CHAPTER 12
BENJI BEACH
“Mrs. Clark, here are the keys. Sorry, but I’m in a hurry, I’ve got my car double parked outside. Thank you for everything. I’ll send you a forwarding address when I get settled. Take care.”
He wondered why he told her that he would send her a forwarding address. For his own safety, he had no intention of leaving any clues, where anyone searching for him could find him.
“Are you sure you want me to rent your apartment? You’ve paid for two more months.”
“That’s OK.”
Mrs. Clark came out of her office to say goodbye to John Cross. She walked with him through the lobby to the building’s entrance. John liked her. He had found her to be a warm, friendly person. Often, she was the only one he would talk to in a day. At the entrance to the lobby, she stood watching him, as he hurried to the car, worried that he would get a parking ticket.
The five-year-old Nissan Altima with low mileage had been bought because it was an innocuous family car that he hoped would transfer him anonymously to a new life. He drove off and never looked back.
From Philadelphia, he took US 13 southwest until he reached Route 1, just south of Wilmington, Delaware. The highway then followed Delaware Bay to where it reached the Atlantic Ocean at Benji Beach. It took him over two hours. The small resort town was also an easy two-hour drive, from the two large cities of Washington and Baltimore.
Benji Beach had become these three cities’ summer playground. In July and August, its population exploded from a few thousand permanent residents to over forty thousand visitors. Hotels, restaurants, and entertainment had developed to cope with the summer influx. Some came to lie on the beach but others came to play golf.
One of the Benji Beach golf courses was for sale. It had risen to the top of Johns’ prospect list of more than a hundred golf courses that were for sale in southeast.
The Benji Beach Country Club was closest to meeting everything he had been seeking. It was a semi-private club, close to a large population, affordable with an asking price of only $3,000,000. It included a fifteen thousand square foot clubhouse with a small private apartment. John thought he could live in that apartment until he got established.
Once prime Delaware pastureland, it was now an eighteen hole, six-thousand-yard golf course. From the longest tees, it was a par seventy-two. Spread over two hundred acres, the golf course lacked hills but there were three large ponds and a creek to make it challenging. The advertisement also said it had a large swimming pool, two tennis courts, a driving range, and a chipping range. It contained everything that John thought golfers would want in a club.
The real estate agent had told him, when he first phoned, that the golf course’s owner had been a heavy drinker who died of cirrhosis of the liver. He had left no heirs. The bank holding the mortgage on the property had seized the club when it went into default. They had been trying to get this nonperforming loan off their books for over a year.
John saw Benji Beach as being just far enough off the beaten path that he could live a quiet life there, well hidden from the FBI and any other Las Vegas connections. Yet, it was within a two-hour drive of a market of over twenty million people. A population big enough to provide enough golfers to make the business prosper.
The climate was ideal. On the coast, the Atlantic breezes kept it cool in the summer and warm in the winter. When John checked historical weather records he found that it rarely got below freezing. The average winter snowfall amounted to only two inches. Golfers could play the course all winter. It surprised him when he read that despite being this far north, the coastal area was classified as semi-tropical.
A golf course is a big investment in real estate. John had considered the possibility of building a housing development around the golf course. The east side of the golf course bordered the Atlantic Ocean. His research revealed that the average price of a beach front home in Benji Beach had soared above a million dollars. Wealthy northern baby-boomers were leaving the big northern cities and retiring to rural areas with temperate climates. If he ever wanted to subdivide the course into housing lots, it would be worth many times more than the three million dollar selling price. He could not imagine how he could lose on this purchase.
Benji Beach's potential as an ideal corporate conference destination had not escaped him. A quick check of hotel room rates had confirmed there was a good choice of accommodation. It was far enough from the three major cities to be an attractive out-of-town destination while still being an easy drive. The fact that Benji Beach had already attracted an annual major beach volleyball tournament which attracted thousands of players from the Atlantic seaboard states. That only confirmed the potential John saw in front of him.
He turned off Highway 1 onto Benji Beach’s Main Street. He rolled through a retail strip until the road stopped at the beach. The last building was a two-story retail store with a giant sign on its roof advertising a fudge. A low, concrete wall blocked vehicles from driving out onto the beach. With a season only three months long, John wondered how a business could make a profit just selling fudge.
