OVA has two preferred candidates for long-term lease partner to replace AGP. The parties intend to negotiate a new long-term lease in the next 60 days.

THE “FIRST” PROBLEM & SOLUTION

When OVA decided to purchase the assets of the Oakmont Golf Club it did so as the solution to a problem. After a lengthy period of research to understand the dimensions of the problem, let’s assume that the problem the Board of Directors identified was something like this:

How to protect Oakmont from having its greenbelt core of two golf courses being owned by potential developers whose interest in golf would be transient at best and only a place-holder for ultimate development of the land?

Such a problem definition subsumed a closely related problem by implication:

How to preserve golf in Oakmont when the track record of the Oakmont Golf Club demonstrated that the operation of two courses and the Quail Inn restaurant & hospitality events business was economically unsustainable?

At this point the Board had completed the initial – and absolutely critical – stage of standard, widely-used effective problem-solving methodology: IDENTIFY THE PROBLEM. Carrying out this stage requires careful attention to identifying interests by a process of “needs finding.” Lest that seem too obvious a first step, it’s important to point out that the exceedingly common practice that characterizes ineffective problem solving is to by-pass needs finding and jump too quickly to, and become a prisoner of, a solution that is less than optimal for satisfying the identified needs.

Once a problem has been identified, the second stage of effective problem solving is to GENERATE ALTERNATIVE SOLUTIONS. The objective at this stage is to brainstorm as many alternatives as possible, judging none of them yet, before choosing one – in order to have the richest possible store of possibilities to consider. Let’s grant that the Board generated a promising cohort of alternative solutions.

The third stage of effective problem solving follows naturally: EVALUATE THE ALTERNATIVES. This stage, too, is not as easy as its obviousness may seem. Of course, a primary criterion for evaluation is how well each alternative satisfies the identified needs. Let’s grant that the Board evaluated the alternative solutions it generated.

But the choice of a solution is far more complicated than simply satisfying the identified needs. The fourth stage of effective problem solving – CHOOSE A SOLUTION – requires consideration of a multitude of issues specific to the problem situation. In toto that amounts to evaluating practicality: cost, resources, timing, attendant political processes, legal requirements, etc. The Board chose a solution, something like this:

Purchase the assets of the Oakmont Golf Club and negotiate an acceptable long-term lease with the lease partner determined to be the best able to satisfy the identified needs by operating the business and assuming most of the risk – Advance Golf Partners.

The fifth stage of effective problem solving – IMPLEMENT THE SOLUTION – is also both obvious and complicated. We should not minimize the difficulties the Board faced in implementing both elements of its chosen solution. The Board had to secure the financial resources to be a credible bidder for OGC. That required a dues increase substantial enough that the matter had to be submitted to and then carry a membership vote. It also had to structure and secure a loan.

Even with the resources, the Board had to convince OGC, a membership-owned golf entity, to agree to sell. At least part of that consideration required a credible claim that OVA could and would continue golf operations in Oakmont similar to OGC’s. The Board had to overcome legal obstacles to owning the land and operating a golf/food & beverage business as a Homeowners’ Association. And the Board had to negotiate successfully a long-term lease for operating the business with AGP, the chosen lease partner. Criticism notwithstanding, the Board accomplished all of these objectives. That accomplishment deserves recognition and gratitude.

The Board now would be entering the sixth and final stage of effective problem solving – MONITOR PERFORMANCE AND MAKE NEEDED ADJUSTMENTS – but for two profoundly disheartening and sobering events: the world-wide Covid-19 Pandemic and the unanticipated demise of the long-term lease deal and abrupt exit of AGP. The pandemic has caused and will continue for years to cause severe economic dislocations and myriad social changes from ‘what used to be.’ No one could have anticipated such a world-shattering event. Projecting the future consequences of the pandemic and planning are daunting, difficult tasks imbedded with enormous uncertainty.

The collapse of the lease deal and departure of AGP, by definition, requires moving back into the problem solving process because one of the two necessary elements of the chosen solution is no longer in place.

In the short term, the Board immediately secured an arrangement with CourseCo to operate the golf courses for 60 days. As for the long-term, the Board announced that in the next 60 days it will negotiate a new long-term lease deal with either CourseCo or Billy Casper Golf, both of which are legitimate professional golf and food & beverage operators with track records, both of which the Board and its broker had already vetted, and both of whose prior proposals it had considered and rejected in favor of AGP.

SO, WHAT’S THE PROBLEM?

The Board’s rapidly-decided and announced course of action for the long-term merely assumes that its First Solution – well-chosen for the First Problem for the sake of argument – is still the optimal solution. The Board chose that solution after a careful, lengthy problem solving process and believes it will be able expeditiously to negotiate a long-term lease deal with one or the other of the two known, interested companies. The Board’s announced course of action thus re-enters the effective problem solving process at the next-to-last, IMPLEMENT THE SOLUTION, stage.

