Deeds and Weeds

Results for May 2009 Back to Deeds and Weeds Index

Unprofitable This Century??

Thursday, May 28, 2009 Comments
parkland.jpgDeeds & Weeds blogged on the troubles of the Legends Resort a few days back. In case you missed it, the big Myrtle Beach outfit has been going through a pretty rough patch. But I'm not sure anyone knew things were this rough:  Speaking to the Myrtle Beach Sun yesterday, owner Larry Young said, "We haven't made any money out of Legends golf courses in eight or 10 years."

Young yesterday handed over the keys to three Legends courses, Heathland, Moorland and Parkland (pictured), as well as Heritage Club on Pawleys Island. A court-appointed receiver will be put in place for  the courses.

General Electric Capital claims in court filings that Legends Group owes the lender $51 million. Rounds played are down by 25 percent this year, Young told the newspaper.

"It's emotional to have to move out of the clubhouse and not be in charge of the golf courses I built, that's the only issue," he's quoted as saying. "It's not a money issue because we never made any money out of it anyway."

-- P.F.




Posted by Peter Finch
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Is the Housing Market About to Hit Bottom?

Tuesday, May 26, 2009 Comments

Lots of news the last couple of days about the housing market, led by today's report that housing prices suffered their biggest quarterly drop, year over year, in the 21-year history of the S&P/Case-Shiller U.S. National Home Price Index. According to the index, U.S. home prices are at levels similar to the fourth quarter of 2002.

Also today, Bloomberg.com had a comprehensive story on the housing market in which a survey of analysts predicted a bottoming of the housing market in June (good news, sort of) and an unusually slow and sluggish recovery (bad news):

"The slump in the U.S. housing market that caused the median value of homes to decline 24 percent since 2006 may bottom next month without any prospect of a rebound for another year, according to estimates from chief economists at Fannie Mae and Freddie Mac, the Mortgage Bankers Association and national realtors and homebuilder groups."

The full text of the story, including a number of golf related anecdotes, is here.


-- G.R.

Posted by Geoff Russell
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'Multi member club' catching on in Chicago

Monday, May 25, 2009 Comments
When a slumping economy causes membership rolls at private golf clubs to drop, is there a solution besides shutting down? How about offering modified memberships without full benefits?

That's the idea behind MM (for "multi-member") Players Club in Chicago, which is profiled in this story in Sunday's Chicago Tribune. For $1,000 (or $700 apiece if you join as part of a foursome), golfers get access to 17 private clubs in the Chicago area -- and the number of facilities participating in the venture (like the golfers themselves) is growing.

MM Players Club is the brainchild of Mike Munro, who owns and operates White Pines Golf Dome in Bensenville. Let him explain how he came up with the idea:

"A lot of guys talked [during the winter] about having to cut back on business hours and staff," Munro told the Tribune. "I thought there must be a way for clubs to add revenue while maintaining their private club image. Why not make some of their slow times available to the public?"

There are some restrictions to the program. Access to the most of the clubs is limited to weekdays and weekend afternoons, and members have to pay a guest fee (typically between $70 and $100). But it seems to be catching on. According to the story, when Munro first hatched the idea, 48 of the first 50 clubs he contacted turned him down. But now?

"We're getting calls from clubs asking to participate," he says.

-- G.R.
Posted by Geoff Russell
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'If You Can't Sell, You Die'

Saturday, May 23, 2009 Comments
Bobby Ginn gets the Sunday New York Times treatment in tomorrow's Business section, a feature on the controversial golf-community builder that reveals, among other things,  he's facing about 30 lawsuits from homebuyers and others.

Two of his developments, Tesoro and Quail West in Naples, Fla., filed for bankruptcy protection last year. He sold North Carolina's Laurelmor resort. He has 13 other resorts, some of which continue to struggle. According to the Times, there are a mere 48 homes at Bella Collina (out of a proposed 800) and only three are occupied.  At Ginn's Conservatory development, homes have been built on only five of 340 lots.

Ginn, who ran into financial troubles in the 1980s before reemerging as a developer in the 1990s, tells the Times he is "ready to sell properties in trophy locations” when the market recovers. "If you can't sell," writer Geraldine Fabrikant quotes him as saying, "you die."

-- P.F.

Posted by Peter Finch
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Bonita Bay Group Troubles Worsen

Thursday, May 21, 2009 Comments
The financial struggles of Bonita Bay Group continue. As this story in today's Naples Daily News reports, the company's CEO is resigning, four of its golf courses are about to shut down for the entire summer to save costs, and seven more courses may get taken over by their members.

"Company officials confirmed Wednesday that Kitty Green resigned as president and CEO of the Bonita Bay Group as it continues to fight off bankruptcy," says the story. "The award-winning developer, headquartered in Bonita Springs, is in financial turmoil. Lenders have required the company to hire a crisis manager to conserve cash and restructure operations."

Three weeks ago in Deeds & Weeds, we reported on a plan in which golfers could buy a membership at one of four Bonita Bay Group facilities (the four were Bonita Bay, Shadow Wood, Verandah and TwinEagles) and then enjoy playing privileges at the other three. The cost was $25,000. Clearly, it wasn't enough to pull the company out of its tailspin.

