The NAMA List: Golf Courses

mr.mickels

Mizuno Man wrote: »

(editing this so it doesn't look quite so offensive a diatribe)

There is no subsidy for the asset in most cases as with these courses. They are not in NAMA because they left debts unpaid. They are not receiving payments from NAMA. They are not receiving payments from the public. They run themselves and deal with their own finances like any other business. Yet in NAMA they now be.

The really enraging thing is that all those out their who bleat like sheep - uneducated about the reality and believing what some non-expert journalist assumes to be the case writes - who then say we should let these places go down the swany and stop wasting public money, can't even see that it is entirely in the publics best possible interest that exactly these places do very well and make a lot of profit and therefore become more saleable and achieve a better price at auction so that NAMA and the public get a better return on the money they have already put in.

On one hand you say NAMA didn't give any support to Portmarnock, and then you encourage us to support Portmarnock so NAMA can get a better return for the money they put in!!! So did they put money in or not? And I personally have no interest in supporting any of NAMA's interests, golf or otherwie as I view the entire lot and the government/civil/public service/banking institutions to be little more than legalised racketeers and us the taxpayers are getting screwed anyway. And it is clear to me that contrary to what you said earlier that many of those courses were follies, they saturated the market slump or no slump. It should have been obvious that longterm most of those ventures would struggle to ever make a profit.

LostPassword

mr.mickels wrote: »

On one hand you say NAMA didn't give any support to Portmarnock, and then you encourage us to support Portmarnock so NAMA can get a better return for the money they put in!!! So did they put money in or not? And I personally have no interest in supporting any of NAMA's interests, golf or otherwie as I view the entire lot and the government/civil/public service/banking institutions to be little more than legalised racketeers and us the taxpayers are getting screwed anyway. And it is clear to me that contrary to what you said earlier that many of those courses were follies, they saturated the market slump or no slump. It should have been obvious that longterm most of those ventures would struggle to ever make a profit.

It's really pretty simple - when a developer goes bust, he is often left with a bunch of assets, some of them profitable, some of them not. Nama takes over all of his assets, even (especially!) the profitable ones and tries to use the income from the profitable one to recoup the losses on the bad ones. So when it comes to profitable golf courses, Nama will try to use their profitability to offset the bad loans of the developer by selling the business as a going concern. Shutting down profitable businesses because they were once owned by a shady gambler developer would be crazy insane and would just cost the taxpayer more.

FixdePitchmark

LostPassword wrote: »

It's really pretty simple - when a developer goes bust, he is often left with a bunch of assets, some of them profitable, some of them not. Nama takes over all of his assets, even (especially!) the profitable ones and tries to use the income from the profitable one to recoup the losses on the bad ones. So when it comes to profitable golf courses, Nama will try to use their profitability to offset the bad loans of the developer by selling the business as a going concern. Shutting down profitable businesses because they were once owned by a shady gambler developer would be crazy insane and would just cost the taxpayer more.

Ok, I think I get it now, but are these profitable courses???? repaying the full cost of the loan relating to course ?

If not this is enabling them to provide a course at cheap green fee rates, without covering the full cost of the develpement.

The world is not fair, as we have learnt , but it would be imposible for other courses to compete with a course not paying developmental costs.

mr.mickels

LostPassword wrote: »

It's really pretty simple - when a developer goes bust, he is often left with a bunch of assets, some of them profitable, some of them not. Nama takes over all of his assets, even (especially!) the profitable ones and tries to use the income from the profitable one to recoup the losses on the bad ones. So when it comes to profitable golf courses, Nama will try to use their profitability to offset the bad loans of the developer by selling the business as a going concern. Shutting down profitable businesses because they were once owned by a shady gambler developer would be crazy insane and would just cost the taxpayer more.

He is also left with a bunch of debts, and you haven't answered the question. Did NAMA put money into Portmarnock, previous poster said No and also said NAMA needs to get a return on the money they put in, which means Yes they put money in.

