Vail Daily letter: Cordillera responsibility
Vail, CO, Colorado
I am a founding member (1993) of The Club at Cordillera. I am also a chaired professor of accounting and finance at the Tuck School of Business at Dartmouth. I would like to clear up some of the statements in Randy Wyrick’s article, dated Jan. 14, and add some additional comments.
First, the statement that the club has “lost” more than $10 million since the Wilhelm Family Partnership (WFP) assumed ownership in June 2009 is erroneous.
Although the club members had paid dues in the amount of $7.6 million prior to the start of the 2009 season, the WFP failed to capture these funds during negotiations with the prior owners. This was/is the WFP’s responsibility and problem, not the members.
That the WFP has contributed $5.3 million in cash since assuming ownership would suggest that these are costs incurred for services to the members to which they were entitled predicated upon their payment of 2009 dues.
WFP also has indicated that the $4.8 million raised via premier membership sales was used for club operating expenses.
Inasmuch as the primary benefits to the premier members were to include access to associated clubs and legacy privileges, it is my professional opinion that these funds should have been set aside into two pools of funds, one for the development of the “associated clubs” concept and the second in the form of a capital expenditure reserve fund, as transfer fees from one membership to another are typically used for capital expenditures which would not be realized from the legacy arrangement.
To use these monies for operating expenses is clearly an inappropriate diversion of funds, period.
The $10 million loss which WFP throws around really represents monies spent for services owed to the members and members’ payments for purposes other than the club’s operating costs.
The WFP has, in my opinion, also spent considerable money unnecessarily since their assumption of ownership, which may have added to their current cash flow problems.
On Dec.17, 2010, David Wilhelm announced 2011 dues of $13,800 in a letter to the members, in accordance with our membership plans which require that information before the start of the club’s year, which runs from Jan. 1 to Dec. 31.
On Jan.10, he wrote a letter to the members setting the 2011 dues at $18,000, but with the “opportunity” to have the new dues level “discounted” to $13,800 if paid by Feb. 4.
The invoice sent with his letter was “backdated” to Dec. 31, 2010. If members pay before Feb. 18, we pay $16,000; before Feb. 25, $17,000; after that, the stated dues of $18,000.
I personally consider his new schedule of payments nothing short of blackmail to force the members to pay the $13,800 or else.
I would point out that if the $13,800 is what he has always intended that members pay for 2011, and that is what he is counting on for planning-budgeting purposes, his proposed late fees in excess of 300 percent per annum, dramatically exceed legally allowed rates.
The Dec. 17 letter suggested to the members that services would be cut in 2011 if the club experienced a shortfall of members, which is in violation of our membership plans.
A large number of members wrote letters to the WFP asking for assurance that services would not be cut before they tendered the requested $13,800 dues being asked by the WFP at that time.
The Jan. 10 letter makes only vague assurances that they “intended to open all four courses and permit member access.”
WFP has failed to commit that all four courses would be open for the required six days per week for the 20-week season.
In 2010, WFP did cut back on services and closed courses earlier than usual. Why should members accept a vague assurance for 2011 given the WFP’s prior track record?
Speaking for myself but believing that a number of my Cordillera neighbors, whether members of the club or not, feel the same way, I find it very difficult to know what to expect from the WFP for 2011, and beyond, given their history since owning the club of telling us one thing about the future of the club, associated club relationships, service levels, dues, etc. and then abdicating their commitments to us.
The WFP has the responsibility of assuring that communications between their owners-management and both club members and the wider Cordillera community are accurate, can be relied upon, and truly are in the best interests of the club, its members, and the total Cordillera community.
Anything short of that is unacceptable.