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News: Golf Course - A Fairway to Heaven

Golf Course - A Fairway to Heaven
26 Sep 2022 - Alan Burge

Many of you may have already heard that the owner of the Golf course, GNK, wishes to sell our course at Condado de Alhama.

A team of interested people have formed a group called 'A Fairway to Heaven' to look at initial options to purchase the course.

Below is a communication from them. You should ideally click the link and fill in the form at the bottom of this page. If you have any further questions you can make contact directly with the group by emailing fairway.to.heaven@condadoalhama.com


Dear Friends

As many of you will now know the course is officially up for sale and if a buyer is not found quickly then I believe it is GNK’s intention to close the course. Having had a couple of face to face meeting with the owner we are convinced he will not change his mind and the course will close if a new owner is not forthcoming.

We have the choice in whether we submit a bid or not. This decision would be in two parts; firstly can we raise the required amount of capital to purchase the course, and secondly do we have enough support / a strong enough business case to make the course sustainable in the short/medium term.

So we have two key questions based on our formula.

Are you interested in buying a share/s in the golf course?

Will you take up a membership to play the course?

There is no point in making public in this kind of forum what the actual purchase price of the course is intimated to be. There is still much negotiating to be done, there will be a large number of associated costs (taxes, solicitors, due diligence and searches etc) to purchasing the course and we are currently working on the costings of getting the course back to the standard we believe it must be. This includes due diligence on the operating costs to us ongoing. So to intimate a number would be wrong at this point.

Only when we understand these component parts more fully will we be able to make some commercial decisions. However we have prudent ball park figures that we will use until the more detailed numbers can be established.

Over the weekend we had Darren (UK Head Greenkeeper) walk the course on our behalf to assess how much work is needed to get the course back into a good condition. The key parts being fairways and getting the finer grasses back into the the greens. He will professionally assess and report back to us in the next few days, however his verbal reflection on the phone was “not as much work to do as I’d anticipated” so that is a positive.

To be clear and transparent the current owner has given us until the end of this month to make a bid without the course going on to the open market. However he has been clear that at the moment it is not viable for him to keep open and his focus is going to be sharply on his other venues. It is impossible for us to say whether their will be interest from other parties or not. Industry research has flagged up that their is a significant amount of golf courses for sale at the moment in Spain, many with better additional features that CDA (Clubhouses, changing facilities etc). So it is at his discretion as to how long he is prepared to fund the current losses at CDA before finally closing the doors.

To explain to those of you who may not know or truly understand the golfing model in Spain we will endeavour to outline why we think we could make CDA viable when GNK are unable to.

A golf course can facilitate up to 50,000 a year. This is about the maximum golf that you would be able to play, however an industry average sits around 35,000 a year. In the UK and across Europe most clubs build a membership that belong to the club and the members pay a variety of methods to belong to the club…and play golf. In Spain a fair percentage of clubs operate without strong memberships and they rely on visitor golf. They do this because the yield per round is significantly higher. EG a visitor may pay €60 for a game, whereas a member who plays once a week and pays €1,000 for membership is actually only paying €20 a round. Over the last ten years or so the Spanish golf tourist market has been hit hard and instead of altering the model slightly and accepting they may need to change their outlook, they have simply increased the cost per round to make up the shortfall. In turn this has reduced footfall further…essentially an ever decreasing circle.

As you will read further down we believe if we gain the support of a significant amount of the owners & residents as well as the less frequent owners then we can create a strong membership base that ownership can be built upon.

Gaining control of the course and making it a true feature of the resort will certainly create an uplift over time and add to the value of properties. No one is saying a well loved and busy course is going to add value overnight, but we are pretty certain sales of properties will be easier if its on a renowned golf resort in the medium term.