-- G.R.
Posted by Geoff Russell
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Birmingham Report: 'Probably Don't Get My Money's Worth'

Thursday, May 21, 2009 Comments
Here is an interesting story on the Birmingham golf market that appeared last week in The Birmingham News. Judging from the story, Alabama's course supply boomed a little too well in the go-go '90s, and is now in a correction mode. 

"From 1990 to 2000, the number of public courses in Alabama nearly doubled from 83 to 157, while the number of private courses fell from 117 to 95, according to the National Golf Foundation. The net gain was 52 courses, a 25 percent increase in the overall supply.

While public courses have maintained their presence since 2000, private clubs have continued to close. Today, out of 247 golf courses in the state, those offering yearly passes and pay-to-play packages outnumber private clubs nearly two to one."

The story includes the account of Johnny and Kip Dollar, father-and-son golfers who, in a nutshell, embody the challenge facing private country clubs these days. Johnny, the father, is a 69-year-old insurance salesman who plays three days a week. He was a longtime member at Chace Lake CC, which closed last year. Instead of joining another club, Johnny bought a season pass to the Robert Trent Jones Golf Trail, which has four courses in the Birmingham area.

Meanwnile, his son, Kip, belongs to Hoover CC, but he sounds like his commitment there is wavering.

"I probably do not get my money's worth," Kip said. "I'm still hanging in there, but if you figure in the rounds I play [at the Hoover club, the answer would be no."

-- G.R.
Posted by Geoff Russell
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Foreclosure For Myrtle's Legends

Thursday, May 21, 2009 Comments
Moorland.jpgOne of Myrtle Beach's best-known golf groups, operator of five courses, is headed for  foreclosure, the Myrtle Beach Sun reports today.

The Legends Group runs the Parkland, Heathland and Moorland (pictured) courses at Legends Resort as well as the Heritage Club in Pawleys Island and Oyster Bank Golf Links just over the North Carolina border. The company also manages TPC Myrtle Beach but it will not be affected by the foreclosure, the paper says.

The Sun quotes Legends founder Larry Young as saying rounds played at his four courses were down 25 percent this spring. "Our debt is right at $50 million," he said. "No course would be able to survive being down 25 percent, unless they were debt-free."

Young's lender is General Electric Capital Corp. It is expected to bring in Arnold Palmer Golf Management to run the courses.

-- P.F.

Posted by Peter Finch
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A Deal For The Yellowstone Club

Monday, May 18, 2009 Comments
vol51no2_2B.jpgCrossHarbor Partners, a Boston private equity firm led by Yellowstone Club member Sam Byrne, will take control of the Montana private golf and ski club, the Wall Street Journal is reporting. The purchase price is $115 million. (The firm is coming up with $35 million in cash and assuming $80 million in debt.)

CrossHarbor had offered to buy the club -- which features a Tom Weiskopf-designed golf course -- for $470 million last year, but the deal fell through.

Think about that one for a sec: It's getting the club for 76 percent less than it offered a year ago.

If you're new to the whole Yellowstone Club fiasco and want to learn more, here's a helpful article from Bloomberg. And here's a recent Q&A with CrossHarbor's Sam Byrne on NewWest.net.

-- P.F.
Posted by Peter Finch
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BofA Exec Cuts Price of Spring Island Home

Monday, May 18, 2009 Comments
Life hasn't been a bowl of cherries lately for embattled Bank of America CEO Kenneth Lewis. The latest sour fruit: According to this story from the Wall Street Journal, Lewis has cut the price on the vacation house he has been trying to sell at Spring Island, S.C. (home of the very fine Old Tabby Golf Links, designed by Arnold Palmer), for the last two years.

Lewis bought the 5,700-square-foot home with Dennis Thompson, founder and CEO of Firebirds International, in 2002 for $3 million. Current asking price (after the reduction): $3.3. million. The story includes a nice slideshow of the house.

-- G.R.
Posted by Geoff Russell
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'Nothing like a dorm. Nothing like it'

Monday, May 18, 2009 Comments
Not our usual Deeds & Weeds fare, perhaps, but there was a great story in the Atlanta Journal Constitution last week about David Dragoo, a senior on the Georgia tech golf team that will compete next week for the NCAA Division I championship in Toledo, Ohio.

At the beginning of the school year, Dragoo was looking for a place to live. He considered all the usual college-type options -- a dorm room, a frat house, an off-campus apartment. But Dragoo had options: specifically, a nest egg of money, courtesy of a small inheritance and some wise investments he'd made during his college career. 

Coupled with that, real estate prices and mortgage rates were at record lows. So Dragoo did what all golfers, even those in college, dream of doing: He bought a house next to a golf course. As the story describes it, "Tan. Stucco. Three stories. A lob wedge away from the Golf Club of Georgia in Alpharetta."

Of course, owning a home can also be complicated. The newspaper account goes on to describe an emergency that occurred in February while Georgia Tech was playing in a tournament in Hawaii, and how Dragoo responded to it. Suffice it to say Dragoo gained the kind of experience most of us don't learn until we're well into our 30s -- if ever.

But I won't ruin it for you. Read for yourself.

-- G.R.
Posted by Geoff Russell
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