The Rhode Island club is now a member-owned, for-profit property that is trying to create “a desirable club at the affordable end of the scale” through sound business practices
After the 60-year-old Valley Country Club, a club with non-profit status in Warwick, R.I., filed for bankruptcy in March 2010, a group of members and business partners began to fashion a new business model to try to save the club and take it in a new direction. A recent report in the Jamestown (R.I.) Press outlined the efforts of the new investors in the club to implement an “innovative member-owned, for-profit business model that puts business professionals in critical decision-making positions and ultimately results in a private club that is far more affordable than its exclusive counterparts.”
Five primary investors supplied $2 million for the purchase of the club and the payment of back taxes, the report said. To satisfy an outstanding note with Centerville Bank, 50 additional investors, all members of the club, were encouraged to purchase “incremental shares,” said one of the primary investors, Tom Markarian of Jamestown, R.I.
Prior to the purchase, Markanian explained, the club was carrying a $5 million debt that generated a $35,000-a-month mortgage payment. The debt had been incurred over a 10-year period as the result of funding a $3 million clubhouse renovation and $2 million in improvements to the golf course.
Declining membership then made it impossible for dues to pay the bills, leading the club to seek bankruptcy court protection. Centerville Bank, which held the note, was preparing to foreclose on the property when the investors began to take steps to save the club.
Negotiations with the bank, based on independent appraisals, reduced the bank debt to $3.3 million. That savings, coupled with a new mortgage from Washington Trust and the money from the 50 additional investor-owners, resulted in a far more manageable debt service, Markarian said; the club now pays only $7,500 a month in mortgage payments.
The new partners described the club as a long-term investment with the goal of both growing the membership and making Victory a “go-to destination for golf in the state.”
The club currently has 196 members and is trying to add new ones through a Young Executives Program that makes membership more affordable for those under 35 years old. The club is also preparing to launch a grandparents and young children’s program, to try to bring members’ grandchildren into the golf experience.
Valley CC does not charge an initiation fee. Applications are made to the club for membership but new members are not required to gain sponsorship of current members. Golf lessons are offered to nonmembers as well as members.
The club’s dues of $4,500 are nearly 25 percent less than comparable clubs in the area that are managed by a member-only Board of Directors, Markarian said. A primary goal of the club, he added, is to offer a more reasonable pricing structure that can help to not only promote club membership but the game of golf in general.
Another investor, Dr. David Siwicki, described the goal as creating a “desirable club at the affordable end of the scale.”
Valley CC members don’t face regular assessments for maintenance projects, Markarian noted, reflecting his belief that assessments are the demise of private clubs, because they chip away at members’ ability to maintain their memberships.
A better approach, he said, is a for-profit business model that puts good business practices at the center of the institution, which in turn promotes sound spending policies and helps to mitigate costs.
And through this approach, the new investors of Valley CC are in it for the long haul, Markarian made clear.
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