The Pellucid Perspective - April 2011 - (Page 13)

BIG NAME FAILURES Golf deals to forget By Jim Dunlap List of ill-conceived or ill-fated courses includes some big names he downward spiraling economy has made it clear that when game show host Howie Mandel asked “Deal or no deal?” a lot of golf course developers, lenders and buyers should have taken the latter alternative. The list of courses that from a financial standpoint, if not an artistic one, should never have been built includes some that to this today are included on various “Best Courses” lists, ranked by golf aficionados rather than investors. Some, like Stone Eagle and Porcupine Creek in the Palm Springs area, were developed just before the current recession hit, blissfully assuming that economic prosperity and the baby boomers’ march toward second homes and a golf-filled life of leisure would fill pricey membership rosters and fairway home sites. Both are familiar with either the bankruptcy codes or the foreclosure process by now. At least those were built in a desert enclave known for decades as a golf retreat for the wealthy. How to explain the spare-no-expense golf course and expensive home sites at the acclaimed Tom Weiskopf-designed Forest Dunes in the uh, woodsy getaway of Roscommon, Mich.? Developed in the build-a-course-a-day boom of the late 20th century and bankrupt soon after, Forest Dunes was purchased by the Detroit Carpenters Union Pension Fund, which has reportedly poured some $40 million into the property and is now hoping to unload it for significantly less. Other projects were, even without the benefit of retrospect, doomed to struggle financially before the opening day tee shots were struck. The Crossings of Carlsbad, in the golf manufacturer-laden San Diego suburb of Carlsbad, had run up a tab of approximately $63 million in a development effort stretching over decades before the course finally opened in August 2007. The municipal course simply reached a point of no return and had to forge on, as several different Southern California environmental groups blocked course routing after course routing for years before the city and Greg Nash finally got approval for a layout that is challenging from a number of perspectives, expensive for non-residents even by San Diego area standards, and has almost no chance of ever covering debt service and turning a profit. If the city didn’t already know the project was conceived under an unfortunate star, their fears were confirmed when a small plane from a nearby airport (always a plus for the golfing experience) crashed onto the third green and killed a maintenance worker only days before the scheduled course opening. Other municipal project failures are a bit harder to explain, although certainly the economic woes that have plagued the golf industry in the last few years are likely suspects. The city of Casper, Wyoming, not exactly a golf mecca, nevertheless got a Robert Trent Jones, Jr.-designed course called Three Crowns in 2005 for very little municipal outlay, unlike Carlsbad, as the T course and its other former oil refinery site improvements were funded originally by Amoco and later by BP. The bad news? The course lost over $500,000 last year, and one of its board members estimated it would lose over $400,000 this year. Most of those losses have been subsidized by BP, but that will come to an end soon, as BP’s final $4 million payoff for site improvement and maintenance, plus the $6.5 million currently in the account of the joint powers board that oversees the course finances, will have to last for the next 90 years of the lease between BP and the city and county. And how could we forget PGA West, although it certainly enjoyed its share of glory days before the recent foreclosure takeover from Morgan Stanley Real Estate by its current group of investor-owners. Residents have suffered for the past several years from substantial homeowner and golf membership dues, while their homes cannot be sold for anywhere what they paid for them. Tough times in the desert for sure. The list of bad deals and bad projects could go on, but it would take more space than we have here. The Pellucid Perspective staff would welcome any candidates our readers would care to nominate. Use the Discussion tab to send us your lovable losers, and we can share them with our other readers. n JOIN THESE INDUSTRY LEADERS The Pellucid Perspective thanks and recognizes our charter sponsors – Club Car, ValleyCrest Golf Course Maintenance, GolfNow and KemperSports – for both their financial support and their shared commitment to elevate the discussion of key industry issues among thoughtful stakeholders, to grow their business and preserve the industry at large. Other companies who would like an EXCLUSIVE opportunity to convey their marketing message to over 25,000 industry recipients are invited to join the companies above as Pellucid Perspective sponsors. If your product represents an industry segment not occupied by our Charter Sponsors, we are pleased to offer you exclusivity in your category. Contact Jim Dunlap at 760-212-3714, regarding sponsorship benefits and cost. The Pellucid PersPecTive 13 http://WWW.PELLUCIDCORP.COM

Table of Contents for the Digital Edition of The Pellucid Perspective - April 2011

The Pellucid Perspective
Cover Your Asset
NGCOA Ponders Becoming Southwest Airlines?
Is E-Mail Dead?
Foreclosures Opening New Avenues for Managers
Mar 2011 YtD Weather Impact, Feb 2011 YtD Utilization
An App a Day Takes Your Money Away
Comings & Goings
Golf Deals to Forget
Phoenix, AZ Core Business Statistical Area (CBSA)
Can’t Sell Your Home? Call Tullymore Resort

The Pellucid Perspective - April 2011