[Tom Yost]

The subject was mentioned in my thread about Potters Park, but I thought it deserves its own thread

After some year of studying its options, the City of Middletown OH has accepted an offer to sell its 36 hole municipal golf course to a private auction company.  The city was facing huge budget deficits and the course was reportedly losing $150K per year along with $250K of debt service.

http://www.journal-news.com/news/news/local/middletown-council-votes-to-sell-manchester-inn/ndC55/


An earlier article about the offer from Bowling Auctuioneers:

"Myron Bowling, president of Myron Bowling Auctioneers in Hamilton, made the highest offer after meeting with his partners, who have been in the auction business for 38 years. He expects to open Weatherwax, a 36-hole course in Madison Twp., this spring and the “immediate plan” is to keep it a golf course.

He said his goal is to make Weatherwax, which has operated in the red, profitable by making improvements and reducing costs. When asked to elaborate, he said: “We don’t have a plan laid out.”

Bowling said he’s “never held a golf club,” then added: “I don’t plan on starting.” ..."

http://www.journal-news.com/news/news/local/auctioneer-offers-16-million-for-weatherwax/nc6cB/

[Jason Thurman]

Over/under on how long it stays open as a golf course? 3 years? 5?

I enjoyed playing there two years ago. It's nothing special, but very solid golf at a good price point - walkable and with a few interesting holes. I'm just not convinced that the urge to develop the property won't eventually win out. 200+ acres for 1.6 million isn't an awful deal really.

[JESII]

Any idea how much debt? The article didn't say other than the annual service of $250k.

[Richard Hetzel]

I would say he loses his shirt, sooner rather than later. At one time, let's say mid to late 1990's, that this was a desirable place to golf. Now, I am not so sure. They even closed different 9's of the course to seed in bent grass fairways which limited play for them. Back then, maybe even worth a drive from Cincinnati every once in awhile. it WAS a busy place. Too many DECENT, CHEAP golf courses in Cincinnati in this day and age. The course is not really near any high traffic areas and it is near Middletown, which is not really great as far as golf is concerned. They used to play a lot of high school matches here back when I coached high school, and even one of the largest high school tourneys, the Dick Hadley Memorial. I hope they make it, but I seriously doubt it.

[JLahrman]

I hope the course can make it as well. I've played a lot of golf there. It's actually got a lot of solid holes, and with a few changes the courses could be very strong. I'm most partial to the Woodside.

Middletown is not doing all that great though, and the crowds were noticeably thinning before I moved away from the area in 2008. It's not that far of a drive from Dayton or Cincinnati, but there are plenty of golf options in each of those towns.

[Tom Yost]

Any idea how much debt? The article didn't say other than the annual service of $250k.

A search for Weatherwax on the Journal-News.com site turns up a series of articles that go back to 2011 and sort of document how the sale unfolded.

From what I pieced together, sounds like they owed $1M on a $2.1M loan for a renovation done in 1996.

The course is a solid layout on a gently rolling property and an outstanding value.  Four nines in a core routing that is perfectly walkable.  I was shocked at the bargain rates, and the $600 annual pass for seniors made me actually think about moving back to my hometown after retirement (for a minute anyway...      )  Cheeseburger, fries and a drink for less than $5 (!) No wonder they are losing money.

[Richard Hetzel]

Any idea how much debt? The article didn't say other than the annual service of $250k.

A search for Weatherwax on the Journal-News.com site turns up a series of articles that go back to 2011 and sort of document how the sale unfolded.

From what I pieced together, sounds like they owed $1M on a $2.1M loan for a renovation done in 1996.

The course is a solid layout on a gently rolling property and an outstanding value.  Four nines in a core routing that is perfectly walkable.  I was shocked at the bargain rates, and the $600 annual pass for seniors made me actually think about moving back to my hometown after retirement (for a minute anyway...      )  Cheeseburger, fries and a drink for less than $5 (!) No wonder they are losing money.

1996 was right around the time they converted to ALL BENT GRASS fairways. I cannot remember if anything was doen to the clubhouse, I don't think so anyway.

[Tom Yost]

Not sure if I've ever seen any photos of the "Wax" on GCA so here are a few snapshots. 

[Tom Yost]

No trip to southwestern Ohio is complete without experiencing some hometown favorites:


Got to have a 5-way!



Wash down with a cold Hudy



Vic Cassano and Mom Donisi's place

[BCowan]

Tom

    Thanks for the photo thread, my bet is that the new owner makes it. 

[Josh Tarble]

1.6 seems like a steal. 

But trying to make improvements while cutting costs seems like it's easier said than done.

[Tom Allen]

Thanks for the photos! 

I wish the new owner the best of luck.  I hope he can run it at a profit.

A few years ago, I was on City Council in Middletown.  I was also on the Golf Commission there.  I tried my best to save it (along with several other people, of course).  I was off council by the time it was sold.

