September 30, 2014
INTRODUCTIONS
• Peter Nanula
• Chairman, Concert Golf Partners
• Chris Watkins
• General Manager, Gaillardia Country Club
• Nate Kalb
• General Manager, Heathrow Country Club
• General Manager, Legacy Club at Alaqua Lakes
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ABOUT US
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Arnold Palmer Golf founders
35+ clubs since 1993 (including both Palmer and Concert Golf clubs)
CGP is a boutique owner-operator
• Premier private clubs only
• Major metro areas
• Large-scale clubs
We own and operate 7 clubs today:
• Heathrow CC – Orlando, FL
• Legacy Club – Orlando, FL
• Carrollwood CC – Tampa, FL
• Golf Club of Amelia Island – Jacksonville, FL
• CC Woodmore – Washington, DC
• Gaillardia CC – Oklahoma City, OK
• MacGregor Downs CC – Raleigh, NC
More clubs soon to join
We have a dedicated $50m fund
• Solely for investing in country clubs
Freestone Capital is a $3b asset management firm
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OUR TEAM
• Peter Nanula – Chairman
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Managing Director, Freestone Capital
CEO, Arnold Palmer Golf
Principal, Warburg Pincus
AB & JD, Harvard University
• Susan Dunnavant – Chief Operating Officer
• Director, Valley Crest Golf Management
• VP, Arnold Palmer Golf
• BA, Florida Atlantic
• Aaron Straub – Director of Operations
• General Manager, Shula’s Restaurants
• F&B Director, Westin
• Sommelier
• Michael Padden – Director of Membership Sales
• President, Three Oaks Hospitality
• Membership sales at Kiawah Island; La Quinta; The Woodlands
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WHAT MAKES US DIFFERENT
• Boutique private club operator
• Select few clubs we tend to carefully
• Well-capitalized
• All-cash – no debt
• Important for clubs over the long term
• Continuous capital improvements
• Immediate capital projects funded up-front
• Monthly reserve funding
• Equal focus on golf, dining and other amenities
• Total member experience
• Passion for service
• We listen to our Members
• “Stewards for your Club”
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HOW WE GOT HERE
• Sep 2013: Acquired Textron Note, matured in 2010
• 20+ year relationship with Textron
• Textron was exiting the golf lending business
• They had been promised re-financings for 3+ years
• Oct-Dec 2013: Defaults and Concessions
• Numerous loan defaults
• Surprising revelations
• Offered concessions and more time
• Jan-Feb 2014: Foreclosure Proceedings
• We finally had no choice – started foreclosure
• Borrower filed Chapter 11 bankruptcy
• March 2014-Now: The Future of Hawthorns
• Meetings with Creditors Committee and Borrower
• Competing plans for the Club’s future
We are prepared to be part of the long-term solution.
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WHY WE LIKE HAWTHORNS G&CC
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Large, supportive family membership
Top-notch golf course
Full amenities
Affluent part of the Indy market
Attractive Hamilton Proper residential community
Thoughtful, active committee members
Opportunity to make improvements and grow the Club
for the long term
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OUR PROPOSAL
Transaction
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All mortgage debt paid off.
Membership deposit refunds:
• New, reliable payout
structure.
Prepaids:
• Honor all pre-paid F&B
minimums.
• Honor all pre-paid dues;
sponsor member program.
Capital improvements:
• Immediate $1.3m+ estimated
projects – golf course and
facilities.
• Reserve funded monthly.
Working capital funded up front.
• Estimated $200-400k.
Covenants
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Club remains private.
No assessments – ever.
1-year dues freeze.
Reciprocity with our other clubs –
and access to 500+.
Advisory Board of members.
Members have first opportunity in
any future sale.
Inheritability continues.
Legacy credits guaranteed.
Membership transfers with your
home.
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MEMBERSHIP DEPOSITS
Current Status
Our Plan
• ~$13m total refunds owed.
• However, Concert Golf wants
• Resigned list ~$4.5m of this.
to honor the members’
• Club has not been paying
investments in the Club.
refunds according to bylaws. • We will exchange old notes
• Bankruptcy and foreclosure
for new refund rights:
typically wipe out these
• 4:1 payout at 80% of
liabilities.
then-current initiation
• Hawthorns is worth ~$5m
fees.
and HGCC loan amount is
• 10:1 payout for resigned
roughly $5m.
members, at 40% of
• There is nothing left of the
then-current initiation
current assets to pay
fees.
refunds.
• Additional payment to
>$16k initiation fee
payors.
• Transparent wait list.
• Realistic payouts to
members 5-10x annually.
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WHY DEBT-FREE?
• Concert Golf prefers to operate private clubs on a debtfree basis.
• Debt service payments can starve clubs of needed
capital improvement funding.
• We fund a large capital improvement reserve at closing,
in a local Indy bank account, for immediate improvement
projects.
• We also fund a capital improvement reserve monthly,
rain or shine, with ~3% of gross revenues.
• When the economy softens, we always continue to fund
the capex reserve.
• Debt-laden clubs are forced to use all their cash to pay the
bank, deferring maintenance and planned improvements.
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CAPITAL PROJECTS
Preliminary scope based on 70-page inspection report and Member input.
