A report in the Roanoke Times questions whether the region can support three full-service clubs. Hidden Valley Country Club in Salem, Va., Hunting Valley Country Club in Roanoke, Va., and Roanoke (Va.) Country Club have recently relied on members stepping up to buy the clubs’ debt, provide loans, or pay special assessments.
A February letter to members of Hidden Valley Country Club in Salem, Va., described a “cash crisis” attributed to declining membership at the private club—one of three full-service country clubs in the Roanoke Valley in southwest Virginia, the Roanoke (Va.) Times reported.
“Faced with the prospect of shutting down or substantially curtailing operations, we concluded that the Club’s only true option is to obtain the funds from its nearly exclusive source of revenue as a private country club—its membership,” the letter reported.
Less than a month later, General Manager Jim Lawrence sounded upbeat. It looked like the club was going to raise from members the money necessary to make it through the year, and beyond. “We’re doing things to stay alive and current,” Lawrence said. “We’re doing things to bring people back in the mix.”
The February letter reported that member revenues declined by $334,000 in 2016, when dues revenues shrank because of membership resignations and downgrades. And it alerted remaining members of a special charge over and above monthly dues that would show up on their March bill to help fund Hidden Valley, the Times reported.
Separately, a few club members launched an effort to recruit allies to pony up personal money, with a fundraising goal of about $3 million, to pay off the club’s debt of about $2.5 million and add some reserve funds in exchange for an ownership stake in the Hidden Valley property, the Times reported.
Roanoke (Va.) Country Club relied on a similar equity buyout in 2015 to bolster club efforts to remain afloat by shedding debt. Meanwhile, at the 18-hole golf course at Hunting Hills Country Club in Roanoke, participating residents are in the midst of raising money to try to ensure that the golf course will remain open space and not sprout condos or patio homes instead, the Times reported.
The question has been asked before: Can the Roanoke Valley support three full-service private country clubs during an era when public options for recreation, dining and socializing are plentiful and don’t require payment of monthly dues, initiation fees and the like? George Vogel III, 41, president of the board of directors at Roanoke Country Club, believes the answer is probably “no,” the Times reported.
“I think we’re completely over-saturated with clubs,” Vogel said. “I think the Roanoke area can support one to two clubs. But two might be pushing it. All of us are seeking the same families, the same golfers, the same tennis players.”
Membership numbers at the Roanoke clubs have been dropping for some time. That trend has continued in recent years, although Roanoke Country Club said it has added members during the past year. In August 2015, Roanoke Country Club reported it had about 448 members, Hidden Valley reported having about 535 members and Hunting Hills said it had about 465. Recently, the clubs reported the following tallies: Roanoke Country Club, 469; Hidden Valley, about 435; and, Hunting Hills, about 460, the Times reported.
Businesses that once paid for executives to be club members as an investment in networking no longer do so as a result of changes in tax laws. And while most clubs have become more diverse, they can still be judged by preconception as stuffy and elitist, the Times reported.
Additionally, some observers report that the millennial generation’s interest in golf is sub-par. Generally, when clubs offer varied categories of membership, full-fledged golf memberships cost the most and help pay the freight for other club operations, the Times reported.
“I think golf is still in the downswing,” Vogel said. “Tennis seems to be doing well. For one thing, tennis takes less time than golf.”
Several years ago, the region’s three clubs started to emphasize family-friendly activities, including such events as fireworks shows and Easter egg hunts, plus weekend evening activities for children that allow their parents to dine as a couple or with friends.
Hidden Valley added a fitness room a couple of years ago, joining another trend in which clubs emphasize fitness as one way to attract and keep members. Hidden Valley has offered Family Meals to Go on Wednesday evenings, and Hunting Hills and Roanoke Country Club offer a similar takeout option for busy families. Hidden Valley hired a new chef in October and since then has experienced a 30% increase in member participation in the club’s food and beverage operation, Lawrence said.
Yet Hidden Valley has struggled to make ends meet. The February letter to members reported an “operating cash shortage in excess of $400,000, which has essentially depleted all of our operating cash.” The operating assessments identified in the letter varied according to membership category. A family with a full golf membership faced a charge of $1,525, a sum which Lawrence acknowledged caused some members to balk and bolt, the Times reported.
Hidden Valley reports that its debt totals about $2.5 million, a tally that includes a loan with HomeTown Bank and loans that have been made by members. Longtime club members Nancy and Barry Snodgrass have helped organize the equity buyout campaign. Nancy Snodgrass, 65, confirmed that the goal is to raise $3 million, a sum that would pay off the debt and establish a capital reserve fund of $400,000 to $500,000. She said the goal is to sell 120 equity units at $25,000 each. The total assessed value of the Hidden Valley property, including land and improvements, is about $4.52 million, the Times reported.
As of March 20, 57 people had committed to be involved and had pledged a total of $1.77 million, Snodgrass said. The campaign to date has focused on club members, but Snodgrass acknowledged that residential neighbors of the club who are not members might want to invest in an effort to protect the golf course from development, the Times reported.
Numbers crunched by Lawrence for 2016 suggest Hidden Valley could have enjoyed a net operating profit for the year of $113,870 without debt service costs of $363,725 and a one-time payment of $90,000 to a consulting group, the Times reported.
“It took [Roanoke Country Club] 18 months to accomplish their equity buyout, so we know that this is a minimum eight-to-12-month process, a process which includes drafting legal documents in addition to the campaign for funds,” she said.
In 2004, Hunting Hills received an injection of cash when Hunting Hills Golf LLC, established by Old Heritage Corp., bought the club’s golf course for $1.9 million and leased it back to the club for 30 years. The transaction also provided a loan to help the club shed bank debt and tackle capital improvements, the Times reported.
Developers have long coveted the acreage that is part of the golf course and have frequently contacted Old Heritage to inquire about buying it. But the corporation has not been willing to sell. This fall, a group of residents, including people who are members of the club and people who are not, formed Hunting Hills Community Real Estate LLC to begin raising money to buy back the golf course from Old Heritage Corp. and to pay off debt lingering from the 2004 loan from Old Heritage, the Times reported.
The three clubs all describe similar goals for 2017: boosting membership and revenues and achieving the sort of financial stability that will allow the clubs to invest in capital improvements. And all three hope to continue to recruit young professionals, the Times reported.
Looking forward, Vogel expressed optimism about Roanoke County Club, where the 2015 equity buyout helped turn things around, he said. “I strongly believe the future prospects of RCC are as strong as they have been since 1999,” he said, citing a year when the club had 900 members. “We have reversed the trend of declining membership. We are debt-free.”
Since 2004, the three clubs have survived because members have stepped up to buy the clubs’ debt or provide loans or, in some cases, pay special assessments—or, in the case of Hunting Hills, because of a commitment to the club by one of its founders, the Times reported.
Tell Us What You Think!
You must be logged in to post a comment.