Tough Love at Scottsdale National

Apparently there's a new Sheriff in town at Scottsdale National & he's taking no prisoners!

http://www.geoffshackelford.com/homepage/2013/12/16/scottsdale-developer-to-members-who-play-too-much-resign.html

Wow, well apparently he has a plan and is going to implement it. I can see a lot of members resigning especially those that "play the course the most and spend the least", at least he is refunding 100% of the fees they paid to join. I wonder how many members there are now and how many in the future?

[quote name='Golfwolf' timestamp='1387194766' post='8306723']
Wow, well apparently he has a plan and is going to implement it. I can see a lot of members resigning especially those that "play the course the most and spend the least", at least he is refunding 100% of the fees they paid to join. I wonder how many members there are now and how many in the future?
[/quote]

I have no idea of the membership #'s, but there's apparently a lot more to the financial dynamic.

Just my speculation, but he bought the place for less than $1,000,000, which leads me to believe there are significant contingent liabilities that go with the place ... for example, the existing Membership structure and the fat of their Initiation fees, must be a significant liability. It sounds like the previous owner must have made some mistakes in structuring the deal.

Wow...I wouldn't have put in the part about the people that play the most. Otherwise, he bought the course so he can do as he pleases. I would not be happy if I was a member but at least I would get all my initiation fee back.

I would like to know if this type of course stucture is prevalent? I don't see how this arrangement will make him money unless they are like Eastlake and only have corporate members.

"There is no golf played at Bushwood, sir!"

I understand what he's trying to create and it doesn't involve local membership. My advice would be for members to take the 100% refund and RUN. Sure the course will be nice when he's done with it but to pay due's then a greens fee of a $100 is crazy if your a local member who plays 2-3 times a week.

Sounds awful, I would take my money and leave.

Not every day you see a business offering to pay its clients to leave....

Wonder how successful this will be.

This guy isn't the first owner to realize the $ vs Usage problem.

Non-Resident or National Members are a great deal for a private club. They pay their dues (normally a reduced amount compared to full local members) and rarely use the club. When they do show up it's an event and they bring guests and spend money.

The local membership will be out there everyday and rarely eat lunch, drink in the bar or spend money in the pro shop.

This new owner may be the first guy to be quite so blunt about what he intends to do.....but he owns the joint - he can run it as he pleases.

I don't know anything about Scottsdale National. The only criticism I might have would be depending on how the original deal was structured for the members.

Wow, I'd take the money and run if I was a member there.

Hope he has enough liquidity to honor the refunds.

Two things.

First, the guy sounds like an egotistical idiot.
Second, the purchase price of 600K raises a lot of questions.

Johnny T.

Parson's is straight and to the point. I agree with others posts that if I was a member I would be inclined to take my money back and go find another club. Sounds like the club will be making heavy investments that will not only disrupt the experience in the short term, but will be aiming to phase me out at later stages.

Tough love is a good way to word his message. He's not sugar coating it which let's people know the clear direction he thinks he is headed with the club. Either get on board or there's the door.

[quote name='kevch25' timestamp='1387206898' post='8307209']
Parson's is straight and to the point. I agree with others posts that if I was a member I would be inclined to take my money back and go find another club. Sounds like the club will be making heavy investments that will not only disrupt the experience in the short term, but will be aiming to phase me out at later stages.

Tough love is a good way to word his message. He's not sugar coating it which let's people know the clear direction he thinks he is headed with the club. Either get on board or there's the door.
[/quote]

Exactly. I honestly think what he's offering is really above and beyond what most people would do. Good for him in being honest with the direction of the club rather then string people along only to get due's and keep members. He's trying to create a pine valley, augusta type thing in the west.

[quote name='hankmoody' timestamp='1387201144' post='8306907']
Hope he has enough liquidity to honor the refunds.
[/quote]

He's the billionaire former CEO of GoDaddy, something tells me he isn't hurting for $. I always drive past this place and wondered what the deal was.

Seems like a pretty golf-unfriendly strategy. He's looking at it from a business perspective, which is his right as the owner. I would take my money and go somewhere that's more focused on the golfers.

For that purchase price, I can't imagine why he wouldn't simply develop the land for other uses.

This honestly might be one of the most idiotic things I've ever read.

So my private club cost-knowledge has a very East Coast bias but at a course like this wouldnt you have monthly F+B minimums? For example the club thats right near my house has a $30,000 initiation fee in addition to a @ $500/month F+B minimum. If guys dont eat/drink there they are charged anyway. I guess my question would be is this an unusual fee structure?

Otherwise I would wonder why clubs wouldnt just increase their minimums so even if you dont spend money there they are getting your $$$. But if I'm a member there I would take my money and run, there have to be other private club options in Scottsdale that wouldnt try to hose guys that play the most.

Private club economics are a lot more complex than most realize. You don't get a true appreciation of the numbers until you've served on a Board of Directors and really dug into the financials.

The ultra exclusive big time rich clubs rarely have a problem. Their membership will just get the bill and pay it and keep going.

Realistically there aren't that many of those clubs around.

Most of the nice clubs that have run into this type of problems all have a similar history. Some local rich guy that has done really well in whatever business he owned decides he wants to build a golf course.

So he buys some land and calls up a big name designer and they start moving dirt. Founding memberships are sold and the regular Full memberships and finally Non-Resident or National Memberships and eventually Junior Memberships. All of these categories have lower and lower initiation fees.

After a decade or so when the old rich guy that founded the place either A) Gets tired of subsidizing the club or B) Dies. - His family takes over. The situations that I've seen are that the heir's desire to subsize the club is a lot less than the founder. Especially since the economic meltdown in 08-09.

