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To Invest or not

post #1 of 20
Thread Starter 
I have a chance to invest in a rebuilding of my local country club. That being said, it's not a big investment. It does have a restaurant and kitchen, and bar. A little background about the CC. It's an 18 hole course, carts, Pro Shop, etc. The dining area seats 50-60, has a pool and patio area. The CC closed a few years back, and as such, the corse needs repair, the clubhouse, dining area, pool will need work to bring the place up to par. The equipment is still good in the kitchen. So a friend of mine 10 years running bars, a family member who has over 25 years as FOH, GM, and cooking experience, and myself cooking. The guy bought the course, clubhouse and all that goes with it. He's wanting people to invest, he's going to hold 51%, with the other 49% open to anyone that wants to invest. Here is my concern if my friend my cousin, and I do decide to invest, we've already let it be known that we want the dining, bar, kitchen, and patio. Each of us are putting in $22,500 and starting a company for said area.

The only thing I have an issue with is the investment is open to 50 plus people. They want to have a board of directors with 5 people max that have final say. If you invest you get one vote. I like the idea of having some say, but was putting back for a food truck or opening a proper pub in my area with the three of us.

Any input is greatly appreciated. Feel free to play devils advocate too.
post #2 of 20
"He's wanting people to invest, he's going to hold 51%, with the other 49% open to anyone that wants to invest."

"They want to have a board of directors with 5 people max that have final say. If you invest you get one vote."

 

"Here is my concern if my friend my cousin, and I do decide to invest, we've already let it be known that we want the dining, bar, kitchen, and patio."

 

     So far we have "He's wanting"  "They want", "If my friend my cousin and "I". Oh, and the approximately 47 other investors. 

That's a lot of miscommunication I guarantee will happen. 

 

I think I would want a lot of details ironed out before anyone saw a penny of my money. I'm not a gambler and I've never invested in anything like this so maybe this is how it's done but it seems like a huge set of problems. 

     Basically, who's the real boss? Who says you, cousin and friend can run the kitchen and bar or whatever if there is a board of directors, the 51 percent guy and all the other investors?

when does that decision get made? before you all invest or after and by whom?

How long does your running the kitchen/bar last? Forever? 

What results are you expected to achieve?

Does any "profit" you make from bar and food sales go to the club or does it help pay back your investment? 

Who decided how much work is needed on the total property, who will do the work and how much it will cost?

Does the first round of investment from everyone cover just the improvements or does that include operating capital?  

How did the investment price come about? Who made the valuation and based on what?   

Who handles the liability and for what? 

The kitchen is in working order you say? What if you find out a week after you open that the walk-in, the oven or the dishwasher needs repair/replacement? Do you and the cousin and friend pay? 

Who is Mr. 51%? Does he know what he's doing and have a trackable background? 

Why did the CC close in the first place and why would this time around be any different?

What kind of country club is it going to be? High end, middle of the road, a neighborhood gathering place? Does that end goal fit in with potential membership? 

Okay, that's enough. 

You don't have to answer all those questions for me, obviously. But you should find out the answers if you don't know them already. 

post #3 of 20
Thread Starter 
Thanks for the reply. All of these are questions I need answers to as well. I have been thinking of this all day. I'm glad that I'm not fooling myself into making a bad financial move.
post #4 of 20

Now that I've had a good night's sleep, I realized what bothered me first. 

Why does Mr. 51% get to be Mr. 51%?

Does that not give him veto power over everyone, including the Board? Wouldn't it be better if all other investors equaled 51%? 

So Mr. Initial investor gets nearly half the returns based on his larger share but "control" remains with everyone. 

I'd definitely visit other country clubs to learn how they work out these issues. And of course, the lawyers. 

Anyway, good luck and please reply with an update when you work things out.

post #5 of 20

I wouldn't touch it as a business investment with a ten foot pole. 50 investors. A board of directors. Everyone spouting their opinion on how it should run but  with one guy with the only real say so (51%). He wants my money and he will decide how it is spent. Autocratic monarchy... I don't think so with my money. The only way I would consider it from a business stand point would be as a contractual service with no investment on my part.

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post #6 of 20

@M Buchanan I absolutely agree with @cheflayne. That is a huge hell to the NO! If you take a look at country clubs in general they are sitting in a declining market. Not to mention the guy who is asking what he is asking sounds "shady" right off the bat. Take a good look into why the country club didn't make it in the first place. 

 

IMHO, I would keep your money and invest into your own company such as a food truck like you had mentioned or a small yet swanky place that focuses on quality everything in a up and coming area. Hope you take the time to research and rethink this venture. 

 

Good luck!:)

post #7 of 20
During my bartending days one of my regulars was the Exec Chef for an upscale CC.
He was forever complaining about all the money flying out the window because his real bosses were the members.
Because it is the members not the owners that drive the bus.

