react, there are TONS of times available all thru the week these days.  have 12 guys that want to play on this Thursday?  they can offer you 9.00, 9.10, 9.20 consecutively, if that suits you! 

I'm sure there are many many courses that will have declare/reorganize/restructure...

SM

[Jeff_Brauer]

I think Pebble will make it........besides the general panic right now making ordinary people stop spending large amounts of discretionary dollars, corporations (I heard AIG had an outing there cancelled) don't want to appear too flashy right now, or may be dealing with their own in house problems.

I think many newer high end wannabes will struggle before the ones that they strive to be will.

[BCrosby]

I heard last week that The Manor (T. Watson), a high end development north of Atlanta, is having serious difficulties.

Atlanta is over-built with courses whose business models no longer work. We are in just the first or second inning of this crunch.  

Bob

[Sam Maryland]

I think Pebble will make it........besides the general panic right now making ordinary people stop spending large amounts of discretionary dollars, corporations (I heard AIG had an outing there cancelled) don't want to appear too flashy right now, or may be dealing with their own in house problems.

I think many newer high end wannabes will struggle before the ones that they strive to be will.

agreed that Pebble makes it.  but last week there were similar tee-time gaps so I called and asked "how much to play"?  answer was $495 + $35 if you take a cart.

told her I couldn't afford that, "can I get a better deal"?  she said "we never cut deals at Pebble Beach" -- said they'd let the spot go empty instead of lowering the price...

...I suspect this will change. 

that was kind of what I was getting at, that Pebble will have to make some meaningful adjustments to pricing, I think.

SM

[JohnV]

she said "we never cut deals at Pebble Beach" -- said they'd let the spot go empty instead of lowering the price...

...I suspect this will change. 

Except when they have huge blocks that haven't sold in the off season.

Last Spring they offered this to NCGA members: http://www.cgccc.com/NCGASpecialOffer.htm

Of course, they aren't going to give you a deal when you call.  They know that you (or anyone else) who gets a deal like that would immediately post it on the Internet and everyone would be calling asking for deals.

[Jeff_Brauer]

Sam,

There are always a few courses that maintain that stance and kinda need to.  PB may be one of them as the King of US golf resorts.  Once they start discounting it never ends, but it may end their image as an icon of golf.  That said, I can for some reason easily imagine Greenbriar, Pinehurst and others cutting rates, probably with caveats so it doesn't look like they are cutting rates across the board.

I think any course without debt will probably survive.  Newer courses with a heavy debt load will be more likely to go under.  As in Bob's example, if the debt is low, a course can survive by cutting operations costs along with fees.  If it has been built in the last ten years and is heavily leveraged, it has less chance when greens fees go down.

I wonder how many golf courses will be like hockey teams who hold ticket prices, but charge more for hot dogs and parking?  For that matter, would it be a hoot to pull into a "bargain course" and find someone issuing you a pass for $10 parking?

On the club side, most experts were already saying the key was actually to expand services, not cut them.  For middle class America, once you spend your discretionary funds on a boat or club, you need to spend most of your free time there to justify the cost.  Thus, family activities probably will be increased and we might see a return to the old style country clubs, vs. golf only clubs.

[Sam Maryland]

Sam,

There are always a few courses that maintain that stance and kinda need to.  PB may be one of them as the King of US golf resorts.  Once they start discounting it never ends, but it may end their image as an icon of golf.  That said, I can for some reason easily imagine Greenbriar, Pinehurst and others cutting rates, probably with caveats so it doesn't look like they are cutting rates across the board.

I think any course without debt will probably survive.  Newer courses with a heavy debt load will be more likely to go under.  As in Bob's example, if the debt is low, a course can survive by cutting operations costs along with fees.  If it has been built in the last ten years and is heavily leveraged, it has less chance when greens fees go down.

I disagree on your Pebble example and their need to maintain any sort of "stance".  Pebble would still be good ol' Pebble to the purists even with a 50% rate reduction (still impllies a $250 green fee!).  If this economic downturn turns out to be particularly severe (and I think it will be) I believe Pebble will have no choice but to reduce rates...only time will tell (but I bet you can also get a great deal on a Rolls Royce right about now!).

Agreed on the debt issue.  I know of a private club in NC that just spent $8mm on reno's.   They had a long waiting list and the strategy was that a lot of people of people would drop off the membership rolls and new initiation fees (~$60k per) would finance a large part of the reno costs.  Word got around that instead of the golf course being closed 6 months that is was going to turn out to be 12-14 months, concurrently the economy started going into the tank and sure enough the member dropouts started coming...

...but when they started trying to admit off the wait list they got a lot of "please defer me" and "no thanks" type of responses. 

Now they have a financing gap to close and new member admits not close to doing it.  The current membership is strong enough that an assessment will close the gap if needed but the reno plans were very unpopular broadly in the first place -- the board will probably end up having to play golf amongst themselves going forward.

SM

[Adam Clayman]

I disagree on your Pebble example and their need to maintain any sort of "stance".  Pebble would still be good ol' Pebble to the purists even with a 50% rate reduction (still impllies a $250 green fee!). 

The good ol' purist has long ago forsaken the new and improved version. I witnessed, around the time the new kid on the block (think Oregon) showed up, the PB regulars were realizing the service was noticeably inferior as the costs had skyrocketed over the years. Then to top it all off, if the group was not large enough, even though they had come every year like clockwork, were getting the bum's rush on tee times and other amenities.

