Debt management helps clubs rebound

ON PAR: While the recession took its toll on the local golf-club industry, most locations have been able to rebound in recent years. Above, Sue Pimental, general manager and managing partner of the Hillside Country Club, speaks with patrons Paul  Harris, left, and Richard Haley. / PBN PHOTO/MICHAEL SALERNO
ON PAR: While the recession took its toll on the local golf-club industry, most locations have been able to rebound in recent years. Above, Sue Pimental, general manager and managing partner of the Hillside Country Club, speaks with patrons Paul Harris, left, and Richard Haley. / PBN PHOTO/MICHAEL SALERNO

Golfers may not be coming out in the numbers they did before the Great Recession, but that hasn’t stopped investment in local clubs and courses. Three member-owned golf clubs in the region survived economic pressures over the past five years by selling to private owners, rebounding from the recession’s ripple effects and the downturn in demand, club owners, managers and industry leaders say.
Of the 52 member clubs of the Rhode Island Golf Association, 24 in Rhode Island and southern Massachusetts are private establishments. Prior to 2012, 13 of those had been nonprofits, which file 990 financial forms with the Internal Revenue Service. While a look by Providence Business News in 2010 at fiscal 2008 filings showed six of the 13 were operating with deficits, a look in 2014 at fiscal 2012 filings shows five were operating in the red.
Given that slight improvement, private golf clubs are not out of the woods yet, says Robert Ward, the golf association’s executive director.
“It’s a common trend across the country that private clubs are struggling these days because golfers don’t have disposable income to spend,” said Ward. “[But] people do have money to invest in a business. There are clubs that can still retain the private aspect and the burden of debt is off of the club and on one person, which helps the club survive.”
According to the National Golf Foundation, rounds of golf played dropped from 518.4 million in 2000 to 489.5 million across the country in 2012. Last year, the total was down further, to 466 million rounds nationwide, said Gregory T.A. Nathan, senior vice president of the Jupiter, Fla.-based foundation. Through August 2014, it’s down another 1.9 percent, he said.
As of Jan. 1, 2014, there were 15,516 golf facilities in the U.S. While most of them are open to the public, 4,011 are private clubs, the foundation reports.
“It’s a challenging market because it’s oversupplied,” said Nathan. “[Golf facilities] are competing hard for customers. And all forms of recreation are under pressure, especially pay-for-play recreation.” In Rhode Island, two of the clubs that were sold recently are Ledgemont Country Club in Seekonk, to Joseph Ruggiero on Jan. 1, 2014, and Crestwood Country Club in Rehoboth, to Joseph G. Muniz on Jan. 26, 2012. The third, Valley Country Club in Warwick, was sold in March 2010 to investors under a new for-profit business model that preserves member ownership, according to published reports.
The rationale for converting from member owned to individually owned is fairly plain to see, says Nathan. He called the changeovers “a trend to watch.”
“If they’re operating at a loss, it’s very difficult to make capital investments,” he said. “The owners come in, they have a fund, and they try to help the club be more competitive by clearing their debt and investing in the physical plant.”
Muniz paid slightly more than $3 million for the 18-hole, private Crestwood and still owes about $1 million on the property, but has spent another $1 million-plus on renovating facilities, he said. As a result, membership has climbed from 80 when he took over the club to 300 today, he said. While dues are up slightly, word-of-mouth has attracted new members, he said.
“We keep on adding value,” he said. “We’ve remodeled the whole inside of the building, built a new bar and outdoor kitchen. We just keep on upgrading everything.”
Still private and 18 holes, Ledgemont likewise has added about 100 members, bringing its roster up to 275, said General Manager Jack Tosone. Improvements totaling $2 million have included everything from clubhouse remodeling to a new driving range and swimming pool, new golf carts and even windows, he said.
“The owner has made a commitment to keep us competitively priced and try to get in new members with new energy, which has worked well,” Tosone said. “This time in the season, membership inquiries usually stop [but] we’re still going strong. We’re fortunate that we’re kind of bucking the trend, and we’re on the upswing. The members are the ones who are going to benefit the most.” President Jeff Chase, who heads the investors at Valley Country Club, could not be reached immediately for comment.
Some 18-hole, private clubs, including Point Judith Country Club in Narragansett, say they are doing well, thanks in part to innovative marketing techniques to keep revenue flowing. Jules Olley, a general manager with 10 years experience, was hired at Point Judith last year in part to make the place more “family-friendly.”
For Point Judith, that has meant everything from a fireworks display to movie nights and events with crafts or at Christmas to provide families with more shared time together, since golfing can easily eat up a 4.5-hour chunk of time, he said. Membership has remained steady at about 300, he added.
One of the clubs trying to broaden its reach is the member-owned Pawtucket Country Club that straddles the line between Pawtucket and Seekonk, whose operations were running a $588,059 deficit in the 2012 fiscal year – the largest deficit of those clubs filing 990 forms.
Michael Gelinas, Pawtucket’s director of golf and house operations, said the club is “in a lot better position than we were in a year ago, and that’s primarily due to some operational changes we’ve made, as well as doing a better job selling the club.” Once a seven-day-a-week operation year-round, Pawtucket has shortened its hours in the off-season and hired a “fantastic new banquet salesperson [who’s] done a terrific job selling the club,” he said.
Membership Chairman David Spencer said membership has increased from 225 in 2013 to 250 today, because “we have relatively low rates, a great golf course and a great member experience.”
The club feels “like we’re trending in the right direction at least,” Gelinas said. “Especially in our geographic area, we have Ledgemont, Crestwood and [Metacomet Country Club in East Providence], all within in a 15-minute reach. It’s pretty tough in our area because there are a lot of options.”
Pawtucket Country Club also has tried to combine expenses and cut overhead by sharing services and staff with three other clubs, said Spencer. Discussions continue with one club, but the only club he would name as having participated is Ledgemont, which shared the expertise of its comptroller with the Pawtucket club for a year and a half before the club was sold, he said. The Pawtucket club has since hired its own comptroller, Spencer said. Hillside Country Club, in Rehoboth, a semi-private club, allows public play. Originally an 18-hole golf course, the previous owners had previously sold off nine holes in 2003, said Sue Pimental, the current general manager and managing partner. Pimental and her partners bought the bankrupt facility in August 2013, she said.
Hillside, which is not a member of the Rhode Island Golf Association, has renovated its once “tired” nine-hole course and property, she said. Besides sprucing up the course, owners have turned a bar into La Collina Restaurant and Tiki Bar, replaced the pro shop, opened up views over the golf course to a grand ballroom, and added a pool and Cristallo Spa, said Pimental.
She called the tiki bar on the ninth hole, which allows players to linger after finishing a round of golf, “a home run.”
Pimental said the property’s evolution is intended to make it a destination.
“The idea was to fix it up and make money on the weddings,” she said. “It’s beautiful. Then we thought: ‘You know what? Let’s make it a day spa, too.’ It just keeps evolving. It has the feel as you’re putting these packages together [of] a resort.”
At Pawtucket, Spencer said it recently sold off adjacent homes it owned, netting about half a million dollars – a big help, though it is a one-time influx of money. As for its future, operators remain optimistic.
“We’re operating pretty close to break even this year,” said Spencer. “That makes me very optimistic. We still have banks willing to work with us because our debt-to-equity is low now. They’re willing to loan us money and that gives us the power to hold out as member-owned longer than others may be able to.”

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