John parked vertically, in front of the real estate office, across the street from the fudge store. Even though this was the off season, and the street was deserted, there was still a parking meter to contend with. He got out and tried to insert a coin into the meter. The meter was out of order and wouldn’t accept his quarters.
He walked to the low concrete wall and looked across the wide beach to the Atlantic Ocean. The fresh, salty air made him realize how unhealthy large cities were. To the north and the south, the wide beach stretched for miles. A wooden boardwalk bordered much of the immediate beach area. Ocean waves slid up the beach and receded. It wasn’t New Mexico, but he got the same sense of big skies and open space. In Philadelphia the buildings always seemed to be pressing in on him.
It felt like he belonged here. He turned back to the street and walked over to the real estate office.
The real estate office was small and cramped. Old-fashioned, oak, wooden desks failed to impress him. An elderly receptionist, behind a low counter, sat staring at a computer screen. She looked up and peered at John through her bifocals. John suspected from her apparent surprise at seeing him that he must be the first customer of the day, even though it was now past noon.
“May I help you?” she asked in a gravelly, quavering voice.
“My name is Raymond Powell; I have an appointment with Peter Sprackman.”
The receptionist nodded and picked up her phone and tapped in an extension number. John could hear it buzzing in an office just ten feet behind her.
“Mister Sprackman, a Mister Powell is here.”
Without the benefit of the phone, John heard Sprackman reply, “OK, I’ll be right out.”
There was a pause, she hung the phone up and stared at John before she said, “He’ll be right out.”
John wondered if using the phone instead of just turning around and telling Sprackman he was here, was meant to impress him. The next sound was the creak of a wooden swivel chair as Sprackman got up. John was forming mental images in his head of what Sprackman would look like. As expected, a wiry, white haired, intense, little man popped through the door. The real estate agent gave John that full, empty smile that salespeople give prospective customers who they have never met. He mumbled cheerily, “Mister Powell?”
“Mr. Sprackman?” John replied, as he shook Peter Sprackman’s hand.
“I've got it all set up. The loan officer is expecting us at the bank in half an hour. He’s been the acting general manager of the club since they took it over on the mortgage default. He’ll give us a tour of the property and answer your questions. It’ll only take two minutes to walk to the bank. Why don't you come into my office and we can have a coffee in the meantime?”
The office was just big enough to seat Sprackman and two thin visitors around his small desk. They exchanged pleasantries about the weather and what a nice place Benji Beach was. Soon, a dragging noise was followed by the elderly receptionist who crept in carrying two coffees in white Styrofoam cups. She also had sugar packets, tiny cream containers and wooden stir sticks. John prepared his coffee and tasted it. It was watery instant coffee and was already less than hot. He had anticipated nothing better.
Peter Sprackman slurped his coffee, smacking his lips, enjoying the cold instant coffee. It established that he was not a coffee connoisseur. Putting down his coffee he laid out the essentials for John, “They want three point two million but I expect they'll take two point nine million. They’re eager to sell. How much of a mortgage they will take back is another question. They will want to lend you money. The place needs to be spruced up, but nothing that a little paint can’t fix. You can point out the less than pristine condition to them. That should get them in the mood to negotiate. How soon do you want the closing date?”
John recognized that this question was a feeble attempt to determine how hot a prospect he was. He baited Sprackman, “As quickly as possible, I want to move into that apartment in the club house as soon as I can. I’ve given up my apartment in Philadelphia. I’ll be staying in the Benji Beach Grand Hotel until the deal closes. I don’t like hotels.”
Sprackman beamed at this revelation. They finished their coffees and walked up the street to the bank. The loan officer, who would drive them to the golf course, was standing in front of the bank, waiting for them. A blond, red faced man with a long neck and a large Adam’s apple. John could not help staring at it as it bobbed. It took less than ten minutes to drive to the golf course.
John sensed that Sprackman was already savoring the large commission he would receive as both the listing and the selling agent. John sensed that this would be the first solid offer the bank had received for the golf club and probably the biggest sale Peter Sprackman had made in some time. As the listing agent, Sprackman was supposed to be working in the best interest of the seller but he had already dropped the seller’s price before negotiations had even begun.
CHAPTER 13
THE CLUB
During the short drive to the golf course, there had been some idle chit chat. From their comments, John Cross believed they thought they were dealing with a business neophyte. John Cross was anything but a neophyte. He knew what he had taken on. Buying a golf course was like acquiring a small city populated by golf club members, casual customers, employees, suppliers, neighbors, and bureaucratic civil servants. The bureaucrats monitored licenses, permits, water rights, environmental issues, operational contracts, federal laws, state laws and local bylaws.