Golf Course
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Cart path upgrades
Maintenance equipment
Maintenance building
Possible croquet, other
Clubhouse
• Roof fixes
• HVAC and water heater
replacement
• Kitchen equipment
• Interior and exterior refresh
• Carpet and paint
• Ceiling tiles
• Furnishings
• Players Lounge
• Ladies locker room
• Parking lot and sidewalk
repairs
Immediate Projects Estimated at $1.3m+
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BENEFITS TO HG&CC MEMBERS
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Long-term financial stability – no debt
Capital improvements fully funded up front
Experienced, quality club operator
Strong covenants to ensure Club preservation
No assessments ever
Reliable refund rights
Affordable dues and minimums
• Frozen at current rates for a year
• Home values protected
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WE HAVE DONE THIS BEFORE
CC Woodmore – Before
• Arnold Palmer Signature
Design outside Wash DC
• #7 ranked course in DC
area
• Storied history since 1981
• $600/month dues
• Debt + Refunds + Capital
Projects led to
assessments
• Each assessment led to
attrition
• 350->300 Golf members
CC Woodmore – After
• Concert paid off all debt
• Invested $1m+ in Capital
Projects
• More underway…
• Course conditions
improved
• Food quality improved
• +95 new members
• $500k new banquets
booked into 2014
• Happy Board, members
Dec 2012: Club Transitions to Concert Golf.
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WHAT CHANGES?
No Change
• Identity and culture stay the
same.
• Membership categories stay
mostly the same.
• Dues and minimums stay
the same.
• Bylaws mostly the same.
• Activities and traditions
remain.
• Staff mostly the same:
• 90-day evaluation
period.
• General Manager is
point of contact.
Change
• Years of capital projects
accelerated.
• New members added
gradually.
• Course conditions
improve.
• Dining experience
improves.
• Debt-free = Financial
stability.
• No assessments ever.
• Less Board / committee
time.
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HOW CAN CONCERT GOLF DO BETTER?
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This is our only business.
We have operated ~35 clubs.
Best practices.
Streamlined governance.
Purchasing power.
Recruiting magnet.
Laser focus on member satisfaction.
Operating discipline – no other agendas.
Unlimited capital.
Just like your favorite restaurants and hotels.
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ADVISORY BOARD
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Advisory Board is critical liaison with Members.
Small group representative of Member groups.
Capital Projects prioritized by Members.
Accountability via your General Manager.
Members keep all activities and traditions.
– We like to add new events and programs for a
vibrant club.
Members have a voice in the Club’s direction.
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WHAT DO OUR MEMBERS SAY?
“Now we just pay our dues and enjoy the Club. The course is better. The
improvements are happening. And it’s all someone else’s problem.
What’s not to like?”
• Former President, Woodmore
“Your personnel are first class. You have made changes that are very
noticeable and appreciated. And the projects you have planned are the
things we (members) have had on our “wish list” for quite some time.”
• Past Board Member, Heathrow
“I am a HUGE supporter of you and your team…the Club has never been
better!”
• Past Board Member, Golf Club of Amelia Island
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QUESTIONS
Concert Golf is a “private equity fund”
False.
Concert Golf is one of the leading private club owneroperators in the US, with over 750 employees at 7 upscale
private clubs across the East and Midwest. Our funding
comes from more than 60 wealthy families who are long-term
investors in timber, real estate and similar properties.
Concert Golf is a well-capitalized hospitality company that
can provide a secure long-term future for the Hawthorns.
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QUESTIONS
Concert Golf will sell the Hawthorns in 2-3 years
False.
In fact, Concert Golf has never sold a single one of its clubs.
Ever.
Concert Golf’s investors are wealthy families, like many
Hawthorns members, who invest for the long-term. There are no
timelines or plans to ever sell the Hawthorns. Concert Golf has
committed to long-term ownership at the Hawthorns, and has also
committed that if a change in ownership ever is contemplated, the
members will have the right of first discussion to own the club.
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QUESTIONS
Concert Golf will fire lots of our favorite employees
False.
In fact, Concert Golf has very low turnover at our clubs. All
Hawthorns staff will be reviewed during a normal probationary
period.
Members should be aware that the current owners of Hawthorns
did not give raises to the club staff for 5 straight years from
2009-2013. Not a single raise for a single employee. Concert
Golf has provided its staffs with raises every year.
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QUESTIONS
Will the Club Still Face Continuing Litigation and Bank
Defaults?
No.
If Concert Golf becomes the owner and operator of the Hawthorns,
the foreclosure litigation and the Chapter 11 bankruptcy of the
current club owner will terminate. Concert Golf is not a party to
any litigation at any of its clubs nationally.
More importantly, Concert Golf does not use any debt to purchase
its clubs, so there will be no bank involved. And therefore zero risk
of bank defaults, foreclosures, or the uncertainty that has
surrounded the Hawthorns for the past several years.
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QUESTIONS
Will the Golf Shop Be Able to Purchase Inventory?
Yes.
Concert Golf is a “Platinum” or “Preferred” customer at all of
its clubs nationally, due to prompt payment and large multiclub purchases from the top brands of golf equipment, golf
balls and golf apparel. We receive exclusive products at our
clubs, and we often receive the best products in advance of
when other clubs get their merchandise.
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QUESTIONS
Will Member Refunds Depend on How Much Cash the
Club Has Available?
No. Unlike past promises of refunds, which have not been
paid due to cash problems at the club, Concert Golf has
committed to strict adherence to the 4:1 and 10:1 payout ratio
– regardless of the cash resources of the club. Concert Golf
views these commitments to members who paid large
initiation fees with the promise of future refunds as a
contractual obligation rather than an optional payment, and
we have committed in writing to a transparent, reliable
process for making these payments to note holders.
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IN SUMMARY
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No more debt
No dues increases for a year
No assessments – ever
No change in Club identity
Reliable refund rights
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Years of capital projects accelerated – and funded up front
Back office professionally managed
Gradual member growth
Improved course conditions and dining
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IN SUMMARY
QUESTIONS?
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