Spanish Trail club expecting a profit

Relieved of the obligation to pay down its mortgage, the posh Spanish Trail Country Club expects to post an operating profit for the balance of the year.

According to its Chapter 11 operating budget approved by U.S. Bankruptcy Court Judge Bruce Markell on Monday, the club expects to net $58,000 on $1.9 million in revenues over the next 13 weeks, after which it must return to court for an extension. The club projects $532,000 in annual earnings, but did not disclose how much the debt service was supposed to be.

The filing of the case on Aug. 24 halted the need for the near term to make payments to Jackson National Life Insurance Co., which loaned the club $15 million four years ago to remodel the clubhouse and upgrade the 27 holes with features such as improved bunkers and extended paths for golf carts. While the club had paid down the principal to
$13.1 million before it defaulted a year ago, Jackson National calculates that
$16.1 million is due when adding back interest and penalties.

The case will center on how to deal with the debt, which could include everything from softening the terms to changing ownership. As Jackson National moved for a foreclosure and the appointment of a receiver, the club filed bankruptcy to gain breathing room.

The golf course and related facilities cover 249 acres of the 640-acre gated community. The bankruptcy does not apply to the homes, which are all owned separately.

Because the club dues were raised to cover the debt just as the economy started to sink, general manager Farhang "Freddie" Rohani said in court papers that membership started falling sharply.

The club counts 347 people who have memberships entitling them to vote on the nonprofit club's affairs, about half as many as four years ago.

Also, Rohani noted that golf has generally suffered across Las Vegas. He estimated that revenues among the 45 public and private courses have dropped by more than a fourth in the past three years.

According to National Golf Foundation annual surveys of how many rounds are played, Las Vegas has posted declines in three of the past four years. Among the 44 cities covered in 2010, Las Vegas' drop of 8.2 percent was the second-worst after Oklahoma City and more than triple the national decline of 2.3 percent.

"Without a doubt, its ugly out there," said Susanne Marx, the owner of Golf Event Co., which stages outings mainly for corporate clients. "It's particularly a problem here in Las Vegas, where many people are making less money than they did five years ago."

Conventions and meetings have also reined in their tournaments. In better times, she said, a group might schedule both a show and some golf for attendees. Now, groups often choose between the two.

As a result, she said, new course construction has largely ended, especially because of the maintenance costs of keeping patches of grass in the desert.

Water is often Spanish Trail's largest expense, with monthly bills soaring as high as $140,000 in the summer. During the winter, they drop to as low as $14,000. The renovation project included several water-conservation measures such as drip irrigation and removing 10 acres of turf on nonplaying area, for which the Southern Nevada Water Authority gave the club a credit.

Contact reporter Tim O'Reiley at
toreiley@reviewjournal.com or 702-387-5290.