I felt Weatherwax was one of the few remaining things that drew people to the area.  Nonetheless, with economics they way they were (golf spending way down, rounds way down, strong competition from area courses), it no longer made sense for the City to run it at a loss.

A few years ago, I thought closing one of the 18s to save on maintenance, chemical, and labor costs could keep it afloat.  But now I don't think that could even help.

I hope it stays, because I have many fond memories of playing there.

[BCowan]

''But trying to make improvements while cutting costs seems like it's easier said than done.''

   Private sector knows how to do that.  There was a mower at my local muni that was making $18 an hour, a little above market value!  They wondered why they almost went under. 

[Josh Tarble]

I didn't say it wasn't possible.  Just someone with no experience running/owning/even being on a golf course is fighting an uphill battle in that process. 

[BCowan]

True, I wonder if he will sell 18 holes of the 36 to a farmer for some extra operating capital.  Farm land is so valuable and he probably doesn't need 36 holes. 

[Jason Thurman]

Ben, you seem to know a lot about golf course economics. It’s obvious that your parents have taught you a lot about the golf business, and your industry experience as a caddie and grounds crew member speaks for itself. I’m sure you’ve served other roles in the industry too, forgive me for forgetting them at this time. Considering that you’ve driven the Interstate through Middletown, your perspective seems especially valuable.

What do you think Weatherwax needs to be successful? I do know that they already allow trolleys, which may or may not be important. How much capital could the course gain by selling 18 holes after purchasing for $400,000 above appraisal? How many years would they be able to finance the operating deficit with that profit?

[Lou_Duran]

1.6 seems like a steal. 

But trying to make improvements while cutting costs seems like it's easier said than done.

It might be a great "asset buy", but if it can't generate positive cash flow after debt service and taxes, it is worth only what its next best alternative use would fetch.  If the site has an abundance of creeks and flood prone areas, it might be mostly dead land with little value, particularly given the city's declining population and other negative demographic factors.

It would be interesting to learn whether the golf courses were operated by city employees and how their compensation and staffing levels compare to those offered in the private sector.  Also, sometimes municipalities allocate costs for a variety of non-core functions (like G&A and other Parks & Rec activities) which make the bottom line look worse than it really is.  If there is a large difference and a new operator is able to find more productive labor, it could very well work.  Best of luck!

[Will Lozier]

Tom,

As much as I love a 5-way or chilidog from Skyline, Cassano's is the real treat!!!!!  The saltiest, thinnest crust anywhere with bitesize "slices" - a tradition at our house in Springfield when everyone gathers at my mom's house! 

I'll have to make it down to Weatherwax as I've never played it.  Thanks!

Cheers

[BCowan]

''What do you think Weatherwax needs to be successful? I do know that they already allow trolleys, which may or may not be important. How much capital could the course gain by selling 18 holes after purchasing for $400,000 above appraisal? How many years would they be able to finance the operating deficit with that profit?''

   That is a tough question, I don't know what the owner wants.  He might just want to have lots of leagues and run it on a tight budget.  Buying the course over $400k appraisal seems alright if the guy has deep pockets.  I am under the impression that he owns the courses outright.  Permitting is the other issue, does he have an out?  The muni's in Toledo were run in the red for years until they had American Golf run them with a profit until they went out of business, then another area golf owner took over management and they are making money.  An upscale public just across the line in Michigan is owned by an owner who doesn't play golf, he skimmed on applications one year and I think he learned his lesson (been open for 14 years).  All I can say is a private owner has a much better chance at keeping the course profitable than a local gov't does, whether or not they do or don't play golf.  I know Middletown is exactly Mason, but we will see.   I agree with Lou.   

[JLahrman]

Not sure if I've ever seen any photos of the "Wax" on GCA so here are a few snapshots.

Thanks for putting these up Tom, these bring back memories of a lot of fun rounds of golf with old friends of mine.

#3 Valley View, nothing too special about this par 3. I do like how the bunkers pinch the front of the green while the back is wider. If the hole is up you're hitting to a narrow target. If the hole is back you'll need two more clubs but the green is much wider.



#4 Valley View, kind of an interesting par 5. There are two slight doglegs to the right. Keep your drive on the left side of the fairway and maybe you can have a go at it in two shots, but things get narrow up by the green.



#5 Valley View, a short par 4 that is one of the weaker holes on the property IMO.



However, #6 on Valley View is one of the better holes. An uphill par 3 that works. It's not going to be more than a 7-9 iron for most players, with an interesting green.



#2 on Woodside is one of my favorite holes at Weatherwax. It's a par 5 that can't be more than maybe 480. From the tee you can see everything. That's the flag you see dead ahead. If you hit a good drive the second shot is blind. You can lay up off to the left, or have a go at the green. But make sure you look where that flag is before you leave the tee. The green is very wide, and it has a wide bunker in front of it. If the flag is to the right (and I've seen it so far to the right that I couldn't believe it was still on the green) you've got to add a good 15 yards. Blind uphill approach from an uphill lie to a diagonally-oriented green with a bunker short...it's a fun shot.



