A ‘Vital Threat to Oakmont,’ a Decade in the Making

This statistic shows the number of participants in golf in the United States from 2006 to 2016. In 2016, the number of participants (aged six years and older) in golf amounted to approximately 23.82 million

This article I wrote in 2005 describing the challenges facing the Oakmont Golf Club, reads almost as if written today.

And former OGC Board member, John Williston just recently comments, “I have repeatedly tried to get the community interested in this potentially vital threat to Oakmont for almost ten years and am happy to see that there has finally been a response.”

Ten years ago is when OGC borrowed $3.4 mm to pay back the bondholders/equity owners, who invested their monies to build the Quail Inn and the pro shop.

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Yvonne Frauenfelder | Kenwood Press, April 2005

For more than a year rumors have swirled around the Oakmont Golf Club, the anxiety palpable in the air. Word got around that 3.4 million dollars in notes to golf club members were due in 2005 and nobody knew how to raise the money. Some residents of the community were afraid that the Oakmont Village Association might buy the golf courses, or help the club out and assess every house a certain fee to make the deal possible. Worse, condominiums dotting the greens were mentioned in hushed gossip.

Memories of the “civil war” that pitted resident against resident and developer against the common good in 1988 elicited fear and uncertainty among many villagers. And, indeed, the situation was becoming precarious about a year ago when informal talks took place with the OVA, financial institutions, and the city of Santa Rosa as a potential purchaser of the golf courses.

Once a flourishing restaurant, the newly rebuilt clubhouse and restaurant became a drain on the “for profit” Golf Club Corporation. People complained that the food was not nearly as good as it used to be, and the formal dining room closed down.

In order to quell these rumors and to obtain accurate information, I met with the president of the Golf Club, Tony Jenks, First of all, he corrected the assumptions that the notes were due this year – they are not until 2008 – and secondly “surprise” the Golf Club is getting out of the business of running the facilities. A management company has taken over the functions of both the golf courses and the Quail Inn as of April 11.

A thorough search was conducted, and among 8 applicants, Empire Golf Inc., located in Rancho Murietta near Sacramento, was eventually chosen. (See related story HERE.) The vetting process was exhaustive. Members of the search committee visited the various golf and dining facilities, talked to players and personnel, walked the grounds, observed up close the operation and tasted the food of the respective restaurants.

Once a flourishing restaurant, the newly rebuilt clubhouse and restaurant became a drain on the “for profit” Golf Club Corporation. People complained that the food was not nearly as good as it used to be, and the formal dining room closed down.

Tony Jenks was upbeat and optimistic that the board had done the right thing in hiring out the daily responsibilities and choosing Empire Golf, Inc. to do just that. And while the management company, which signed a 5-year contract, has the mandate to run a first class facility, the Oakmont Golf Club retains oversight over all aspects of the businesses.

As for the financial side, the $96,000 annual management fee is more than offset in savings, from accounting to workers compensation. And if management can prove that net earnings have surpassed the previous year, they receive a 15 percent incentive pay, a bonanza not only for Empire, Inc., but also for the club, namely, one dollar paid out begets $5.67 in profit.

But the good news does not end with Empire Golf Inc. Remember the $3.4 million obligation due in 2008? (The debt was incurred in remodeling the little restaurant into the stately Quail Inn and building a new pro shop). The board came up with the simplest of simple solutions, that is to ask the note holders and club members for an extension on their loans. A process is underway to arrange for lengthening the pay back until 2018 at a six percent interest rate, or to 2033 at seven percent, respectively.

Considering that the stock market returns over the past 30 years have amounted to an average of six percent, this is by any account a good investment. Indeed, owners of $1.6 million in papers have already indicated a willingness to sign up for the new plan. With half of it potentially raised, a financial institution may be inclined to extend a loan if such should even become necessary.

Additionally, the club has made great strides in signing up new golf members. A change in the bylaws as of January 1, 2005, allows non-resident golfers to become full club members. Remarkably, 108 resident and non-resident people have already taken advantage of this unique opportunity in the last three months.

With professional management running the golfing and restaurant facilities, hopes are high that with skilled staff for marketing, management and dining operation, the restaurant will once again become a favorite destination and the golf course a thriving enterprise.

Where in the wine country can you truly play the East course in the morning, have a wonderful lunch at a great restaurant, and play another 18 holes on the West course in the setting sun? Only in Oakmont.