The clubhouse was on a long circular driveway. It reminded John of those large classical, white clapboard, two-storey houses he had seen driving through rural Pennsylvania. There were a dozen cars parked close to the entrance. The banker pulled into a handicap parking spot, next to the entrance. Rank has privilege.
John stood for a few seconds staring at the building. He agreed with the sales agent. The building could do with a coat of paint, the salty sea air is hard on paint, otherwise the clubhouse looked in good repair. The roof shingles were fine, no broken windows, no potholes in the parking lot, the grass was cut and the flower beds weeded.
When they entered, through the main entrance, John found himself in a long hallway running from one end of the building to the other. On a wall, placed, so you could not miss it as soon as you entered, was a billboard detailing the club’s rules. Most of the rules were the common-sense sort of prohibitions that John wondered why they had even bothered posting them. The others were so old-fashioned and conservative that John wondered if the club was deliberately trying to discourage new memberships.
He recited the offensive rules to himself, “Shirts with collars and sleeves must be worn, and must be tucked in, at all times. Slacks or golf shorts (mid-thigh or longer) must always be worn. Short-sleeve mocks are permitted, if meeting the golf industry standard. Mock necks must measure 1 1/2" high. Caps shall be worn, bill forward, on club property. Tank tops, athletic slacks, halter tops, tee shirts, bathing suits, sweatpants, athletic shorts and denim shorts are not permitted on the Main Floor of the Clubhouse. Denim is prohibited unless specified. Hats are allowed until 5:00 pm and will not be permitted in the dining room unless there is a private party or a club golf function.”
These archaic rules would be a problem in attracting new members. As expected by such rules, John learned the average age of the golf club members was sixty-five and that memberships had been shrinking for the last ten years. The older members were dying off or becoming too incapacitated for golf.
To his right, were double doors that opened to a large banquet room, with a bar-lounge area, close to the entrance. French doors at the back of the banquet room appeared to open onto the golf course. John estimated that the room's capacity would be two hundred golfers.
To his left, was a large pro-shop. It was full of all the brightly colored golf clothes and the expensive golf equipment; you expect to find in a golf pro-shop. Everything appeared to be on sale. There were no customers. He looked for sales staff but there were none in sight.
At the end of the hallway was the kitchen. When he pushed that door open and peered in, a cook looked up, gave him a quick glance and then returned to stirring something in a large pot. John thought the kitchen’s fixtures looked well maintained, but they did not look new.
They made their way downstairs to the basement to view a small gym and a change room. John could smell that damp, cedar odor of a sauna when they were in the men’s changing room but he never saw it. They did not enter the ladies’ change room.
They took the staircase up to the second floor. Here was the club’s office, two small meeting rooms and the apartment that John wanted to live in. After inspecting them, John took out a small notebook and listed changes he would make to the club house.
Back downstairs, they took a rear entrance and made their way, down a slight incline, towards a swimming pool. Behind it, was the driving range, chipping area, tennis courts and a snack bar. Six customers were sitting at wrought iron tables on the snack bar's fieldstone patio. John estimated that the patio could seat fifty people. The tennis court’s surface, white lines and net looked faded and worn.
It was a longer walk to a large metal equipment shed. When they pushed the shed’s sliding door open, they found fuel tanks, compressors, sprayers, lawn mowers, pumps, generators, tractors, trucks, trailers and all the other expensive machinery needed to runs a golf course. John estimated that there was at least half a million dollars’ worth of equipment in the shed.
They strolled back to the snack bar and sat down. The banker bought them coffee. John sat there enjoying the pleasant warmth of the sunshine. The sun skipped off the ripples in a pond that golfers had to hit over to reach the 18th hole.
John wanted this golf course. The banker, sensing John’s mood, tried a trial close, “I noticed you making notes. What changes would you make to your golf course?”
John smiled at the blatant attempt to test his hunger to buy. He replied, “Let’s not get the horse in front of the cart. I’ve just started my evaluation.”
“How would you like to proceed?”
“I noticed when we were on the second floor of the club house that that there was a small board room next to the office.”
“Yes, there is.”
“Would it be possible for me to use that meeting room for the next three days? I want to go over your records?”