This is #5 on Woodside. Too bad this picture isn't of the green, which is unbelievably narrow and small. The fairway is wide but you really need to split it because it's hard to hit the green coming in from any type of angle.



#9 Woodside, mid-length par 4, another of my favorites on the property. It's a very wide fairway though you want to stay right both to improve your angle in and to not mess with the fairway bunker. A hole cut on the right side (as it is in this picture) is very accessible. The higher left side is much tougher to access. It's elevated and there is a large bunker on the front left.



Almost sure this is Meadows #2. A longer par 4 but not one of the better holes at Weatherwax (#3 at Meadows might be my favorite of the 36 though).



View from the right side of the green at the par-3 8th on Meadows. It can play very long from the back tees (230ish) though more like 160 from the shorter tees. I've made doubles and triples in all sorts of fun ways on this hole, including hooking my tee shot left of the pond.

[Jason Thurman]

Lou, having been onsite, the property isn't flood prone. It's actually on a ridge with Elk Creek to the west and the Great Miami River to the east, and thus drains very nicely. There isn't a lot of water on the course either - only a few irrigation ponds from my memory. Someone more familiar with the course could clarify if I'm missing anything, but I don't see any drainage issues to hurt the land's worth.

The area surrounding the course is mostly mid-to-upscale homes on larger lots. I suspect the land the course is on would fetch a decent price if developed residential. To your point, however, I don't know enough about the economics of the city of Middletown to know what the market would be like. It's a pretty long way out of town and a huge amount of acreage. The one real hiccup I could see with development would be the supply just outsizing the demand. If there's a market, though, the land would be very valuable.

The way the course is laid out, it might even be possible to put homes inside the course boundaries while keeping 18 holes open, with the holes running between lots as they do in many new residential course developments. I suspect this is more interesting to me as a studier of golf architecture than it is as a business option. It does seem like it could eliminate some of the problems with residential courses as a business model, though, while still reaping the rewards of increased home lot value from being located on a golf course.

[JLahrman]

Lou, having been onsite, the property isn't flood prone. It's actually on a ridge with Elk Creek to the west and the Great Miami River to the east, and thus drains very nicely. There isn't a lot of water on the course either - only a few irrigation ponds from my memory. Someone more familiar with the course could clarify if I'm missing anything, but I don't see any drainage issues to hurt the land's worth.

The area surrounding the course is mostly mid-to-upscale homes on larger lots. I suspect the land the course is on would fetch a decent price if developed residential. To your point, however, I don't know enough about the economics of the city of Middletown to know what the market would be like. It's a pretty long way out of town and a huge amount of acreage. The one real hiccup I could see with development would be the supply just outsizing the demand. If there's a market, though, the land would be very valuable.

The way the course is laid out, it might even be possible to put homes inside the course boundaries while keeping 18 holes open, with the holes running between lots as they do in many new residential course developments. I suspect this is more interesting to me as a studier of golf architecture than it is as a business option. It does seem like it could eliminate some of the problems with residential courses as a business model, though, while still reaping the rewards of increased home lot value from being located on a golf course.

There are a few ponds but not a ton of water.

The surrounding property is fairly residential. I just don't know what that land would fetch right now as a residential development. Middletown doesn't seem to be a very attractive market. It doesn't seem to be doing well since AK Steel moved their headquarters down towards Cincinnati. The 2010 census showed a 5% population decline from 2000. Weatherwax is several miles outside of town.

The nines do not criss-cross at all so it might be possible to pick two to keep and develop the other two.

I really liked Weatherwax as a municipal course and hopefully it can make it under its new owner. It's a big piece of land in a town that doesn't seem to be in the greatest economic shape though.

[Jason Thurman]

Joel, that's kind of what I was thinking. Do you know the acreage? It must be close to 225 or more.

On the surface, that much land for 1.6 million sounds like a reasonably fair deal. But as you said, it's relatively far out of town and not the most attractive market. I'm pretty skeptical about it staying open as a golf course long term, but like you, I hope they make it. If a course like Weatherwax can't sustain itself, that can't be good news for anyone in the golf course business.

[D_Malley]

any savings that the new owner gains from lowering payroll would be more than offset by the additional amount a private owner will pay in taxes.

Eliminate 9 holes and put in a Cassano's Pizza Place

[JLahrman]

Jason, I'm pessimistic about the golf course surviving as well.

Yes it might be possible for the new owner to operate it more efficiently than the municipal government did. But on the other hand, a golf course operating under the municipal government doesn't seem to be under the same pressure to sink or swim on its own. As long as the city's finances as a whole are in good order, a golf course might be able to be considered akin to a municipal park that isn't necessarily a money-making venture but something that is nice for the community to have. Under private ownership, the course is going to have to operate in the black. And that could well be difficult in Middletown.

I have no idea what the acreage is, but it's a pretty good chunk. The holes are not isolated from each other, and many of them run in parallel, but they don't feel particularly cramped either.

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