I know about developer assets, supposed functions of NAMA etc.
but where have NAMA shut down a truly profitable business? And like other posters have said the repayments on loans to build a complex must be taken into account when talking about real world profits, lets not cloud the issue with other unrelated developments that may have the same owners. If some of these NAMA hotels/golf courses had ZERO startup costs or perhaps they could make a profit, in the real world how often does that happen. It is clear most of those clubs and hotels should be shut down as they are running at a loss. I am not refering to Portmarnock specifically as I know little of it but some of the others I am familiar with.

Mizuno Man

mr.mickels wrote: »

He is also left with a bunch of debts, and you haven't answered the question. Did NAMA put money into Portmarnock, previous poster said No and also said NAMA needs to get a return on the money they put in, which means Yes they put money in.

Sorry you're barking up the wrong tree here. I meant that the public need to get a return on the money they put in to NAMA, not that NAMA needs to get a return on the money it put in to Portmarnock. Reread my post and you'll see the context that my comment was made in.

mr.mickels wrote:

I know about developer assets, supposed functions of NAMA etc.
but where have NAMA shut down a truly profitable business?

What? Where did anyone say that had happened? Why would NAMA do such a thing? That would make absolutely no sense whatsoever. Except of course that some people seem to hate anything to do with NAMA and would be happy to see anything related to them closed down and out of business. An opinion I think you have voiced yourself here.

mr.mickels wrote:

It is clear most of those clubs and hotels should be shut down as they are running at a loss.

If you know anything about business then you will know that a loss making business can still have a substantial value. So it will never be a simple case of shut down a place that is loss making for that reason alone. That would be an idiotic thing to do from the perspective of the return on public finances invested in NAMA and it's operations unless it is determined that the business can not be sold as a going concern and cannot be made to be profitable.

I entirely accept that there are many businesses out there that are tied up in NAMA and which may well be finding themselves kept afloat by NAMA when they otherwise might have been unable to do so alone. I fully understand that people will see that as unfair competition and destructive to other viable businesses. My points are twofold:

Firstly, not every NAMA acquired business is in trouble and it is wrong to assume that they are despite what the papers may try to have you believe. Boycotting or wishing ill health to a business simply because it is a NAMA asset and you don't like NAMA is idiotic. Not least because the very soul of the argument that people who think this way have is based on the apparent waste of public money that they feel NAMA represents. Boycotting businesses or wishing them to fail and close will more or less guarantee that public funds invested in NAMA are entirely wasted.

Secondly, for longer than we are all alive, banks have been stepping in to a failing business that they have an significant interest in, appointing receivers and finding a way to keep the business afloat, sell it or even to turn it back to profit where it otherwise, without intervention, would have simply washed up and failed. Where were you all crying "unfair competition!" and "shut it down" on those thousands and thousands of occasions?

k.p.h

Might as well be hung for a sheep as a lamb :cool:

Boskowski

Lads it's not that hard to understand. It's been explained over and over again in the end even by a step by step example you might find in a schoolbook. Some courses are surely am unsound development themselves but a lot of courses labeled 'NAMA' are not, they got caught in this being collateral. Simply reiterating a hunch concerning some unfair subsidy due to lack of understanding does not actually make that subsidy real as there is none in those cases.
The only real pressure I can see is that of declining memberships and green fees, however, in this climate that would have always been the case.
Some embership owned courses may have got carried away themselves a bit with green fees only expected to ever go up.

LostPassword

mr.mickels wrote: »

It is clear most of those clubs and hotels should be shut down as they are running at a loss. I am not refering to Portmarnock specifically as I know little of it but some of the others I am familiar with.

From a business point of view, this isn't clear at all. NAMA's terms of reference are pretty clear - to maximise the return on their assets - they have no broader social goals (such as, for example, allowing non-NAMA golf-clubs to survive). Where they acquire a loss-making golf-development, it almost never makes sense to actually close it down because, in the current economic climate that would mean writing down the value of the asset to zero (there is currently no market for things like golf courses).

As an example, consider a golf development that NAMA acquires for €100million and is currently losing €5million a year.