What’s wrong with that is that now the PROBLEM HAS CHANGED. It is a new, different problem with significantly altered underlying fundamentals:

1. The golf course(s) land is now owned and protected forever from developers. This “significant milestone in Oakmont History,” as President Spanier has characterized it, has been achieved. Therefore, as the President has stated, “it’s important to remember that the main reason we purchased the golf club was to keep the land in our own hands for all time. Owning this land offers Oakmont infinite land use choices, while protecting the community from external, potentially hostile, interests.”

2. There is no longer a current membership-owned golf course entity that must be persuaded to sell to OVA rather than choose another bidder, or bankruptcy.

3. Preserving golf in Oakmont, whether as a membership amenity or a quasi-public business enterprise, no longer requires the vehicle that the Board used successfully to ensure the purchase – locking in the operation of both golf courses and a restaurant & hospitality business as a long-term obligation to be subsidized as necessary by membership dues until break-even.

4. The effects of the Covid-19 pandemic call starkly into question the viability of the pivotal assumption that restaurant and hospitality food & beverage revenue can be sustainably and dramatically increased to or beyond a break-even point. This virus-caused change in the underlying fundamentals of the identified First Problem, alone, requires serious research, consideration, and time to see how powerful new external conditions play out.

Instead of proceeding to re-implement its formerly chosen First Solution by applying it to a changed, different problem, the Board should create an interim period for study of and reflection on the new realities. It should extend the agreement to operate the golf courses in the near term – at least 12 months, maybe as long as 18-24 months – while it takes that time to make a deliberate effort to return appropriately to the beginning of the effective problem solving process in order fully to understand the changed circumstances and identify their impact on Oakmont’s needs.

Ironically, the exit of AGP provides an enormously valuable, totally unanticipated opportunity to do exactly that because there is no longer a binding 20 year obligation to fulfill. The Board should take full advantage of and not waste that opportunity!

In this intentional interim period, the Board should return afresh to needs-finding in order to understand and identify all the aspects of the New Problem:

How to preserve golf in Oakmont and identify Oakmont’s long-term needs in order to make optimal use of our newly-acquired assets to meet them?

_________________

Disclosure: I have not played golf in more than 40 years. I don’t live on the golf course. I strongly support preserving golf in Oakmont, including reasonably subsidizing it as an amenity.

I did not care for and opposed the way the Board conducted itself in this matter, in particular, what I’ve regarded as its dogged opacity with respect to keeping the membership fully and timely informed. I would have preferred a different means of securing ownership of the land and believe one was available. I would have preferred a solution that did not lock in continued operation of both golf courses and the restaurant for 30 or 20 years. I was and continue to be deeply skeptical of the viability of depending upon dramatically increased food and beverage revenue to achieve break-even.

Nevertheless, my wife and I concluded as an OVA ‘membership unit’ that controlling the land was of over-riding importance and voted FOR the dues increase. I’m glad for the Board’s achievement of that objective.)

Even with the resources, the Board had to convince OGC, a membership-owned golf entity, to agree to sell. At least part of that consideration required a credible claim that OVA could and would continue golf operations in Oakmont similar to OGC’s. The Board had to overcome legal obstacles to owning the land and operating a golf/food & beverage business as a Homeowners’ Association. And the Board had to negotiate successfully a long-term lease for operating the business with AGP, the chosen lease partner. Criticism notwithstanding, the Board accomplished all of these objectives. That accomplishment deserves recognition and gratitude.

The Board now would be entering the sixth and final stage of effective problem solving – MONITOR PERFORMANCE AND MAKE NEEDED ADJUSTMENTS – but for two profoundly disheartening and sobering events: the world-wide Covid-19 Pandemic and the unanticipated demise of the long-term lease deal and abrupt exit of AGP. The pandemic has caused and will continue for years to cause severe economic dislocations and myriad social changes from ‘what used to be.’ No one could have anticipated such a world-shattering event. Projecting the future consequences of the pandemic and planning are daunting, difficult tasks imbedded with enormous uncertainty.

The collapse of the lease deal and departure of AGP, by definition, requires moving back into the problem solving process because one of the two necessary elements of the chosen solution is no longer in place.

In the short term, the Board immediately secured an arrangement with CourseCo to operate the golf courses for 60 days. As for the long-term, the Board announced that in the next 60 days it will negotiate a new long-term lease deal with either CourseCo or Billy Casper Golf, both of which are legitimate professional golf and food & beverage operators with track records, both of which the Board and its broker had already vetted, and both of whose prior proposals it had considered and rejected in favor of AGP.

SO, WHAT’S THE PROBLEM?

The Board’s rapidly-decided and announced course of action for the long-term merely assumes that its First Solution – well-chosen for the First Problem for the sake of argument – is still the optimal solution. The Board chose that solution after a careful, lengthy problem solving process and believes it will be able expeditiously to negotiate a long-term lease deal with one or the other of the two known, interested companies. The Board’s announced course of action thus re-enters the effective problem solving process at the next-to-last, IMPLEMENT THE SOLUTION, stage.

