MYRTLE BEACH, S.C. - The good news for the Links Group, the Grand Strand's largest golf course management firm, is that it received an Order of Confirmation from the U.S. Bankruptcy Court on August 20, and now the company is legally and financially permitted to continue operating the eleven courses under its management umbrella in the Myrtle Beach area.
But is the Links Group's second "lease" on life bad news for Grand Strand Golf at large?
It's not everyday that a company that owes its creditors millions of dollars suddenly finds itself in expansion mode. And expansion of what? For years, the Myrtle Beach faction of Links Group golf courses has earned a dubious reputation among golfers for having mediocre course conditions and less than hospitable service.
Now, with the Golf Capital of the World fighting through one of its biggest slumps in recent history, it could be time for the Myrtle Beach golf community to question the expansion of a company that seems to have caused the region nothing but grief.
The Links Group leased a total 12 golf courses at the time of its bankruptcy filing on January 10, 2001. President Ken Folkes says the Links Group would like to ultimately acquire up to 20 golf course leases, and fresh off of Chapter 11, the beleaguered company has already purchased the leases for the Meadowlands and Farmstead Golf Courses.
Folkes, misguided or not, believes that expansion will actually be the key to the Links Group regaining its profitability.
"You have so much better opportunities when you expand," he says. "There are economies of scale when it comes to managing golf courses. You just use the people you've got on board and keep the ones at the new courses. We added Meadowlands and Farmstead on September 1, and we are looking at some others to further bolster our situation."
Yet, expansion in the face of failure seems counterintuitive, even to the business acumen challenged of us.
Let's put it in terms that we layfolk can understand.
What if Joe and Billy own two barbeque joints, and neither turn a profit. Joe and Billy file for Chapter 11 bankruptcy, which protects them from their creditors and allows them to reorganize their debt.
Then they go to court, convince a judge that they have their "stuff" together, get the green light to keep their stores open, and then go out and open even more stores, all while owing their old creditors boatloads of money?
This type of behavior would get you "whacked" in a Martin Scorsece movie, and is questioned by some of the Grand Strand's savviest managers.
"It (expansion) saves money if you have multiple courses, because you can move equipment from course to course," says Joy Causey, Director of Marketing at Calabash Golf Links. "But as far as people and the goods you have to buy for the courses, that is the constant. Expanding your course base doesn't save you any money there."
Bankruptcy isn't always being two runs down in the bottom of the ninth, or being two holes down with five to play in a golf match. Sometimes, the deficit is just insurmountable. The Links Group has simply dug a hole that is too deep to climb out of, according to some local golf officials.
The company owes $3 million in overdue taxes, payroll, lease payments and other expenses, according to its chapter 11 filing. The Links Group has $8.3 million in debt and $4.8 million in assets. According to one Myrtlebeachgolf.com source, the Links Group even owes the EZ-Go golf cart company close to $300,000. The kicker is that the Links Group has 15 years to pay off its debts incurred before it filed for bankruptcy.
Folkes said he can expect between $1 million and $4 million in investments from MemberTree Management LLC., a North Carolina based company. But what's to say that the Links Group won't find themselves right back in the hole five years up the road, even with an injection of capital?
If MemberTree comes up on the short side of that range, Links Group will have just enough money to pay off its Golf Holiday membership dues, its golf carts, and if they are lucky, some of its personnel.
"They had to give the bankruptcy court something, so they showed them that they were going into expansion mode to make things better," says Donald Wizeman, Chief Executive Officer of International Resort and Golf Resources. "They paid way too much for the leases in the beginning, paying amounts that didn't make sense. It is just a matter of time before they are looking at chapter 7 bankruptcy and it's all over. I will give them between 12 and 18 months."
Maybe if the Links Group had a reputable product to offer the golfing public, its task may not seem so daunting. But many golfers and golf experts around the Grand Strand agree that the Links Group's courses are the worst conditioned facilities on the beach.
