A recent ad in Golf Digest featured one of the picturesque yet treacherous oceanside greens at Pebble Beach, where some of the PGA Tour’s best players are battling the elements and each other this weekend.
The full-page promotion, from tournament sponsor AT&T, asked, “Ever wonder how something so beautiful can be so cruel?”
The 200-plus members of The Golf Club at Briar’s Creek on Johns Island might be pondering that same question.
The elite, private enclave off River Road charges $100,000-plus initiation fees and steep monthly dues. Its membership roll has included the likes of General Electric CEO Jeff Immelt and retired Miami Dolphins quarterback and NFL Hall of Famer Dan Marino.
But big names and big fees weren’t enough to sustain a business model derailed by the recession. Briar’s Creek was forced into bankruptcy last week, taking the financial equivalent of a mulligan.
Founding member Bob McNair preferred to call the filing a “reset.” The billionaire owner of the NFL’s Houston Texans, who owns a home on nearby Kiawah Island, is now proposing to buy the club he helped start about 15 years ago and start over with a clean slate.
The collapse at Briar’s Creek highlights the hazardous conditions that continue to weigh on the fragmented and overbuilt golf industry, which can no longer rely on an aging and injured Tiger Woods to recruit new customers. Scores of courses of all stripes have gone to seed. Others, like RiverTowne and Snee Farm locally, have merged to cut operating expenses.
At the upper crust of the spectrum is Doonbeg, which has a direct tie-in to the Lowcountry. The exclusive golf club and resort, built in western Ireland by the former developers of Kiawah, was forced into receivership last year, awash in $50 million in debt. Donald Trump’s organization ended up buying it for about $20.5 million.
Briar’s Creek was supposed to be insulated from such financial turmoil. The mood on Johns Island was jubilant some 15 years ago, when some of the 20 founding members gathered on the site to break ground on the new club with renowned golf course architect Rees Jones.
Featuring expanses of marsh, sweeping water views and more than 1,300 live oaks, Briar’s Creek was etched out of a nearly 1,000-acre former cotton plantation between Charleston Executive Airport and Betsy Kerrison Parkway. The 18-hole layout was touted as one of the most exclusive in the nation — and a less-crowded local alternative to the nearby Kiawah fairways.
It lived up to the hype. Golf Digest ranked Briar’s Creek as the best new private club in the country for 2002. The headwinds began to kick up around 2008, as the global financial crisis plunged the nation into a painful downturn. Briar’s Creek felt it, along with almost every other business venture that lived or died on discretionary dollars.
“This is all a function of the recession, as far as I’m concerned,” said founding member Michael Martin, who signed the 139-page bankruptcy filing Tuesday.
The real estate crash led to some of the financial troubles, he said. Early on, Briar’s Creek had banked on selling a limited number of upscale home sites to fund its operations.
“After the recession we weren’t selling any lots,” Martin said. “No one was selling any lots. That affected the cash flow of the club.”
As money ran short, several dozen members fronted the club more than $2.9 million in the form of “patron loans” to keep it going. Others dropped out as they reassessed their own personal financial situations.
“Briar’s Creek is a second or third club for a lot of people,” Martin said. “That impacted us as well.”
In the end, Briar’s Creek couldn’t dig its way out of the red. Initiation fees, monthly dues, clubhouse sales and other major revenue sources fell to the point that it was no longer able to sustain itself, according to a court document. Bankruptcy counsel was retained in November.
Now, a bailout for Briar’s Creek is being proposed, though it’s running into some resistance.
McNair, the NFL team owner and a University of South Carolina graduate, is leading an investor group that includes two other club members. They want to buy most of the assets for $7.4 million in cash in an expedited sale. They also would take on nearly $4 million in existing debt, pay off about $3 million in bank loans and pump $2 million into a newly constituted club that the current membership could join.
McNair, who made his money in the energy industry, said in a statement that Briar’s Creek “is a business. And sometimes, in order to be successful, a business must reset. We hope our purchase proposal will ultimately be approved through the bankruptcy court process and allow us to chart a new path toward success.”
The sale isn’t finalized, and a rival bidder could emerge as the process unfolds.
Also, a powerful bankruptcy court official is raising objections to the idea of a quick sale. U.S. Trustee Judy Robbins said in a filing that the McNair-led buyout proposal “should be subjected to heightened scrutiny” because it’s an “insider deal.”
Among other questions, Robbins wants to know how hard Briar’s Creek has tried and will try to market itself to other buyers.
The members, who will have a say in the sale as unsecured creditors, support the deal that’s on the table, even though they’re likely to recover a fraction of their original initiation fees. Martin said the biggest plus is that McNair’s plan would ensure the club remains “first-rate facility.”
“I think the overwhelming feeling is that people are very pleased with the outcome, given the circumstances,” he said.
Contact John McDermott at 937-5572.