Let's imagine a relatively pessimistic projection that it will be 10 years before the market recovers to a stage where there is a functioning market for golf developments.

If NAMA was to close the course now, then they swallow a loss of the entire amount - after 10 years of lying fallow, the course and developments will have decayed to a stage where it is no longer a golf-course, it is a tract of wild land encumbered by a bunch of decaying structures and probably has less value than a virgin tract of agricultural land.

If NAMA cuts costs radically to such a point where they are merely paying the minimum to prevent irreversible decay and, let's say, losing €2 million a year, and after 10 years, when the market recovers, they are able to sell the course for even €50 million, then that is a much better outcome vis a vis their terms of reference (net recovery of maybe €20 million after interest, etc) than closing it down now. They do also have the advantage that they have deeper pockets than most of the competition and will be able to finance the 10 years of loss making, which competitors won't meaning that the competitive landscape will tend to improve over the 10 years. This is obviously probelmatic from the point of view of their competitors but that's capitalism - banks do this sort of thing all the time with property and other businesses, run them at a loss for many years so that they can take advantage of a recovery.

FixdePitchmark

Meanwhile , the guys in NAMA swan about playing golf with not a worry in the world. Total Bast*66s. Charging 500,000 for half built apartments in Dublin, putting the cat and the dog in the wives name, not paying tax, still houses abroad, fancy cars, trophy houses, holidays abroad.

It is true that they were drinking champagne and toasting NAMA on one of their junkets abroad.

These people are still allowed to run a business, the mind boggles.

It is morally and ethically repulsive.

Tarquin1970

Jebus, the people on here giving out about NAMA courses are probably snapping up the City Deals such as a round of golf plus lunch for €49 in these very same courses.....just saying!!

mags1962

I think Mizuno is trying to win an argument with some rocks in this case. Why would anyone close down a business if it was producing a decent cash flow and maybe even a break even situation. Even if the business was producing a loss, closing it down is still not an option as this would certainly de-value he business and minimise their return. The banks cocked up by giving greedy developers loans greater than the value of the security placed on it. Nama has bought these loans from the banks and is trying to recoup as much as possible to pay back the Country.
Any business that is making a profit would have no problems getting money or loans using their profits as security as well as the value of the business/cash on hand etc. Lots and lots of golf clubs are in dificulty as they are not making a profit and have no cash reserves and can not get loans to develop or survive. No one will loan and investor money to buy a loss making business, why buy it in the first place. All businesses have to look at their cost model in order to survive, operating costs vs income, and if the operating costs exceed the income then more than likely bye bye.
Does Corballiss operate for a profit or does it receive help?

Mizuno Man

FixdePitchmark wrote: »

Meanwhile , the guys in NAMA swan about playing golf with not a worry in the world. Total Bast*66s. Charging 500,000 for half built apartments in Dublin, putting the cat and the dog in the wives name, not paying tax, still houses abroad, fancy cars, trophy houses, holidays abroad.

It is true that they were drinking champagne and toasting NAMA on one of their junkets abroad.

These people are still allowed to run a business, the mind boggles.

It is morally and ethically repulsive.

The only reason they were charging those crazy prices is because idiots like you and me were willing to pay it. We all fell in to the trap and should be individually taking some responsibility for it. The bank crisis which caused most of this mess was caused primarily by mortgage debt, which was created by the public. Of course you can blame the banks for lending the money in the first place, but that is quite like blaming BMW for a hit-and-run accident or blaming Smith & Wesson for a gun massacre.

As for the toasting NAMA thing. I assume you are going on more than what you read in the papers? Can you explain to me why a developer in heavy debt would be happy at the creation of NAMA?

The_Architect

Tarquin1970 wrote: »

Jebus, the people on here giving out about NAMA courses are probably snapping up the City Deals such as a round of golf plus lunch for €49 in these very same courses.....just saying!!

This is a pretty valid point.

