Source: The Bradenton Herald (Fla.)
El Conquistador Country Club members are considering an offer by IMG Academies to buy the golf course and country club for $6.7 million, but not every member is ready to give up equity in the golf course.
The 117-acre golf course has been used by students of IMG's David Leadbetter Golf Academy for more than three years under contract. IMG is in the middle of a five-year deal with the golf course.
IMG's 190-acre complex is adjacent to El Conquistador, with a driving range on its property but no golf course.
Club members have been mailed ballots to vote on the sale, with a decision expected at the club's Dec. 6 annual meeting. The club has approximately 360 members in different categories, but only a majority vote by the club's 170 proprietary members, or equity owners, will decide the sale, said Jan Erfert, president of the club's board of directors.
Reasons for entertaining IMG's offer include declining membership and lack of new real estate undertakings in the area to boost membership, Erfert said.
"This is not a distress sale," Erfert said. "We're not in financial difficulty."
But longtime El Conquistador member and board member Dan C. Farlin III said it's not too late to turn the club around and allow the 170 proprietary members to hold onto ownership rights.
Farlin, who inherited his right of successorship from his father, said the club is making a hasty decision.
"Members should not be so willing to give this club up," Farlin said. "We need to take a look at this situation closely before signing ownership away."
A sale to IMG would allow equity owners to recoup some of their investment and still allow them to continue playing golf, Erfert said.
An early draft of the IMG proposal offered the possibility of an 85 percent return on their equity investment, Farlin said. "But that figure started to drop on later versions and has since disappeared," Farlin said.
"There's no guarantee on this deal and no legal counsel has looked it over," Farlin said. "It is IMG's intention to keep this a first-rate club and to keep things the way they are for now, but intentions are not worth much."
Farlin, whose family has held membership in the club for 30 years, said that he and at least three other board members were unaware of the negotiations being made for a proposed sale to IMG.
"This was orchestrated without the entire board's consent," Farlin said.
The member votes will be counted Dec. 6 at the board of directors annual meeting, which is also the day before four new board director openings will be filled for 2005, Farlin said.
"It's very convenient that the vote for this sale will be complete the day before new board members with different opinions would get a chance to speak up," Farlin said.
Ted Meekma, senior vice president and director of IMG Academies, said it was premature to discuss the possible purchase of El Conquistador.
Financial considerations
Club membership at El Conquistador is down 20 percent in the past five years, Erfert said.
Farlin said the budget has shown a loss of more than $500,000.
"There have been numerous budget proposals that show huge losses," Farlin said. "Some of these numbers are on target, but they were just displayed to sell the idea of IMG purchasing this club."
El Conquistador club member Jesse Orsini said the sale might be needed to help with the club's financial situation.
"It seems like the sale could be a good alternative to the situation we have now," Orsini said.
Farlin said that at a legal committee meeting held Oct. 21 many board members were surprised to hear that IMG's original contract with the David Leadbetter Golf Academy has a clause that gives IMG the right of first refusal in any sale of the club, Erfert said.
"There was some language in the contract that some of the board members were unaware of," Erfert said. "A licensed real estate professional and legal counsel should be dealing with a multi-million dollar contract instead of giving a company claim to this property."
But a yes-or-no authorization ballot has already been mailed to members to decide whether the sale should go through.
In an attempt to boost income, the club recently waived the $10,000 initiation fee for new members, allowing associate members to join by paying annual dues of $5,000 for a full golf membership. The result has been six new members in the last two weeks, Farlin said.
"We could get ourselves out of financial trouble by adding members and allowing organizations to use our facilities," Farlin said. "But we might not get a chance to."
The IMG offer is still on the front burner, even though the board called to review and discuss a $5 million signed letter of commitment loan from Coast Bank at a meeting on Nov. 5 that would be used to help offset expenses from the recent golf course remodeling, Farlin said.
"We have a loan with a good term that had a closing in December to help the club's financial troubles," Farlin said. "But its been pushed back to January because people on the board want to see if they can seal the IMG deal."
Membership problems
A $2.5 million renovation of the course last year failed to produce a significant increase in members, Erfert said.
"Boosting membership was the hope," Erfert said. "It was a tired course in need of renovation."
The golf course and country club had a tax assessed value of $5.46 million in 2003, according to the Manatee County Property Appraiser's office. That included $911,618 for the golf course, and close to $4.6 million for the Country Club.
IMG's offer of $6.7 million would be "a very good price for IMG," said Jay Heagerty, a commercial broker with Wagner Realty. Heagerty was involved in the sale of Palma Sola Golf Club, which was sold to Taylor Woodrow Homes for $9.5 million in July, according to the Manatee County Clerk of Court's office.
In comparison, the assessed tax value of the Palma Sola golf course, which was close to 100 acres, was almost $2.7 million in 2003, according to the property appraiser's office.
Farlin said an independent appraisal of the course did nothing to assuage his concerns for what he considers to be a low-ball offer.
In Farlin's opinion, "the 6.7 acres of land alone where the country club sits on the Sarasota Bay is worth more than $6 million."
In an IMG draft memorandum dated Oct. 4 and provided by Farlin, IMG said it plans to continue the operation of the club, including dining and golfing. Existing members would have their annual membership dues frozen for five years. Annual dues increases after five years will be limited to no more than 10 percent annually.
Tee times would be dedicated to El Conquistador members from 8 a.m. to 1 p.m. Monday through Friday, with two tee times each hour reserved for IMG guests.
"The IMG draft also states that El Conquistador indicated that the closing would be preferable by Dec. 31," Farlin said. "When you have a piece of property that is very valuable in a booming market, I just don't see why this deal needs to be pushed through at such a rapid pace."