A struggling upscale country club in Hanover County is now open to the public, but the change of course might come too late.
The Federal Club, which filed for Chapter 11 bankruptcy protection in October, opened last week to golfers who pay to play the Arnold Palmer-designed course. Greens fees are $65 in the off-season and will rise to $75 in April ($95 on the weekends).
For comparison, the Independence Club is $60 for a weekend during the off-season, and Kingsmill’s River Course is $90 during the off-season and $160 starting in April.
The Federal Club also formed a partnership with Spring Creek Golf Club in Gordonsville that allows members of either club to play either course. Like the Federal Club, Spring Creek is bentgrass, which is only used on upscale courses in Virginia.
Kinloch is also bentgrass.
The move is part of the three-year-old course’s plan to turn profitable.
President Richard Laibstain said during sworn testimony at a bankruptcy hearing Tuesday that if public play meets his expectations, the club could be breaking even by the end of the year, although that likely doesn’t take into account paying down a growing debt.
“Last week we met with our members, and we told them we had a substantial monthly deficit. The only chance we have to succeed is for them to stay on board and for us to go the semi-public route,” Laibstain said.
The members were open to the idea, Laibstain said.
The Federal Club owes the Bank of Essex more than $7.5 million and owes unsecured creditors more than $7 million. (You can read an in-depth feature on the club and its challenges in a BizSense story here. )
Laibstain said he projects the public play could bring in an additional $700,000 a year in revenue. And that extra play won’t boost costs significantly, he said, because the course needs to be maintained carefully for members anyway.
It’s unclear how much longer the club can keep paying its bills. The company might not have enough cash to last until spring, when more golfers would likely pay to play a round.
Suppliers are only delivering goods – such as fertilizer – when they are paid upon delivery.
The club is losing around $75,000 a month, according to testimony in the bankruptcy hearing. And Laibstain said under oath that the club does not have enough cash to get through the next 60 days.
The course needs a new source of funds, but efforts to find investors or financing have turned up dry. That’s partly because there are no fixed assets left to use as collateral.
Representatives from the Bank of Essex grilled Laibstain about the condition of the course and want to make sure that the Federal Club does not scrimp on course maintenance, because the golf course is their main collateral.
So far the Bank of Essex has not wanted to foreclose on the property.
Of special interest to golf nuts: Laibstain said in the hearing that golfers often say that the course is one of the nicest Arnold Palmer courses they’ve played. That’s a backhanded compliment, because most golfers aren’t particularly fond of Palmer layouts, Laibstain said. The Federal Club is involved in litigation with Arnold Palmer’s golf course design company about an outstanding balance of $600,000.
Aaron Kremer is the BizSense editor. Please send news tips to [email protected].
A struggling upscale country club in Hanover County is now open to the public, but the change of course might come too late.
The Federal Club, which filed for Chapter 11 bankruptcy protection in October, opened last week to golfers who pay to play the Arnold Palmer-designed course. Greens fees are $65 in the off-season and will rise to $75 in April ($95 on the weekends).
For comparison, the Independence Club is $60 for a weekend during the off-season, and Kingsmill’s River Course is $90 during the off-season and $160 starting in April.
The Federal Club also formed a partnership with Spring Creek Golf Club in Gordonsville that allows members of either club to play either course. Like the Federal Club, Spring Creek is bentgrass, which is only used on upscale courses in Virginia.
Kinloch is also bentgrass.
The move is part of the three-year-old course’s plan to turn profitable.
President Richard Laibstain said during sworn testimony at a bankruptcy hearing Tuesday that if public play meets his expectations, the club could be breaking even by the end of the year, although that likely doesn’t take into account paying down a growing debt.
“Last week we met with our members, and we told them we had a substantial monthly deficit. The only chance we have to succeed is for them to stay on board and for us to go the semi-public route,” Laibstain said.
The members were open to the idea, Laibstain said.
The Federal Club owes the Bank of Essex more than $7.5 million and owes unsecured creditors more than $7 million. (You can read an in-depth feature on the club and its challenges in a BizSense story here. )
Laibstain said he projects the public play could bring in an additional $700,000 a year in revenue. And that extra play won’t boost costs significantly, he said, because the course needs to be maintained carefully for members anyway.
It’s unclear how much longer the club can keep paying its bills. The company might not have enough cash to last until spring, when more golfers would likely pay to play a round.
Suppliers are only delivering goods – such as fertilizer – when they are paid upon delivery.
The club is losing around $75,000 a month, according to testimony in the bankruptcy hearing. And Laibstain said under oath that the club does not have enough cash to get through the next 60 days.
The course needs a new source of funds, but efforts to find investors or financing have turned up dry. That’s partly because there are no fixed assets left to use as collateral.
Representatives from the Bank of Essex grilled Laibstain about the condition of the course and want to make sure that the Federal Club does not scrimp on course maintenance, because the golf course is their main collateral.
So far the Bank of Essex has not wanted to foreclose on the property.
Of special interest to golf nuts: Laibstain said in the hearing that golfers often say that the course is one of the nicest Arnold Palmer courses they’ve played. That’s a backhanded compliment, because most golfers aren’t particularly fond of Palmer layouts, Laibstain said. The Federal Club is involved in litigation with Arnold Palmer’s golf course design company about an outstanding balance of $600,000.
Aaron Kremer is the BizSense editor. Please send news tips to [email protected].