My problem is not with NAMA as such. It is more with the expensive high-end golf courses we've been building over the last 20 years, many of which find themselves in NAMA hands because of the nature of those who built them.

I want to see the back of many of these because until they close down and we start again along a more sensible path, we have no way of growing the game in this country.

Golf needs to be affordable. That does not equate with low quality.

None of these developments will ever be affordable and break even. Portmarnock Links possibly.

Fota Island is worth keeping also as it fills a void very near Cork City where there are actually few developments of the same level and class.

FixdePitchmark

Mizuno Man wrote: »

The only reason they were charging those crazy prices is because idiots like you and me were willing to pay it. We all fell in to the trap and should be individually taking some responsibility for it. The bank crisis which caused most of this mess was caused primarily by mortgage debt, which was created by the public. Of course you can blame the banks for lending the money in the first place, but that is quite like blaming BMW for a hit-and-run accident or blaming Smith & Wesson for a gun massacre.


As for the toasting NAMA thing. I assume you are going on more than what you read in the papers? Can you explain to me why a developer in heavy debt would be happy at the creation of NAMA?

Wrong, it is like blaming BMW for not putting seat belts in. They would not do it. Because it is wrong.

Not me , I did a basic calculation of 2.5 times my income, purchased a house based on that, I borrowed what I could comfotably afford.

And I didn't join or buy shares in a golf club, because it was obvious to somebody with common sense it was not value.

I don't hang around with developers , they were toasting nama knowing it was going to bail them out, hard to believe that was a made up story, you seem to know a good bit about them, what was the story ?


http://www.examiner.ie/ireland/mountcharles-developers-toasted-nama-rescue-in-spain-101459.html

Bandana boy

The_Architect wrote: »

This is a pretty valid point.


Golf needs to be affordable. That does not equate with low quality.

I would suggest ,that good quality golf is available cheaper ,and more conveniently to the average punter in 2011 than at any other time in its history on this Island

Mizuno Man

FixdePitchmark wrote: »

Wrong, it is like blaming BMW for not putting seat belts in. They would not do it. Because it is wrong.

Not me , I did a basic calculation of 2.5 times my income, purchased a house based on that, I borrowed what I could comfotably afford.

And I didn't join or buy shares in a golf club, because it was obvious to somebody with common sense it was not value.

I don't hang around with developers , they were toasting nama knowing it was going to bail them out, hard to believe that was a made up story, you seem to know a good bit about them, what was the story ?


http://www.examiner.ie/ireland/mountcharles-developers-toasted-nama-rescue-in-spain-101459.html

I would absolutely guarantee that if BMW could get away with no seatbelts and it would provide a dramatic change in profits as a result, they absolutely would leave them out. Don't confuse regulation with social responsibility!!

It's not just about being careful with your finances. Fair play to you for being careful with what you borrow. I did the same, but I still payed a ridiculous price for what I got. I have a mortgage I can manage, but I effectively have dog box for a house as a result. It can be argued that I played my part in continuing the cycle of overpriced housing and further pushing others into personal finance that they didn't bother to fully understand.

I will never forget hearing a woman on the radio a few years ago saying if she knew that interest rates could go up so quickly she would never have taken the mortgage out in the first place. You can blame the bank for letting her have the mortgage all you like. But it is probably fair to say that if this same woman was signing a finance agreement for a telly worth 500 quid she would probably have paid more attention to the finer details than she did with her 300,000 euro mortgage. She is not blameless. Neither are the majority of the rest of us. We got knowingly trapped in a cycle of only seeing relative value rather than absolute value.

I can't go into it again since this is a golf forum at at the end of the day. But there is simply no bail out for developers. Plain and simple. The creation of NAMA means that that many of these developers will see everything they own taken from them where before they had a crippled bank trying to pester them for funds. Unless they are into personal pain and tragedy for their families, then they were not toasting NAMA.