That's when one of the big Club Management Companies are contacted and then all *#)$ breaks loose.

There are two really nice clubs going through this very scenario within 100 miles of where I live. Both are adopting the strategy of trying to find more National Members and less local play.

So let me get this right. I pay $110k to join the club, I presumably pay a monthly dues rate AND he wants to charge me $100 everytime I play. WTF is THAT?????

It's been raised on here more than a few times, but the new CEO only paid $600K for the club. There has to be a lot of different variables in play here. I am not educated on the financial on goings of private clubs but I can't imagine that marginal players in this club are going to be spared in the end. I don't necessarily agree with the letter but it's his club now and I am just a muni player looking for deals. Take the buyout and get yourself a new hat/shirt in the new clubhouse with any money saved.

It's obvious he's trying to change the paradigm of the membership. Most courses and clubs have a basic golf/member type that they appeal to through pricing, exclusivity, ammedities, course set-up, etc.

Bascially, it appears to me that he wants to make this an exclusive and EXPENSIVE place to belong. Existing members who don't fit that mold (ie: play a lot of golf and spend very little money) will read this note and get the message. They will move on to a golf club that does want their membership and what's nice is that he is offering a full refund.

Other members who read this note and are unphased by it will fit the mold. He will accomplish the first phase of his goal, but you have to hope that he can attract the members he is looking for to make up for those who are leaving.

What's more intreguing to me about this situation is that the owner took a VERY direct course of action to get his message across. Any more these days, I'm used to seeing a softer message (increased rates over time to push out unwanted members) vs. the direct approach.

He basically wants Augusta National in Arizona. He wants the best of the best and an empty yet meticulously maintained golf course. And i'm not kidding about empty as most clubs like this have only a handful of members play each day. In my neck of the woods there's a club called Caves Valley. It's golf candyland and they discourage members from playing too much, not kidding.

There has to be some smart guy who could figure out the actual expense to a club of a round of golf. I can't imagine how complex or even valid it will be....but common sense tells you that the more play that exists on a course - more expenses are incurred.

The obvious cosmetic issues with more play: More balls marks on greens, more divots in fairways, wear marks from carts running around...more people stealing the fancy Titleists from the driving range.

I know this from personal experience: National Members at really nice private clubs have serious expectations when it comes time to visit and play. They want the place to look like Augusta National does on TV during Masters Week.

I don't know this for a fact but I've been told by a friend who is related to an Augusta Member that there are very, very few "[i]Local[/i]" Augusta National Members. Back in the day - 30s thru 60s - There were quite a few members of ANGC that lived in Augusta....Not anymore.

It only makes sense that less daily play will be less expensive to maintain the grounds.....I just couldn't even begin to figure out how to put a number on it.

Thems "rich people problems." LOL!

See ya on the munis.

Bold move for sure. His intentions seem to push out current members. My guess is there is an issue w/ the equity memebers contract. He essentially sees them as a loosing equation the the overall health of the club. Not bad to offer them 100% refund but almost forces them out at $100 a round.

I'm wondering if the equity members managed themselves or contracted out management. I know of a local pvt. course that decided to manage themselves after the initial principals sold the place. The equity members made horrible decisions letting members freeze there accounts w/ no monthly dues and no reinstatement fees. Memberships declined, more and more members froze accounts in the wet/soggy winter months and revenue was lost. Equity members initial investment comes due next year and the club is now scrambling to find new owners to buy the equity members out.

There is def a bigger picture to this club than is told in the article. Only time will tell.

The super wealthy putting the smack down on the run of the mill wealthy. This is awesome.


Anybody know the quality and design of this course? Is it top-notch?

[quote name='The Pearl' timestamp='1387225398' post='8308815']
The super wealthy putting the smack down on the run of the mill wealthy. This is awesome.


[b]Anybody know the quality and design of this course? Is it top-notch?[/b]
[/quote]

yep, its pretty top notch

[quote name='dcmidnight' timestamp='1387209914' post='8307477']
This honestly might be one of the most idiotic things I've ever read.

So my private club cost-knowledge has a very East Coast bias but at a course like this wouldnt you have monthly F+B minimums? For example the club thats right near my house has a $30,000 initiation fee in addition to a @ $500/month F+B minimum. If guys dont eat/drink there they are charged anyway. I guess my question would be is this an unusual fee structure?

Otherwise I would wonder why clubs wouldnt just increase their minimums so even if you dont spend money there they are getting your $$$. But if I'm a member there I would take my money and run, there have to be other private club options in Scottsdale that wouldnt try to hose guys that play the most.
[/quote]

I alluded to it in my previous post, but here's what I suspect is going on here ...

One of the reasons for the very low purchase price, is the "Membership Deal" that the previous or original owner made, just doesn't hunt any more. For example, the original Membership Contract the existing member have, may have a "fixed" or "no" minimum clause in the contract. The contract probably contains other "incentives" the original owner threw out there, to fill the original membership. There might also be a "freeze on dues". A myriad of contractual obligations might now be hanging over the new owner's head ... which are adverse to his new marketing strategy.

When one busy an existing business, you take the contingent liabilities with the business (assuming it's a stock purchase and not an asset purchase). I'm just tossing darts here, but the very low purchase price suggest to me, that the contingent liabilities on this deal, are oppressive ... clearing out the existing membership to change the club's positioning in the market, is one of those burdens.

The latest news:

[url]http://www.geoffshackelford.com/homepage/2014/10/8/hes-back-parsons-pens-another-letter-to-the-few-members.html[/url]