Courses such as the Sea Gull, Quail Creek, and Indian Wells are some of the oldest, cheapest golf courses in Myrtle Beach, and Wizeman says that the Links Group has performed only the minimal amount of maintenance required to keep them afloat.
"If you go to our website, their courses are ranked in the basement by players," says Wizeman. "They are appearing in there unequivocally. I took a flight over the entire beach the other day and flew over the Links Group courses. They are crap. They are still the worst courses in Myrtle Beach."
Folkes, remarkably, contends that all the company's facilities are in fine shape heading into the peak fall season, and that everything is just peachy now that the company has a decade and a half to right its wrongs and pay its debts.
"I hope that we offer a really true value," he notes. "We have good golf courses that are maintained well and when a player comes off, he feels like he has gotten a good deal. A limited number of people can afford to pay $100 for a round of golf."
Sure, but a limited number of people actually enjoy hitting fairway shots off hard pan dirt, or putting through sparsely turfed greens.
Even local golf professionals are quick to point out that historically, the company's courses have fallen so short in the areas of maintenance and service that they have actually driven golfers away from the Grand Strand.
"There was a time not long ago that if visitors to the area played just Links Group courses, they may not want to ever come back to Myrtle Beach," says one local golf pro, wishing to remain anonymous.
Once upon a time, the Links Group Courses were not bad golf facilities. In fact, there is nothing wrong with the layouts, per se, to this day. Indigo Creek was nominated by Golf Digest as one of the best new courses in 1991. The recently opened International Club in Murrells Inlet is an excellent track, lest it fall apart in the years to come.
But years of stretching maintenance resources an d service that could peel the paint off a 1957 Chevy had a number of Links Group managed courses in disarray before the company finally hit rock bottom back in January.
"It got to the point where we were alerting golfers to stay away from those courses, even if they charged much less than other courses," says one frequent visitor to a Myrtle Beach golf based message board website.
So how in the world does the Links Group plan to lure golfers back into its web of shoddy courses? According to Folkes, the problem isn't the Links Group, it's the glut of 117 courses that call the Grand Strand home and the stagnating number of annual rounds played that is bringing every course to its knees.
Problem is, not everyone is buying it.
"Gloom and doom is a perception and a self fulfilling prophecy," says Marty Ekster, President of Golf Vacations of the Carolinas. "I will give you five courses under different management that are not only doing fine, they are way ahead of the curve. Ocean Ridge Plantation up in Brunswick County has three great courses for the money, and they do an incredible job of running them. Where is the gloom and doom in that?"
And the notion that expansion will solve the company's problems? Not everyone is buying that either.
"American Golf handles more golf courses than anyone in the U.S. and their economies of scale didn't work, so what kind of logic does Links Group have that they can make it work?" asks Wizeman. "Their business plan has never worked, no matter who has owned the company, so I will give them between 12 and 18 months before it's all over."
How is it then, that Folks was able to convince W.J. McLamb and his daughter, owners of Farmstead and the Meadowlands, that Links Group was the best management firm for the job?
"That owner has all but given up," a source close to MyrtlebeachGolf.com says. "She just wanted to get out of the operations business, whatever it took."
Wizeman agrees, adding that desperate times have led to desperation.
"Things are so bad around here they want to believe that Links can run the courses for them," he says. "Golf is so bad here that they are willing to listen to anyone who says that they can help them."
Folkes unabashedly says that the Links Group is looking to add more Grand Strand courses to its management docket. He is in negotiations with American Golf over taking over the leases at River Oaks and Carolina Shores.
The Links Group may be the largest golf course management firm in Myrtle Beach, but its not the only one. And despite the "haunting specter" of reduced rounds, some of the smaller operations seem to be doing quite fine.
The last thing the Grand Strand can afford right now, as a collective golfing destination, are more poorly managed golf course facilities. Let's hope for the overall good of Myrtle Beach and its environs that the Links Group can finally put its money where its mouth is.
The International Club