Public option: Bankrupt Richmond club opens its tee sheet

        The private golf club landscape, especially in golf communities, continues to change as the pressure on clubs to pay their bills mounts.  More than 500 golf clubs closed in the U.S. the last three years, and this year is expected to bring more of the same.  Faced with bills of their own, many upper middle class golfers and families who would have thought nothing of plunking down a few thousand dollars in initiation fees just six or seven years ago, have put golf club membership at the bottom of their expenditure lists.  If they have to play golf, they will be doing so until further notice at the local daily fee track.

        Every week, these private club prospects have more and more choices as private clubs opt to open

their doors (and tee sheets) to the public rather than close those doors permanently.  One of the latest to go that route is The Federal Club in Richmond, VA, whose story of bad market timing strikes a familiar note.  It reminds me somewhat of Cobblestone Park in Blythewood, SC, the former Bobby Ginn development, which fell prey as much to bad management as to bad timing.  There, the nice golf course has gone from private to public and the uncompleted clubhouse stands out as a bleak advertisement of the community’s issues.  Just yesterday, one of our readers asked me my thoughts about a piece of property he owns at Cobblestone; he paid $120,000 for it five years ago.  He is thinking of walking away from it rather than continue to pay dues and fees.

        The three-year old Federal Club, which until its October bankruptcy filing charged member fees in the low five-figure range, now will charge green fees to all comers for as low as $65, cart included.  To throw a little bone to its current members, who of course thought they were joining a members-only group, The Federal Club has developed a reciprocal member arrangement with the nearby Spring Creek.  That is not likely to mollify most of the members.  The new public fee model, Federal Club officials hope, will help the club break even by the end of the year in the face of monthly losses of $75,000, to say nothing of starting to chip away at more than $14 million they owe creditors.

        Three local friends conceived the Federal Club 10 years ago, when golf community sales were booming along with the economy and Tiger

Woods’ on course performance.  One of the friends owned most of the land the course was built on and had the golf course management experience in the group.  He passed away in 2006, shortly after the economy and housing market began to tank and sales of the adjacent lots virtually dried up.  Nearly half of the one-acre properties remain unsold; homes average $700,000.

        Bankrupt golf clubs don’t typically emerge from debt as deep as The Federal Club’s, and the key to this one’s survival will be some forgiving, if not forgetting, creditors and a full tee sheet 10 months of the year in 2010.  That may be a tall order.  During bankruptcy proceedings last week, and after saying most golfers he knew thought the Arnold Palmer design for the Federal Club was one of The King’s best, he added it was “a back-handed compliment,” according to an account at RichmondBizSense.com, “because most golfers aren’t particularly fond of Palmer layouts.

         The Arnold Palmer Design Group is suing The Federal Club for an outstanding balance of $600,000.