Want to buy a Doak course?

[Carl Johnson]

Charlotte Golf Links (Doak). http://www.charlotteobserver.com/2013/12/11/4538280/skybrook-charlotte-golf-links.html

See also: http://www.golfclubatlas.com/forum/index.php?PHPSESSID=6fbdcaf72fd98dfd14b07f4e1f3d9d3c&topic=56180.0

[Patrick_Mucci]

Carl,

What specifically caused the demise of each club ?

[Carl Johnson]

Carl,

What specifically caused the demise of each club ?

Pat, cannot say specifically.  But, if I had to guess, one word, I'd say "overbuilt" for the area.  Beyond that.  These are older daily fee courses (Golf Links (Doak) and Skybrook, and the five other courses mentioned in the articles referred to in the earlier post), but Skybrook and Golf Links are not last built of the Carolina Golf Trail courses now to be foreclosed, likely, and sold.  At the end, they were all owned/managed by the same guy, Jeff Silverstein.  So two words would be "bad management."  Of the seven courses, I've played six (Skybook the exception), and none of them are dogs.  All had at least fair (as in great, good, fair, poor) bones.  Last words - it's a tough market and only the strong survive - sorry about the cliche.  Some will be bought and the owners will struggle with golf.  Others will become housing subdivisions.  Re: Golf Links (Doak), which is on leased land, that has been the sense all along.

[Jonathan Mallard]

Carl,

  Re: Golf Links (Doak), which is on leased land, that has been the sense all along.

Why would you ever shell out (presumably) seven figures to build something on leased land?

[Carl Johnson]

Carl,

  Re: Golf Links (Doak), which is on leased land, that has been the sense all along.

Why would you ever shell out (presumably) seven figures to build something on leased land?

The original lease was for 25 or 30 years, I think.  I guess someone figured that in that time they could get their money back with a decent return.  However, I'm not that smart, so I don't really know.  And, beyond that, I don't know all the terms.  Silverstein did not own the course (lease) at the beginning.  The original owners may have made money - they were reasonably sharp business people.  With little left on the Golf Links (Doak) lease, as far as I know, it would be mega high risk to buy.  The land is prime housing potential, so the fee owners (lessors) are on top.  Another one of the Carolina Golf Trail courses, The Tradition, is on a very, very long land lease from the county.

[Josh Bills]

Johnathan, not as uncommon as you think. Golf Club of Dublin here in Columbus is up for sale as well on land leased from the city of Dublin for $1 per year until about 2054 or something crazy like that.  If you can get the land for next to nothing and build on it seems like you would have effectively reduced your initial outlay, thus profits sooner.  Now that the course is there it doesn't become another row of condos at least for those I the neighborhood. Hopefully someone can come in and make money on it.  Though the current asking price would make it tough to turn a profit.

[Carl Johnson]

Johnathan, not as uncommon as you think. Golf Club of Dublin here in Columbus is up for sale as well on land leased from the city of Dublin for $1 per year until about 2054 or something crazy like that.  If you can get the land for next to nothing and build on it seems like you would have effectively reduced your initial outlay, thus profits sooner.  Now that the course is there it doesn't become another row of condos at least for those I the neighborhood. Hopefully someone can come in and make money on it.  Though the current asking price would make it tough to turn a profit.

To add to the "leased" issue, we have a nice private club/course here in Charlotte called Cedarwood.  It is also on leased land, on the downside of the term, and on excellent housing potential property.  I've wondered, and continue to, how they'll survive.  At the end, I expect the question will be whether the club members can outbid a housing developer for the property.

[BHoover]

One benefit to building on leased land, as opposed to buying the land and then building, could be the avoidance of environmental liability that may be associated with the property. I'm not a real estate lawyer, but I think I remember enough from real estate class in law school to say that the lessor generally would be on the hook for environmental liability, rather than the lessee (barring any assumption of liability in the lease agreement).

I would be curious to find out what arrangements that owners of courses built on former landfills or industrial sites have--are they generally built on leased or owned property? Here in Columbus, there is a "links"-style course built right on top of a former landfill just south of town. I have no personal knowledge of the arrangement, but it wouldn't surprise me if the owner(s) did not lease the property to avoid historic environmental liability associated with the property.

Any real estate or environmental lawyers out there with any thoughts? Am I wrong about the liability issues?

[Tom_Doak]

Simply put, the clients thought they could make money over the 25-year term of the lease.  The land was close in to the city, so they expected a good location would provide good traffic.  They never would have pulled the trigger on buying the land, and the landowner never would have sold it, because it was inevitable that someday the real estate would have higher value for other uses.  It's possible that the landowner might extend the lease for a few years, if the commercial development market there is soft right now.

This was not uncommon in the Southeast at that time.  Several of the courses on the north side of Myrtle Beach were done on a 25-year lease, including Oyster Bay and Marsh Harbour, which made a LOT of money in their lifetimes.  I don't know if either one is still open -- those leases ran out in 2008-2010.

However, it was not a great experience working on that project, because they weren't motivated by the same factors that many of my other clients have been -- it was much more mercenary of a project because of the tight time frame.

[Jonathan Mallard]

This was not uncommon in the Southeast at that time.  Several of the courses on the north side of Myrtle Beach were done on a 25-year lease, including Oyster Bay and Marsh Harbour, which made a LOT of money in their lifetimes.  I don't know if either one is still open -- those leases ran out in 2008-2010.

Oyster Bay is still open, and is grouped with the 4 other courses including the 3 Legends courses of Larry Young. We played there in late September - it was in decent shape. Interesting concept with all of the houses.

Marsh Harbour has been left to follow the Second Law of Thermodynamics.

My suspicion is that the houses along Oyster Bay are why it is open. [Note: someone left a grader just off one of the tees - I thinik 12 or 13]

[Chris Johnston]

No thanks, already have one