We have sought guidance on the potential impact of the course closing and how this may affect the property prices on CDA. As you will be aware there is no upside whatsoever on prices if the course was to close…so we urge you all to give serious consideration to the impact of any apathy amongst golfing and non golfing owners. Our guidance came from Rupert who was able to offer a professional view of how negatively he believes property prices will be impacted, in the region of 10-25% for penthouses and 5-10% for the garden properties is his view.

So back to our main questions for owners and golfers alike; we have set value of €2,000 a single share in the Course Ownership. We would need to generate interest of over 1,000 shares minimum to allow us to realistically start negotiations. There will be no restriction to the number of shares individuals can purchase.

If we reach the desired number we will then set out the formalities of creating a board of directors (or the Spanish equivalent) who would then lead the operating model of the club. Again we are taking advice on this and will be transparent before anyone is asked to invest formally.

Q1; Please can you indicate on the questionnaire the level of investment you would potentially be considering.

Membership

We will look to operate a two tired membership scheme where we have and an “inclusive membership” and a points based membership*. Everyone will be equal, however their method of how they buy their golf will be different because of the time they are able to spend on the resort may be very different.

Inclusive membership is where we ask for a yearly subscription and this allows essentially unlimited golf in line with the clubs terms and conditions

Points based* membership scheme will suit residents/owners who are only able to play less frequently. This will allow membership to be through buying a number of points that can be exchanged to play the course.

We are also debating the cost of membership, in both costs for shareholders and costs for non shareholders. We would like to create a model where there is a significant reduction in fees ongoing to those who invest and essentially are shareholders in the course.

EG If “inclusive membership” yearly fee’s were circa €1,800 to non shareholders, then we would envisage it being in the region of €1,500 a year to shareholders

We are also of the view that if a non golfer resident was to invest in the ownership of the course, any discounts on golf could be extended to visitors to their apartments etc.

It is vital we work around a business a prudent model of 35,000 rounds of golf, broken down into the following modelling.

A. 18,000 inclusive member rounds

B. 7,000 points based member rounds

C. 10,000 green fee visitor rounds

Our belief is based around attracting a more membership based golf club model than is normal in Spain, as explained. Ideally more club based as in the UK/Europe models supplemented with green fees. The course will be able to cater for as many as 40-45,000 plus rounds…so there is capacity to expand, however we are looking at being prudent initially.

Q2. If you are not keen enough a player for the inclusive membership or simply you are not on site enough to warrant an inclusive membership than we would urge you to consider the points based membership that buys you a discounted amount of golf, depending on your needs.

Could you indicate if you would take up the “inclusive membership” or the level of points you would seriously consider buying.

A. Inclusive membership

Or

B. Points based membership (if points indicate what initial level please, Bronze, Silver or Gold)

Bronze @ €400

Silver @€600

Gold. @€800

*The points scheme simplified, is you will purchase points that will give you approximately the amount of golf you will need over 12 months. Should you not use your points in the 12 months they will carry over as long as you buy the minimum amount of points the following 12 months.

Points Membership example; 200 points for €400 sets the points at €2 a point. If a golf green fee is approximately €50 it would mean points members would say pay 15 points, therefore only equating to €30 for a round. These are just potential examples…and very much subject to change, but show an example of the tiering of prices and discounts etc.

We fully appreciate it would be cleaner if we had exact numbers, but until we can gauge if we can raise the capital needed, and then gauge how many golfers are willing to buy into membership it is a subjective scenario.

So simply put do you want to invest in the course and see the main feature of the resort become a true positive for us all? Do you want to take up some form of membership to help keep the course sustainable?

Lastly please understand we want to build a positive community around potentially securing the course ownership and we are doing this work in our own time, so if you have nothing constructive to add please keep your views off the forum. With love, we simply do not have the time or the inclination to respond to every ‘not so positive’ post.

Phil Grice fairway.to.heaven@condadoalhama.com

LINK TO FORM

https://docs.google.com/forms/d/e/1FAIpQLSdJFnRXdtM1Qr5iMpf_1zuqi-nIXtY3S4MbLVGFrzonpvdMmQ/viewform

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