(The following statement was issued by the Oakmont Golf Club.)
Citing ongoing financial struggles, the Oakmont Golf Club (OGC) board, during its annual members meeting Feb. 13, revealed it has engaged the services of Marcus & Millichap to find a buyer for the club. In addition, to address operating deficits, OGC members will soon vote on whether to assess themselves $750 for each single membership and $1,500 for each couple membership.
OGC Board President Gary Smith stated that Marcus & Millichap has been engaged to lead the Club through the process. Marcus & Millichap is a leader in golf club brokerage and one of the country’s largest commercial brokerage firms. They were selected after interviews and proposals with three premier firms.
Board Vice President Susan Chauncy spoke to the anticipated sales process based upon her experience as CEO of a commercial real estate valuation and brokerage firm. The process is expected to take most of the rest of 2019. This timeframe includes a marketing period of roughly three months, followed by a due diligence period after a letter of intent is received from a prospective buyer(s) and an escrow period of 30 to 60 days.
The OGC board is required to submit all qualified offers to the membership. At least 60 percent of all voting members must vote to approve any sale. While any qualified offers must be presented, the Board described its vision for a preferred buyer: an enterprise committed to long term retention of the golf courses. One that is realistic that golf alone is not a sustainable business model but, in combination with first rate restaurant and banquet features, sees a rebranded OGC as a preferred destination in the Valley of the Moon.
OGC bylaws require approval from 70 percent of the voters for the assessment to pass. The vote will occur in the next month or so. A straw poll of some 150 members attending the meeting suggested strong support for the assessment. An assessment target of $750/$1,250 was initially presented during the meeting but subsequently adjusted to $750/$1,500 following input from members present.
Fiscal years 2017 and 2018 saw large losses for the OGC corporation. Although golf rounds played have remained relatively constant at about 60,000 rounds per year over the past three years, membership has steadily declined in each of the past eleven years.
The OGC expects to go to market in the $4.5 to $5 million range. This is consistent with industry valuation standards of 1.0 – 1.2 times gross revenues. Although 2018 financials are not yet reviewed by OGC auditors, revenue for the year is confirmed at roughly $4.3 million.
OGC has both short and long-term debt and a purchase offer would pay off and/or assume that debt with the remainder of the purchase going toward significant investment in capital improvement.
Smith notes the Board will be providing additional information both soon and as the process moves forward. “In the meantime we will continue to run and manage the Club as a going concern…doing all we can to meet members’ needs, make our numbers and sustain the Oakmont Golf Club.”