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Thursday, September 29, 2011

Are Richmond's Dominion golf club members getting the shaft (super stiff)?

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        Let us say I ran a private golf club, and to get you to join, I promised you, among other things, that I would refund most of your initiation fee within 10 years (in other words, a “deposit”).  That amounts to more than $10 million to you and your fellow members.  One part of my family organization owns the land on which the club sits.  Another part owns the golf club itself. I pay rent from one of my pockets, the club’s, to the other pocket, the landlord’s.  After operating this way for years, the economy

Club owners used member dues to pay themselves rent, then declared bankruptcy when the rent wasn't enough.

hits a rough patch and I declare bankruptcy, claiming I am losing about $450,000 annually.  But I insist on retaining ownership of the club, and here is how we will fix the situation:  I will return to you and 123 of your fellow members 11 cents for every dollar of the $1.7 million you all paid me.  And I promise to lower the annual rent I charge myself -– and which you finance through your club dues –- from $1.1 million to about $750,000.  (Do the simple math, and you will find the difference equals the annual budget shortfall.)  As for the hundreds of other members owed about $10 million in refunds, they will have to wait 12 years -- you should live so long -- to see what the club fetches as a sale price. And if the club cannot be sold, presumably because my price can’t be met, then a “fictitious sale,” according to a local newspaper, will be held to fix a price for the purpose of paying back the members. Don’t worry, that price will be fair market value. 

        Trust me.

        Now if you were a member of this club, which happens to be Dominion Club in Richmond, VA’s Wyndham community, and the owners, who happen to be HHHunt and their coterie of other entities, offered you this deal, would you:

  1. Take it
  2. Cry
  3. Grab a pitchfork and lantern
  4. Wonder what kind of system permits such legal scams?

        According to Richmond local media outlet BizSense, the club’s creditors -– its members –- argued during bankruptcy proceedings that the rental fees paid by the club to Loch Levan, the Hunt entity that owns the land on which the club sits, were exorbitant and caused the bankruptcy.  The court, itself not wishing to step into a stinking pile of nonsense, sent the parties into negotiations.

        “I think this is a very well negotiated and good deal for everyone,” a lawyer for the club was quoted in BizSense. “Assuming this gets through, it will be a strong reorganized club that can continue into the future.”

         Trust him.
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Larry Gavrich

This blog was conceived and is published by me, Larry Gavrich, a former corporate communications executive who founded HomeOnTheCourse, LLC, in 2005.  Our firm advises baby boomers and others seeking a lifestyle in which golf is a major component.  My wife Connie and I own a home in Connecticut (not on a golf course) and a condo at Pawleys Plantation in Pawleys Island, SC, on a Jack Nicklaus layout.  We began our search for our home on the course more than 15 years ago, and the challenges of the search inspired me to research golf communities and write objective reviews of them.

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