Membership group plans $6 million bid for Spanish Trail

Exclusivity could be relegated to nostalgia at the Spanish Trail if a group of members succeeds in buying it out of bankruptcy.

At a court hearing Thursday, club attorney Gregory Garman said that the group would submit an opening bid of
$6 million at an auction scheduled for April 24. Mortgage holder Hermitage Management LLC, a unit of Jackson National Life Insurance Co. or outsiders could then jump in.

Garman said the number of members willing to chip in is uncertain.

Cannery Casino Resorts principal Bill Paulos, a club member for a quarter century, has led the effort to assemble the buyers' group. He declined to comment on details until purchase documents have been filed with the court.

However, he acknowledged that golf generally had suffered in recent years, along with numerous other aspects of the leisure-driven Las Vegas economy, forcing clubs to change their philosophies.

"There has been a paradigm shift," Paulos said. "The life of the absolutely private club is changing."

For much of its existence since it was started in 1984, the club operated a self-described "exclusive haven of timeless elegance" open only to members and invited guests. Now, said Paulos, the club needs to treat the club-wielding visitors that come to Las Vegas as a potential market for fees.

Even before the bankruptcy, filed last August, the club had begun loosening its rules to appeal to a wider audience. The change had come after the club's membership shrank by half over the past five years.

"If you look around town, you see the competitive nature of the clubs" as golf play dwindled across the valley, Paulos said. "The Las Vegas Country Club, of all places, was giving away initiation and six months' membership. That's a real head-scratcher."

Las Vegas Country Club general manager Ryan Shaw said the club administration has no role in setting rates. Instead, some equity members have offered to pay buyers the equivalent of a few months' dues as part of selling their stakes.

At the Thursday hearing, Garman had explained that the Spanish Trail case had evolved into a "Mexican standoff.'

On one hand, the Jackson National debt stood at $13.5 million against an estimated club value of only $6 million, according to financial statements filed last September. This would have made it difficult to rewrite debt in a way that kept the current structure in place.

However, deed and corporate restrictions would have made it more difficult for Jackson National to foreclose on the club than it would be to foreclose on a typical commercial project such as a shopping center or an office building. The club is now a nonprofit corporation, which brings with it numerous legal complexities, and is surrounded by the separately owned Spanish Trail gated community. People can reach the club only because the community gives its permission to pass through the front gate.

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