What’s wrong with that is that now the PROBLEM HAS CHANGED. It is a new, different problem with significantly altered underlying fundamentals:

1. The golf course(s) land is now owned and protected forever from developers. This “significant milestone in Oakmont History,” as President Spanier has characterized it, has been achieved. Therefore, as the President has stated, “it’s important to remember that the main reason we purchased the golf club was to keep the land in our own hands for all time. Owning this land offers Oakmont infinite land use choices, while protecting the community from external, potentially hostile, interests.”

2. There is no longer a current membership-owned golf course entity that must be persuaded to sell to OVA rather than choose another bidder, or bankruptcy.

3. Preserving golf in Oakmont, whether as a membership amenity or a quasi-public business enterprise, no longer requires the vehicle that the Board used successfully to ensure the purchase – locking in the operation of both golf courses and a restaurant & hospitality business as a long-term obligation to be subsidized as necessary by membership dues until break-even.

4. The effects of the Covid-19 pandemic call starkly into question the viability of the pivotal assumption that restaurant and hospitality food & beverage revenue can be sustainably and dramatically increased to or beyond a break-even point. This virus-caused change in the underlying fundamentals of the identified First Problem, alone, requires serious research, consideration, and time to see how powerful new external conditions play out.

Instead of proceeding to re-implement its formerly chosen First Solution by applying it to a changed, different problem, the Board should create an interim period for study of and reflection on the new realities. It should extend the agreement to operate the golf courses in the near term – at least 12 months, maybe as long as 18-24 months – while it takes that time to make a deliberate effort to return appropriately to the beginning of the effective problem solving process in order fully to understand the changed circumstances and identify their impact on Oakmont’s needs.

Ironically, the exit of AGP provides an enormously valuable, totally unanticipated opportunity to do exactly that because there is no longer a binding 20 year obligation to fulfill. The Board should take full advantage of and not waste that opportunity!

In this intentional interim period, the Board should return afresh to needs-finding in order to understand and identify all the aspects of the New Problem:

How to preserve golf in Oakmont and identify Oakmont’s long-term needs in order to make optimal use of our newly-acquired assets to meet them?

_________________

Disclosure: I have not played golf in more than 40 years. I don’t live on the golf course. I strongly support preserving golf in Oakmont, including reasonably subsidizing it as an amenity.

I did not care for and opposed the way the Board conducted itself in this matter, in particular, what I’ve regarded as its dogged opacity with respect to keeping the membership fully and timely informed. I would have preferred a different means of securing ownership of the land and believe one was available. I would have preferred a solution that did not lock in continued operation of both golf courses and the restaurant for 30 or 20 years. I was and continue to be deeply skeptical of the viability of depending upon dramatically increased food and beverage revenue to achieve break-even.

Nevertheless, my wife and I concluded as an OVA ‘membership unit’ that controlling the land was of over-riding importance and voted FOR the dues increase. I’m glad for the Board’s achievement of that objective.

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3 Comments

  1. Malka Osserman on July 29, 2020 at 10:37 am

    Thank you Don for such astute analysis. I would like to contribute another dimension to the problem. Biblical Moses was not allowed to bring the Israelite to the promised land after leading them through the Sinai desert for 40 years. Why? because his task was to lead them out of Egypt from slavery to freedom and shape them from tribes to a nation. Someone else, fresh and courageous was chosen to lead them into the promised land, Joshua. This board had successfully as you noted brought us to the point of owning those two golf courses. But now that we own it we need new thinking, new visions. It is all human but the same board who fought to get the land perhaps now because of ego, short sighting can not bring us to the promised land. Someone else need to complete the task. I pray and hope that other people with courage, wisdom and creativity will bring us new fresh ideas and solutions!! Alot is on stake here!!

  2. Joan Peterson on July 29, 2020 at 2:24 pm

    I have trouble understanding what Spanier is saying:

    “If you didn’t know something happened, you wouldn’t know something happened.”

    “Golfers are still golfing, construction work is still proceeding and we’re not on your doorsteps asking for more money to bail anything or anyone out.”

    Is Spanier saying that there will be no dues increase for 2021? Sounds like Spanier is saying not to worry about AGP leaving and there will be no increases in dues. Why is Spanier speaking in zen riddles instead of clear concise statements?

  3. Ellen Dolores on August 4, 2020 at 9:40 am

    Questions:
    1. Do we or did we get a refund from Madison Marguette for the $72,000 commission paid to sign up AGP?
    2. With all the back and forth- are there any penalty refunds we received when AGP walked out? Like
    all else with this deal, nothing has been made clear by the OV Board.
    3. Was there any due diligence done about AGP’s labor issues before signing them up?
    4. Has any due diligence been done about CourseCo or Casper Golf about their behavior with respect
    to labor issues and/or unions?

    I not only was forced to buy a business I do not want and will never use, but now the BOD who supposedly represents me, has apparently, no interest in or qualms about union busting and/or not making sure the workers, among the lowest paid wouldn’t be exploited, so therefore, did not bother to investigate before giving AGP this contract. Or did they just not think about it because they don’t care. Please let me know if there is something here I am missing!

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