The banker looked like he couldn’t believe that a buyer would ever want to peruse their records. He responded, “What records?”
“I’d like the year-end financials, for the last three years, along with this year’s figures to date, budgeted objectives and tax records. Also, I want to look at the membership statistics, rounds summaries and a list of all the club’s fixed assets with their depreciation schedules. I want to work out revenue and expense projections. Oh, yes, I’d like to review all the club’s contracts, so I can figure out which ones I need to assume.”
“Anything else?”
“Yes, all the employee records. I want to see job titles, salaries, years of service, reporting structures and annual reviews.”
The banker realized that Raymond Powell was not the neophyte he had hoped they had found. This would not be the quick, easy sale he had hoped for.
“This will probably take a while to put together. Perhaps you could arrange a tee off time for me, tomorrow morning? I want to play the course and get a feel for all eighteen holes.”
“This time of the year the club opens later, at 8 A.M. Do you want me to set you up in a foursome?”
“No, I’ll play alone. I want to play it with as few distractions as possible. When I finish, which should be in the early afternoon, I then want to start going over all the club’s financial records that you’ve been able to gather.”
John Cross wanted to analyze the trends and determine if it was possible for the club to make money or not. On average, golf courses net out a profit of about 15%. However, John knew government statistics stated that a third of all golf courses were losing money. If this one wasn’t making money, he wanted to understand what it would take to get it up to at least 15%.
For a year, it had been without a manager. With this banker managing it, he would be a surprise if it were making money. He expected that the banker would do his best to hide its poor performance from him but the Sanctuary had spent years preparing him to do this kind of analytical work.
The ride back to the real estate office was more subdued than the drive to the golf club. The real estate agent and the banker each considered various strategies to salvage the sale. They knew what John would find.
Back in Benji Beach, they pulled in next to John’s parked car. It had a bright yellow parking ticket shoved under its windshield wiper. “Welcome to Benji Beach,” John mumbled under his breath.
The Benji Beach Grand Hotel was a few blocks away. It was four stories high, backing on the beach. A curved driveway lead him through landscaped grounds to an impressive entrance.
With no bellboy in evidence, John took his own bags out of the trunk. He left the car in the driveway and made his way into the hotel and across the impressive marble lobby to the front desk. There was no one behind the desk. With his bags at his feet, he stood waiting for someone to appear. He coughed to get attention. It worked. He heard the scrape of a chair through the open door behind the counter. A tall, young man peeked around the corner, smiled, and came out to check him in. He upgraded John to a suite at a discounted price. This didn’t surprise John since it was the off season and the hotel was almost empty.
He deposited his bags in the suite, took the elevator back to the lobby and left the hotel to explore the town. Two blocks away he found a fake Irish pub called, The Leaping Leprechaun where he had a Guinness with his Irish stew.
The next morning, John arrived at the golf club a little after seven o’clock. He was hoping to have breakfast before he teed off. The club house dining room was closed. He walked over to the snack bar and found it was also closed.
In the pro shop, a young kid greeted him. John introduced himself, explained why he was here. He asked him if he could tee off earlier than eight o’clock. The kid could not find John’s name on that day’s player list. He looked confused. When John told him that he was a potential buyer of the golf course and that the banker was supposed to have arranged for the free round of golf, this only made matters worse.
Since it was too early to reach the banker to confirm his story, John paid cash for the round of golf. The kid allowed him to tee off early.
John knew that you judge the quality of a course by its layout, playability, aesthetics, condition, and amenities. The best way, to understand each hole, was to walk the course. The first three holes would have made good cow pastures and did not excite him. He considered several ways to make them more challenging.
When he got to the fairways that ran beside the ocean, he found spectacular views, but several houses were too close to the east side of the course. He wondered how many windows got broken and made a note to check the club's insurance policies for such coverage. Further on, he came to an area of undeveloped woodland separating the fairways. He contemplated building several houses there.
On the green closest to the ocean, was an area that indicated a lack of oxygen in the soil. John wondered why the grounds keeper were not aerating and top dressing the greens. The fairways could become unplayable. Cancellation of future tournaments were a possible consequence of poor green maintenance.
It had been a long time since John had carried a golf bag, but a cart would not have given him the same understanding of the course. After each hole, he stopped to make notes. In the early afternoon, he finished all eighteen holes.
