5/13/2016

CountryClubMembersAreBearingtheBruntoftheGolfRecessionBloomberg

SPORTS

CountryClubMembersAreBearingthe
BruntoftheGolfRecession
TomMoroney

TMoroney
May13,20164:00AMCDT
UpdatedonMay13,201612:16PMCDT

WithcoursesclosingaroundtheU.S.,therulesarechanging
Thatisthereality,anditsbasedingoodbusinesssense
AcrosstheverdurousfairwaysoftheNewSeaburyCountryClubliesagolfersutopia,withstirringocean
viewsandospreyracingoverhead.Insidetheclubhouselurksrebellion.
MembersaresuingtheCarlIcahnownedresortonCapeCod,accusingmanagersofschemingtoraisefees
andcallahalttorefundsonmillionsininitiationpayments.Theplaintiffsarealsoangryaboutwhatthey
describeasstrongarmtacticsandcoldindifferencetoattemptstobrokercompromise.

BruceLehman
Photographer:TomMoroney/Bloomberg

Itistheunprincipledbullyingweobjectto,saidBruceLehman,aretiredadvertisingexecutivewhoison
theMembersRightsCommittee.Ifwewerejusttocave,whatstostopthemfromdoingitagainand
again?
Well,theyredoingitaroundthecountry.Inclubslargeandsmall,therulesofbelongingareinupheaval
forthedimpledballset.ThepopularityoftheMastersandothertourneysnotwithstanding,coursesare
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closingattherateof150ayear.Thenumberofduffersisdownto25millionfrom30millionadecadeago.
Golfisjustnothot,especiallysincetheapparentendoftheTigerWoodsglorydays,andtheoldclubmodel
doesntworksowellanymore.
Withallrespect,everyonewhofeelsthedealischangingonthem,that,infact,istherealityandits
basedingoodbusinesssense,saidHenryDeLozier,partnerwithGlobalGolfAdvisorsinPhoenix.

SuingTrump
PresumptiveRepublicanpresidentialnomineeDonaldTrump,hedgefundmanagerJohnPaulsonand
Chinesedevelopersareamongthosewhovebeenbuyingupailingorabandonedclubs,inmanycases
changingfeestructurestolurenewmembers.Theireffortshavelandedthemintheroughonmorethana
fewoccasionswithadisgruntledoldguard.AtTrumpNationalGolfClubinJupiter,Florida,forexample,
golfershavesued,sayingmembershipswerecanceledanddepositsnotreturnedasrequiredwhenfeerules
wereadjusted.
DeLoziersaidtherecessionarycyclethatbeganin2008exposedtwoflaws:refundabilityofinitiationfees
andcapsonthenumberofmembers.Bothusedtobesellingpoints,whentherewasastreamofnewcomers
eagertotaketheplacesofthedeparted.Todaythatsoftennotthecase.
IcahnboughtNewSeabury,whichisinthetownofMashpee,in1998afteritsownerswentbankrupt.
HunterGary,aseniorvicepresidentatIcahnEnterprises,declinedtocomment.Phonemessagesleftfor
Icahnwerentreturned.

GolfersBruceLehman,left,andDonMonackwatchasDave
TacelliputtsattheOceancourse.

SecondaryHomes
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Inacourtfiling,hiscompany,NewSeaburyProperties,calledthelawsuitfrivolousandsaidmany
membershaveexpressednoconcernwithmanagementsplans,andinfacthaveadvisedtheclubthey
prefertheproposedchanges.
ThebillionairesNewSeaburyholdingsincludetwocourses,DunesandOcean,a42,000squarefoot
clubhouse,thePopponessetInn,abeachclub,afitnesscenterandatennisfacility.Theamenitiesare
surroundedby2,000privatelyownedtownhousesandsinglefamilyhomes,theoldestdatingtothe1960s.
Whenthesecondaryhomemarketbegantoheatupafterthefinancialcrisis,moreresidencesbeganto
appear,andconstructionisnowunderwayonseveralnearthecourses.Someoftheprotestinggolfersare
convincedthemembershipshakeupisconnectedtothebuildingboom.Theyfigurethecompanywantsto
squeezemoreprofitsoutofthegolfbusinessandselltheresortwithapricereflectinghigherrevenue.

FitnessCenterLeverage?
Thisisnotaboutrunningacountryclub,saidDaveTacelli,whoisinthesemiconductorbusinessandhas
beenamembersince2013.Thisisarealestateplay.
Icahnsrepresentativesrejectedthetheoryinalettertomembers,sayingtheresortisntontheblock.Club
managershavesaidtheyrecommittedtoprovidinganextraordinaryexperienceandincredibleamenities.
Plansareunderwayforasnazzynewfitnesscenterwithexecutivelockerrooms,asaunaandmassage
therapists.Opposinggolfersclaimtheclubisusingthatasleverageforthenewfeestructurebecause
memberswhodontacceptitwouldbebarredfromthefacility.
Theproposedchangesincludereducingthenumberofmembershipcategoriestosixfrom33.InaMarch17
letterannouncingthenewsystem,managerssaidthecaponthenumberofgolfmemberswouldriseto900
from690,butinanothermissiveonApril15theysaiditwillremainatthelowerlevel.

NoRefunds
ForCassCosta,arealestateagentandagolfmemberfor45years,thesocalledstreamliningwouldbe
costly.Ifshestayedinhercurrentcategory,herannualdueswouldgoupto$8,266from$6,681.(Thejudge
inthelawsuitruledTuesdaythatNewSeaburycantimposetheneworderuntilafterahearinginthecase
thatssetforMay27.)
Costasaidshewasoffendedbythewayshewastoldofwhatwascomingbyletter.Shesaidsheand
manyothersleftameetingwithclubmanagersaboutaweeklaterperplexed.Nobodywouldanswerour
questions,shesaid.TheattitudesurprisedhersinceIcahntookgreatpainstoreviveNewSeabury,which
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wasindisrepair.Hesavedtheplacefromgoingdownthedrain.
RalphLepore,anattorney,paid$75,000in2008foraplatinummembership,thenthetopofthescale.His
yearlyduesare$14,100.Underthenewscheme,Leporesaidheandotherslikehimwouldfacetough
choices:Movingtoacategorycalleddiamondwouldmeanlosingtheirinitiationfeesrefundability,
somethingnowguaranteedataproratedsumfor20years.Tokeeptherefundperk,Leporewouldhaveto
pay$2,500moreannuallyandgiveupaccesstothenewfitnessfacilityapropositionheslamsas
coercion.
ThelawsuitfiledonApril8isarequesttoreopenthebankruptcyagreementthatmadetheIcahnsale
possible.Therearejustfourplaintiffs,buttheangrygolferssaidthat270peopleattendedameetingabout
thesuitatChristtheKingChurchinMashpeelastweekend.
Tacelli,agolfmemberforthreeyears,saidhebelievesIcahnknowsnothingaboutthecontroversy,whichis
whyhewouldlikeameeting.
Idsay,Telluswhatyouretryingtodo.Wereallbusinessguys,wecanworkthisout.
Beforeit'shere,it'sontheBloombergTerminal.

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