That article is classic journalism - A journalists mostly paraphrasing a story which is based on the opinion of a man who was told by a friend of his that he overhead some people he thinks are developers apparently toasting NAMA. It's utterly laughable that anyone would read this and come to any conclusion whatsoever! By the time you read it it is already fifth hand information! Lord Whatshisface shows his character by using the word "lynched" - a deeply offensive term referring to the struggle for black liberation in the states many moons ago. So the papers really know how to pick their sources.

Can't you see that the journalist and paper saw a story which they could publish which would appear to be highly controversial and enrage their readers and as a result sell papers? There is no attempt in that article at all to tell the truth or investigate the incident or even to explain why these paraphrased, overhead, assumed-to-be developers would be doing such a thing!

The_Architect

Bandana boy wrote: »

I would suggest ,that good quality golf is available cheaper ,and more conveniently to the average punter in 2011 than at any other time in its history on this Island

That's because rounds are being sold at a loss on courses that cost too much to maintain.

Solution: Build courses that cost less to maintain.

mags1962

That's Capalitism for you and I doubt that anyone in their right mind would build a course that costs more to maintain than it brings in in income. The reason so many high cost courses were built was that the owners thought that there would be a never ending supply of gobsh1tes to shell out for them.

mags1962

In fact I also know of members of clubs that have a stake of 20k or more in clubs but can not find an eejit to take it over as the club will not allow it to be sold for less than 20k, all in the hope of keeping out the ordinary Joe. These are the guys that deserve to go to the wall along with their high green fees.

mr.mickels

The_Architect wrote: »

None of these developments will ever be affordable and break even. Portmarnock Links possibly.

Fota Island is worth keeping also as it fills a void very near Cork City where there are actually few developments of the same level and class.

If it is worth keeping to someone then it should be possible to find a buyer, but any course that is not a sound business shouldn't be kept open despite what some others here are suggesting, they should be sold off for whatever they can get, and let the new owners worry about future viability.
Harbour Point Golf Club was one example of a privately owned course with about 400 members that wasn't making decent profit, so the wealthy owner closed it down, nothing to do with NAMA, it simply wasn't a profitable business mostly due to all the newer courses that were competing with it, and many of them in financial trouble. Some of the other loss-making course should go the same way or be auctioned off. Keeping some of these running at a loss isn't always the best answer for the taxpayer, or the competition which should all be on a level playing field.

ipitydafool

The_Architect wrote: »

That's because rounds are being sold at a loss on courses that cost too much to maintain.

Solution: Build courses that cost less to maintain.

Im curious and you seem to have good knowledge in this area so I'm wondering what you believe it should cost to maintain a course to a high standard in Ireland and be viable?

The_Architect

mags1962 wrote: »

That's Capalitism for you and I doubt that anyone in their right mind would build a course that costs more to maintain than it brings in in income. The reason so many high cost courses were built was that the owners thought that there would be a never ending supply of gobsh1tes to shell out for them.

The reason so many high cost courses were built was for short term profit from real estate sales. There was no view to long term sustainability.

ipitydafool wrote: »

Im curious and you seem to have good knowledge in this area so I'm wondering what you believe it should cost to maintain a course to a high standard in Ireland and be viable?

I am not a golf course owner or manager and although I'm quite aware of the various business models and costs employed, there are others on here who are in that line and are possibly better placed to answer.

My area is the initial design and construction of the golf course and there are plentiful reasons that the courses built are costing a lot to maintain. A few:

1. Excessive length (more maintainable area)
2. Excessive maintenance on non-fairway, tees, greens (rather than native)
3. Excessive use of sand and requirement for it to be pristinely raked (a major eater of manhours)
4. Bad site to start with (resulting in excessive drainage, irrigation and chemical costs, not to mention initial construction costs to recover)
5. Too much focus on ornamental vegetation and off golf course landscaping
6. Vicious circle where consumers expect all of the above and their course to look like Augusta
7. etc.. etc...

Where courses are spending upward of €1m a year on operating costs, it's no wonder that they are struggling. There are excellent parkland courses in this country that operate successfully on a third of that cost.

murphdogg11

Played Fota recently & the fairways were not as well maintained as they had been in previous years.