Seal Island Gold Resort lays off 500 staff
Residential golf communities and golf courses are feeling the financial crisis, particularly in some states. We have reported on several stalled devlopments recently, including The Laurel Cove development in Tennessee. Georgia is another state facing issues. Lieutenant Governer of Georgia, Casey Cagle told a group of local mayors this week, “the state of Georgia isn’t going to be in the golf business and the hotel business much longer,” as he announced plans to start selling off state-owned golf developments and courses.
This September, Georgia’s exclusive Sea Island, once called the best golf resort in the nation by Golf Digest, laid off 500 employees, and industry experts are warning that If the economy gets worse, some courses will close permanently. During the depression of the 1930s, 30% of golf courses closed in the USA.
Cherokee Run Country Club in Conyers, GA filed for bankruptcy this week, and according to federal court documents, the club owes more than $2.9 million. Gold Creek, a 354-acre golf and tennis facility in Dawsonville, shut down in August after the company that owned it went bankrupt.
Residential golf communities are facing similar issues, and Golfside Development Group, the company that developed Covington Place, a residential community wrapped around Indian Creek Golf Course in Covington. had 34 tax liens filed against it by the local county in May.
Indian Creek general manager, Bryan Raines, said “It’s been pretty ugly in the golf business. There’s no serious trouble, but we’re definitely down.” Overall revenues for the golf club and related housing construction has dropped roughly 20% since July.
Realistically, the problem is also one of over-building over the last 20 years. In Atlanta alone, there have been 150 golf courses built since 1990.
Stephens said sales of new golf memberships at the club have flat-lined since September, when the current Wall Street crisis started. Smoke Rise, a member-owned club of roughly 400 people, is down between 20 to 30 members since the start of the year.
“We’ve got people whose businesses are failing,” Stephens said. “The next step for them would be to cut an extra expenditure or two. You start getting people who play two times a week switching to two times a month.
“You multiply that across the board, and it can really hurt,” Stephens said.
Anticipating a prolonged economic downturn, some private clubs have taken steps to protect themselves.
Earlier this month, Joe Guerra, president of the holding company that owns Canongate Golf Clubs, wrote members about the foundering economy’s affect on its 19 courses as well as on the golf industry as a whole.
“Many members have been forced to resign or reduce their use of the clubs due to job loss or other financial hardships,” Guerra wrote. “We don’t expect to see a recovery in the near future and in the meantime must react in order to protect your ongoing membership value.”
That includes closing 11 of Canongate’s course for one day each week and continuing membership rates at their current levels through 2009.
While Guerra assured members that said the Canongate courses are relatively good financial health, “we know of multiple clubs that may be forced to close permanently as a result of the difficult times,” he wrote.
Older, more established golf clubs will likely survive the downturn, and Rick Burton, the director of golf at East Lake Golf Club in Atlanta, said there’s been no noticeable decline in the number of rounds played at the course. Sales in the golf shop and restaurant have declined though, and a major corporate Christmas party booked at the club was canceled recently, Burton said. All in all, not the best time for golf developers, but for the player, a far more affordable range of options are presenting themselves and some clubs that once cost $20,000 to join cost a tenth of that.
It is not all doom and gloom though – At the high end of the market, the economic outlook looks a little brighter, with recent announcements of a new golf community in Mexico, with course designed by Tiger Woods, Abu Dhabi’s Saayit Island golf development, course by Robert Trent Jones, and an Arthur Hills designed course on a new residential golf development in Mexico.
