The Pellucid Perspective - March 2012 - (Page 18)

THE LAST WORD Show me the money F inance has never been a strong suit of mine, as my family and our accountant can attest, but in more than a decade of conversation with many of the golf industry’s stakeholders, I have heard quite a bit about their problems with it, if not the solutions. Virtually all of golf ’s traditional lenders have beaten a hasty retreat from the field over the last three years or so to lick their wounds. If a golf course owner or prospective buyer mentions the word “golf ” to lenders these days, they’d better be inviting the banker to play, or those friendly lenders will immediately discover another call they have to take. The good news is that the golf industry credit hold is not universal. While buyers and brokers continue to lament the absence of funding for course acquisitions, and course owners wear out the knees of their trousers pleading for operating capital or re-financing of existing debt, there does appear to be plentiful financing for equipment purchases, either pre-owned or new. Companies such as PNC Equipment Finance, Global Turf Equipment, Luber Brothers and others say there is plenty of financing available in those arenas for customers with a decent track record and credit history who, if not retiring debt and banking profits, are at least paying their bills. There are a number of reasons why financing is more plentiful on the equipment side than in National Accounts VP Jim Williams said that Luber Brothers, which features in-house funding through LBI Finance, is “taking stuff down on cash flow, and I don’t think we have any defaults currently.” Again proving out the thesis that it’s an ill wind that blows nobody good, the industry’s recent struggles have been a boon for companies such as Global Turf Equipment and Luber Bros., which offer pre-owned course maintenance vehicles and equipment. As budgets tighten, many courses opt for pre-owned and reconditioned equipment, particularly when financing is available. Who’ll be first into the pond? As budgets tighten, many courses opt for pre-owned and reconditioned equipment, particularly when financing is available. acquisition, operating capital or re-finance transactions. PNC SVP Chris Schauerman said PNC approves a high percentage of applicants for golf car fleet, maintenance equipment or clubhouse fixtures/equipment financing in part because the recent hard times in the industry have provided lenders with a good indication of operators’ ability to operate within their means. “We’ve seen improved operating results at the golf course level,” Schauerman said during an interview at the recent Golf Industry Show in Las Vegas. “There has been a lot of expense trimming and efficiency programs have been put in place. We did see delinquencies and defaults when the economy collapsed, but delinquencies are now back within reasonable rates, and defaults are still higher than normal, but they’re lower.” In those previously mentioned chats with industry executives far better versed in finance than myself, I have lately been opining that within the not too distant future, some finance source is going to raise a hand and say “We’ve got money to lend, in golf!” My guess is that whoever is first to take that leap had better have a bank of phone lines and plenty of staff to handle them. Shockingly, everyone I’ve posited that theory to has agreed with me – not an experience I’m accustomed to. Capmark VP Rick Nekoroski, who, like most of his peers at other traditional golf course lenders, spends his time these days managing the institution’s portfolio of existing loans and REO properties instead of soliciting new golf business, said he is thinking the same thing. “Somebody will step in,” Nekoroski said. “The first one in will no doubt be able to cherry-pick and capture some of the big relationships that are out there. There’s a lot of good stuff out there, and a lot that’s being written off by banks. When somebody does step up, it will be interesting to see what the market values are. Initially it will be mostly refi’s – low hanging fruit – and there will be some REO’s where the buyer is able to get $1 million or so from a local bank they’ve dealt with, but there will be some bigger deals too.” I freely admit that I’m nowhere near smart enough to predict who might be the first to take the leap of faith back into golf course finance, or exactly when that might happen, but I think I’ve figured out why golf course equipment, new or used, is a better loan risk than a golf course purchase. Which do you think would be easier to dispose of for essentially what you had in it if you had to repossess it, a non-performing golf course or a —Jim Dunlap perfectly good greens mower? March 2012 18 The Pellucid PersPecTive

Table of Contents for the Digital Edition of The Pellucid Perspective - March 2012

The Pellucid Perspective - March 2012
Contents
New twists in Cincinnati muni course taxation situation
Study cites “Best Practices” to generate more female play
Chip Brewer chosen to write Chapter V of Callaway Golf
Knowing your customer and making it work
Golf Industry Show, CMAA Expo to share San Diego venue in 2013
February weather impact: The hits just keep coming!
Cleveland, OH
Southworth Development acquires Willowbend CC from Reebok head Fireman
Show me the money

The Pellucid Perspective - March 2012