Private clubs weathering storm – mostly
EAGLE COUNTY, Colorado – Most of Eagle County’s golf courses are hard to play, and not just because they were drawn up by some of the best designers in the business.
Most of the golf available in the valley is found at private courses. Some, like the courses at Red Sky Ranch and Beaver Creek, are open to Vail Resorts’ guests. But others are members-only, meaning you have to know someone, or participate in a charity event to get on the course.
As with much of the resort economy, private golf clubs have gone through tough times and some significant changes over the past few years. For the most part, though, local golf clubs seem to be weathering the downturn pretty well, with a couple of exceptions.
Those exceptions, though, are deep-bruise obvious.
The Cordillera Club in Edwards is currently involved in a pair of lawsuits. Club members are suing the owners – the Wilhelm Family Trust – and the owners are suing the members. While those suits grind their way through district court, the club itself is operating, but just one of Cordillera’s four courses is open this year.
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The club also filed for bankruptcy earlier this summer, and for the second summer in a row, has just one of four courses open. The club announced recently it had forged an interim financing agreement with Alpine Bank that will allow play to continue for the rest of the season.
But at least people are playing at Cordillera.
Developers several years ago brought the Brightwater club to the market just as the world’s economy fell into its current slump, and sales and memberships there never took off. At one point, developers were offering a year’s lease on a luxury SUV to anyone who bought a home lot there.
It didn’t work.
Despite a handful of homes at Brightwater, the club has gone through bankruptcy. The club property went back into foreclosure this year, and was purchased at a July foreclosure sale by EFO Financial Group, LLC, a Florida-based company that specializes in financing troubled projects. The company paid just more than $1.6 million for the club.
Company representative David Goduti recently acknowledged his company’s purchase of the property, but declined comment until a mandatory “redemption” period between a successful foreclosure bid and closing had passed.
A cloudy picture
Both private clubs and public courses have struggled since the passing of the golf boom of the 1980s and ’90s. The number of golfers in the country – somewhere between 8 million and 9 million people – has remained static since then.
Industry analyst Casey Alexander said that as of last year, the U.S. golf industry was losing the equivalent of about 65 18-hole courses every year, a trend that had started several years before the financial crash of 2008. Private clubs have been hit hard in that downturn, Alexander said, and for a number of reasons.
One of the biggest is how people socialize. To a large degree, chasing kids from activity to activity has replaced a golf club as the center of social life for a lot of people, including those who can afford club memberships.
“Most people can’t justify something that’s not the center of their social circle,” Alexander said.
Golf clubs have also been affected because public courses are getting better, Alexander said. While people have been cutting back on club memberships, they’re still going on vacations, Alexander said, and willing to play courses while they’re traveling.
In short, it’s easier to spend, say, $3,000 on 30 rounds of golf at a great public course than even $10,000 to $15,000 on a club membership. “And that’s before you put a tee in the ground,” Alexander said.
Attracting new members
Still, private courses in the valley are selling memberships – although some are selling in small numbers.
The Adam’s Rib Country Club southeast of Eagle has just a couple dozen members. But Adam’s Rib Vice President of Real Estate Kevin Denton said it’s a mistake to confuse those small numbers with a struggling club. The course is owned by the HBE Corporation of St. Louis, the country’s largest builder of health care facilities and the parent company of Adam’s Mark hotels.
HBE owner Fred Kummer has owned thousands of acres up Brush Creek since the 1970s, so the land is long since paid for. There’s no debt on the club or course, either.
Denton said that financial position has allowed HBE to wait out the economic downturn. The course has this year started a new marketing campaign aimed at both Vail Valley visitors and people who live in hot-weather markets who might be looking for a place to beat the summer heat.
The course, the conditions and the summer are all part of the pitch for prospective members, Denton said. But potential members also want to know about the club’s financial strength and whether the club will survive its founder – a question Denton answers with an unambiguous yes.
“It’s part of HBE; it’s not going anywhere,” he said.
The more established clubs in the valley have a different pitch to prospective members – although no debt and a clean balance sheet seem to be a crucial part of attracting new people.
Eagle Springs, near Wolcott, opened in the mid-1990s. Members have come and gone over the years, but club owner Fred Green said new members are often referred to the club by those who already belong.
Green said while Eagle Springs was affected by the economic slump, “no more than a few” members resigned because of it.
“We weathered the storm very successfully,” Green said.
While acknowledging that the first wave of the slump did diminish interest from potential members, Green said Eagle Springs has brought in more new members every year.
While membership is open to anyone with the wherewithal to write the checks, Green said new members often are introduced to the club as guests.
“Our existing members are very proactive about finding new members,” Green said.
The value proposition
As an avid golfer and former touring professional, Mitch Perry of Singletree has spent a lot of time on just about every fairway and green in the valley. For the last year or so, Perry has been the “membership ambassador” for the Country Club of the Rockies at Arrowhead. And business has been good.
The member-owned club added nearly 50 new members last year, in part because the club’s board of directors got aggressive with pricing. There’s now a waiting list to join the club.
“They priced memberships probably better than the market to gain momentum,” Perry said.
But the bottom line, Perry said, is that Country Club of the Rockies, like other successful clubs, has been able to persuade existing and potential members about the value of belonging.
Perry, who also sells real estate in the valley, said the idea with any premium item is to combine a product with value for the money and security into one package.
“If people perceive value, they buy – that’s really the whole root of it,” he said.
And that’s what it’s going to take for private clubs to thrive in the future.
Pentti Tofferi is the general manager at Country Club of the Rockies, but spent many years working at Cordillera.
Tofferi agreed with Perry about the need for members to see the value in paying for clubs. He obviously believes that formula is in place at Country Club of the Rockies. But he added, he thinks better days are ahead at Cordillera – eventually.
“I think you’ll see Cordillera come back,” Tofferi said. “They won’t open all four courses any time soon, but once they do get things resolved, I think you’ll see some of the members come back.”
The big question, though, is if there are enough golfers to go around.
“There are 8 or 9 million golfers in this country; that’s not going to change,” Alexander said. Still, he said, golfers are willing to spend, if they have the right proposition.
“To survive in the future, country clubs will have to be creative,” Alexander said. Still, he believes the last golf boom won’t be the final one in the sport’s history.
“Will there be another building boom? Yes,” he said. “Will it be to the extent of the one in the past? Probably not.”
Business Editor Scott N. Miller can be reached at 970-748-2930 or firstname.lastname@example.org.