02 December 2008 Respond to this article
Loch Lomond members bid to buyout course
2nd December 2008
Members of Loch Lomond Golf Club are attempting to raise £100million to buy-out its American owners and rescue one of Scotland's most exclusive organisationsMembers of Loch Lomond Golf Club are attempting to raise £100million to buy-out its American owners and rescue one of Scotland's most exclusive organisations from financial calamity. Spearheading the move to take over is the former Hibernian chairman, Ken Lewandowski. Loch Lomond, which hosts the Barclays Scottish Open and also owns Dundonald, the links course in Ayrshire, is still officially owned by Lyle Anderson of Arizona, but its debt at Bank of Scotland has forced the latter to assume control by placing it in the hands of a New York-based re-financing company, who are now actively seeking potentials buyers. With around 800 members, the vast majority reputedly in possession of personal fortunes that would justify the description "plutocrats", the projected selling price would require each to put up £125,000. But, as Lewandowski pointed out, "it would almost certainly be an equity-based proposal. Some members would want to take a number of shares, while others may not want to buy in at all, but remain members of the club."
Niall Flanagan, general manager of Loch Lomond, revealed that there is interest from "eight or nine parties from the Middle East, Europe and America," although actual offers have yet to be received. Flanagan also suggested that a membership buy-out would not only be the most suitable solution to the club's present difficulties, but would be among the favourites in any betting on who would be Loch Lomond's next owners.
The recently-formed, eight-strong Members Executive Committee, met yesterday to discuss possible strategies, but it is likely to be some time before it is determined that purchase of the club by the members is possible.
Recent developments have clearly caused a certain resentment among members, not least of them an increase in annual fees which, for those based in Europe, have more than doubled. The previous £3,250 per annum is to go up to £7,000, for European members, while 'international' members – that is, most those domiciled in America – will rise by £500 to £3,750.
It seems reasonable to infer that the hike in subscriptions is a form of insurance against the eventuality of no buyers being found. Since the golf club does not make a profit – "it is very close to profitability", said Flanagan – anyone wishing to purchase would probably have to do so for reasons of prestige, as opposed to a return on their investment. Or they would have to find a way of making the business profitable.
Since Anderson himself had been looking in vain for a buyer for the 18 months before Bank of Scotland effectively took control of the company nine weeks ago – the search started long before the global economic downturn – it is hardly surprising that agreement among the members to make an offer would make them favourites to assume ownership.
The bank put the running of Loch Lomond into the hands of Marotta, Gund, Budd and Dzera on 20 October and appointed Stephen Marotta and Philip Gund as the directors to whom the present management are directly accountable. So far, little has changed, but, as well as increasing revenue, it seems likely that the present running costs of £9million a year will have to be addressed.
"It takes a lot to run a club like this," said Flanagan. "We have 151 permanent, full-time staff and that figure goes up to 350 in the summer, with so many part-time workers required. The costs of maintaining Rossdhu House (the 18th-century clubhouse] are very high and, naturally, it is expensive to maintain the golf course itself as one of the best in the world.
"But we are good employers for the local area, for Balloch and Alexandria at Loch Lomond and for Ayr at Dundonald. We wouldn't want to see that change."
There is, for the time being at least, no threat to the Scottish Open itself, as Barclays are committed to their sponsorship agreement for another four years. Indeed, it is expected that next summer's tournament will boast its most attractive field ever, thanks to a number of factors.
"It has become an iconic event for Scotland," said Flanagan. "When pictures of Loch Lomond at the Scottish Open go around the world, there is no doubt that it helps tourism here.
"It is a very attractive tournament, with crowd of 25,000 a day coming here, and that's mainly because it is staged on such a wonderful golf course in a magnificent location.
"Now that the Race For Dubai is part of the European Tour, we expect the field next year to be the best yet. We believe there will be more US PGA Tour players and more Australians. The fact that the Open Championship is to be played just down the road at Turnberry the week after will also be a help.
"And, because of the Race For Dubai, players wishing to qualify for that by remaining members of the European Tour, now have to play 12 tournaments a year instead of 11. An extra one may not sound much, but it can be difficult for many who also play in America.
"In that respect, the Scottish Open is perfectly placed, just a week ahead of the Open itself. We are confident players who haven't been here before will be here from now on."
Loch Lomond in numbers
£100,000,000 - Asking price for Loch Lomond Golf Club
800 - Membership of the exclusive course
£125,000 - Average contribution required from each member to fund buy-out
£3,250 - Existing annual fees for members
£7,000 - New fees for members in Europe
£3,750 - New fees for international members
151 - Full-time 'permanent' employees at Loch Lomond
350 - Employment level at club during the summer
92 - Number of international members who paid their annual subscription last year but did not play the course once
By: Glenn Gibbons - The Scotsman