At the club house, he showered and changed. As he dressed, it hit him that he was starving. He had not eaten all day. The thrill of being able to walk his own golf course had distracted him.
In the club house dining room, he ordered a steak sandwich. It was over cooked, dry, tough, and fibrous. The soggy, limp French fries did not complement the meal nor did the flat draft beer.
A belly, full of greasy food, left him as lethargic as a python that had swallowed an elephant. He made it upstairs to the main office. He let them know he was ready to review the financial data that he had requested. The accounting clerk was not happy. She wondered how many of the staff John would fire when he discovered how poorly the golf club was doing and whether she would be one of them.
When John entered the board room and saw the foot-high piles of paperwork on the large mahogany table, he wondered how he would ever get through it. He searched through the piles until he found the previous three years of financial statements. He pulled up a chair to the middle of the table and started to make notes of anything he found unusual.
Soon, he was looking at the current year-to-date figures and comparing them to the historical accounting figures. Under the bank’s supervision, the course’s revenues had dropped like a stone thrown into a deep pond. Net earnings were just above break even, hovering around $100,000. This would suggest a reasonable purchase price of $1,000,000 for the club not the $3,000,000 the bank was looking for.
John wondered if this golf course was worth buying. However, what was valuable was the land. His research had shown the price of land in Benji Beach had been climbing. If he couldn’t turn the golf course around, it would be a good real estate investment, providing he could get it at the right price. Based, on what he had seen, this golf course could generate substantial profits.
For the next two days, he started reviewing the financial data early in the morning and finished late in the evening. When he completed his review, he arranged to meet with the banker and real estate agent at nine o’clock, the next morning.
The banker opened negotiations, “Well Mister Powell, since you are still here, you must have seen what a great opportunity this golf course offers for someone with your abilities.”
John stared at the banker and thought about an appropriate reply and then edited it, “The golf club has potential but since it isn’t making money, you should pay me to take it off your hands.”
This response took the banker by surprise. He was not use to such bluntness so early in the negotiation. He chose his next words, suspecting that, this buyer, now knew more about the golf club than he did, “Perhaps the golf course has slipped but some smart owner will turn it around and become rich. The land, the course is on, is worth a fortune.”
“I can buy a farm, a mile away with more acreage than this golf course, for less than half of your listing price.”
“True, but the golf course has great beach frontage which makes it precious.”
“With global warming and rising ocean levels, beach front property in a state like Delaware where land is only a few feet above sea level, may not be the best long-term investment.”
That took the wind out of the banker’s sails. He said, “Mister Powell, you’ve had three days to study this investment, what’s your offer?”
“A million dollars, cash.”
“That’s ridiculous. The selling price is three million.”
“You usually pay ten times earnings for a golf course. This golf course is earning almost nothing. A million dollars is more than generous.”
Although the banker said nothing. He did not disagree with John. For several seconds, he pondered the offer. The hundred thousand that the bank had just put into the golf course to keep its doors open was only the latest money they had been shoveling into this bottomless money pit. He also considered that there had been no other offers. Putting more money into the property, for real estate development, was not something he wanted to have to propose to the review committee. He had hoped that some wealthy fool would come along and give them something close to the asking price. His experience had taught him that the first offer in real estate is often the best offer. It was time to sell. He replied, “A million dollars is out of the question. I think the bank would consider two million.”
“Well, I tell you what. If it isn’t worth a million, it sure isn’t worth two million, but I’ll gamble and meet you halfway. A million in cash, up front, and I will take a half million-dollar operating loan at one percent over prime. The golf course will continue to be your security.”
The banker calculated that the million would more than cover their loss on the previous owner’s mortgage. A loan would keep the golf course as a banking client. This new owner seemed to be more than capable. He responded, “Two percent over prime.”
“Okay, two percent over prime it is. How quickly can we close this sale so I can move out of the hotel?”
“Give me a day to get everything drawn up.”
“I’ll need a copy that I can take to my lawyer.”
“I should have one ready by for you by four o’clock tomorrow afternoon. Here are the forwarding directions that you will need for your bank. Let’s schedule the signing for Friday, at nine.”
With that, John stood up and shook the banker’s hand. He returned to the hotel to phone his bank about transferring the million dollars and to lay out a long-term business plan for the golf course. He phoned the hotel’s manager and asked him if he could recommend a local lawyer who would meet with him on short notice. The manager referred him to the hotel’s lawyer.