[Sam Maryland]

I disagree on your Pebble example and their need to maintain any sort of "stance".  Pebble would still be good ol' Pebble to the purists even with a 50% rate reduction (still impllies a $250 green fee!). 

The good ol' purist has long ago forsaken the new and improved version. I witnessed, around the time the new kid on the block (think Oregon) showed up, the PB regulars were realizing the service was noticeably inferior as the costs had skyrocketed over the years. Then to top it all off, if the group was not large enough, even though they had come every year like clockwork, were getting the bum's rush on tee times and other amenities.

funny how that happens...

...ditto Sea Island.

SM

[Jeff Shelman]

Maybe this is a little off-topic, but I think that if you plunk down $495 to play Pebble and you want to ride, they shouldn't hit you for another $35.

[Dean Stokes]

Maybe this is a little off-topic, but I think that if you plunk down $495 to play Pebble and you want to ride, they shouldn't hit you for another $35.

I agree Jeff. It should be more like $70.

[Keith Williams]

Bob,

Hearing about The Manor doesn't surprise me, the developer behind the project has already shut their doors and laid off all employees.

Keith

[BCrosby]

Keith - Is the course still open? If so, is it still private?

[Jay Flemma]

I was reseaching this with the GM guys for the Beechtree article.  We went through the top 100 lists from 1996 forward.  From the '96 Public list, it looks like everything is still open.  Does anyone know of any top 100 public closing?

I know emerald dunes went prive a couple of years ago...does anyone know of any others going from pub to private?

[Sam Maryland]

http://gardenandgun.com/stories/style/calls_of_the_wild-177

"When I meet Jones, a courtly man of fifty, on the front porch of his main cabin, he looks relaxed and happy, miles from his stressful job of running the Sea Island Company. Jones recently finished a massive renovation of the company’s signature property, the Cloister, but all he wants to talk about today is turkey calls. "

http://www.georgiatrend.com/features-economic-development/reinventing-cloister.shtml

-----------------------------------------------------

no debt = no stress

lots of debt = lots of stress

[Adam_Messix]

In the DC area Presidential went under, Lowes Island is for sale as is Pete Dye Club.  Vitually all clubs are looking for members.  With a check you can get into the likes of Caves, RTJ, Burning Tree, and Avenel tomorrow.  I don't know about Columbia, Chevy, 5 Farms or Wash Golf.  Congressional is the only area club I know with an advertised waiting list.  J

A check can get you into Burning Tree??? Wow!!!!!

[Anthony Gray]

In the DC area Presidential went under, Lowes Island is for sale as is Pete Dye Club.  Vitually all clubs are looking for members.  With a check you can get into the likes of Caves, RTJ, Burning Tree, and Avenel tomorrow.  I don't know about Columbia, Chevy, 5 Farms or Wash Golf.  Congressional is the only area club I know with an advertised waiting list.  J

   The Pete Dye Club in WV has been sold.

[Tim Leahy]

Winchester CC, Morgan Creek CC and Nakoma Resort(Dragon) are pretty high profile in NoCal and are in financial trouble.

[Voytek Wilczak]

What do you guys think about Liberty National in Jersey City?

Last I heard they had only about 60 members at $450K a pop.

I cannot imagine many on Wall Street blowing $450K on a golf club membership these days (during and after the meltdown), but maybe I am wrong.

[Doug Siebert]

Here in Texas, there is actually a bill pending that requires golf courses in real estate to remain golf courses.  It was spurred by a course going under and eventually the city bought it out.  I know there is a course in FL that had legal troubles for going out of biz among houses.

All of that, and the last and past recessions, where stand alone chunks of 150-200 acres in nice inner neighborhoods became prime real estate targets, suggests that the courses we lose will be some of the ones we hate to lose the most.  I am thinking of courses like Tam O'Shanter in Chicago getting dozed under, even though it had the history of the first televised golf event.

Close in golf courses have always gone out in recessions, moving golf more and more to the perimeter of the city.  At $3 gas, this doesn't bode well for getting youth into the game.

I guess there's one advantage to those claustrophobic houses on both sides of every hole cartball courses, at least if you own real estate there.  The typical layout where the houses are on winding streets and cul-de-sacs probably wouldn't allow them to ever develop the course because there'd be no way to get roads to that land.  Even if they are no longer golf courses at least your fairway view house wouldn't suddenly be looking into backyard of another house!

[Sam Maryland]

I wonder about Hamilton Farm in NJ. 

their overall maintenance and operations budget must be off the charts (massive grounds and facilities, 18 holes + huge 18 hole par 3 course, etc...)  and every time I've been there the activity level has been quite low. 

it is privately owned by a real estate guy named Townsend from Baltimore.  in the last couple years there has been some friction between the membership about how the club has been run and employee turnover in the golf operations has been ridiculous.  a group of members approached Townsend to discuss buying the club in the Fall of '06 but no sale ever took pace.

supposedly HF has a poilicy of a full refund of the member intiation fees ($125k to $350k depending on who/when, though I've never heard of anyone actually paying the $350k number) upon resignation from the club and given all the fallout in the NYC metropolitan area I'd have to suspect redemptions are way up.

the Hamiton Farm model has to be under severe stress in these times...

SM