Despite having a very nice employee package this regular moved on after a few years.
Last saw him doing cooking demos in the meat department at one one of the super expensive grocery stores.
We talked for a bit and he told me that despite the small cut in pay his happiness quotient was much better.

Unless Mr 51 has experience in the private CC world he may be in for a huge awakening.

mimi
post #8 of 20

RUN FOR THE HILLS

post #9 of 20
Thread Starter 
I agree with all that your saying. I just like a second opinion on this. From the get go it sounded suspect. I was looking at the part of having the kitchen to do other things, ie treat it as a commissary for catering, or for a food truck. I've worked hard to get where I am, I want to make the best place possible. Too many people with their hands in the pot, too many unanswered questions, and I find out today, no business plan. That alone, for me, is a no go.
post #10 of 20

I had one partner in a restaurant, that was one too many.

post #11 of 20

@M Buchanan,

      Over the decades of being in business for myself I have learned the hard way, as most.  In any partnership agreement, whether it be 2 people or 200 people, the MOST IMPORTANT part of the agreement is how to dissolve it.!

Quote:
Originally Posted by M Buchanan View Post

I have a chance to invest in a rebuilding of my local country club. That being said, it's not a big investment. It does have a restaurant and kitchen, and bar. A little background about the CC. It's an 18 hole course, carts, Pro Shop, etc. The dining area seats 50-60, has a pool and patio area. The CC closed a few years back, and as such, the corse needs repair, the clubhouse, dining area, pool will need work to bring the place up to par. The equipment is still good in the kitchen. So a friend of mine 10 years running bars, a family member who has over 25 years as FOH, GM, and cooking experience, and myself cooking. The guy bought the course, clubhouse and all that goes with it. He's wanting people to invest, he's going to hold 51%, with the other 49% open to anyone that wants to invest. Here is my concern " if my friend my cousin, and I do decide to invest, we've already let it be known that we want the dining, bar, kitchen, and patio. Each of us are putting in $22,500 and starting a company for said area."

The only thing I have an issue with is the investment is open to 50 plus people. They want to have a board of directors with 5 people max that have final say. If you invest you get one vote. I like the idea of having some say, but was putting back for a food truck or opening a proper pub in my area with the three of us.

Any input is greatly appreciated. Feel free to play devils advocate too.

 

Just curious, would it not be better to draw up a lease with 51% and lease the part of the property you use?;) 


Edited by panini - 4/20/15 at 9:58am
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post #12 of 20
Thread Starter 
At this point, I'm not going to get involved. There is a meeting in going to and see if these questions can be answered. And to see if he has a business plan, or any plan. I'm pretty sure though I'm going to watch from the sidelines and see how long it takes to implode.
Thanks for all the input and advice. And unless something happens, like all these answers to questions, or lease the bar/kitchen separate from everything else, it's going to be a no go.
However if y'all are courious, I'll let you know how it goes, and what was said.
post #13 of 20
Thread Starter 
Thanks to @chefwriter for the outline of your response. Anyone else that would like to ask a question for me to ask at this meeting, let me know. I think this is a great opportunity to see what not to do. I'll get back this evening after this meeting and let you know what happened, and I your courious or interested.
post #14 of 20

So….. is the meeting over? How did it go? 

post #15 of 20
Thread Starter 
What a debacle. The guy who bought the golf course, admitted he doesn't have any knowledge of how to run the golf side or the bar and grill. Last nights meeting was an attempt to raise $360,000. So he can make his money back.
Keepin mind when this community was built, this was only one of three golf clubs around. He wants the members/ investors to run it with the BoD making all decisions. And if you invest you get a vote. Now, here's the sketchy part. If you invest a $1000, it's equal to one vote. Want a more weighted vote, invest more up to $25,000.
After all money is in place (investment funds) they vote on the 5 BoDs, spots. They will incorporate, the INC, and BoD will pay all health department, liquor license, pay roll etc.
Can't lease the bar and grill separate, even if I invest. If was to run it, I would have to pay for the food out of my pocket, any profits go to paying back the investors and operating cost of the course.
So it's a gaggle. I'm not even gonna do this. Too many sketchy dealings, no business plan, no direction, it looks bad for them.
post #16 of 20

Wow. It fascinates me that people come up with this stuff with a  straight face.  Isn't it interesting that there really are times when you can predict the future? 

When you finally put together your own operation, we'll still be here with our opinions if you have any questions. 

post #17 of 20
Thread Starter 
@chefwriter, it is. And what actually gets me are that people actually put up money last night. Granted, they probably have excess capital to do that with, or they were just stupid. But I did manage said me networking there, hell, if someone is willing to throw money at someone that has no business plan, maybe they can get behind someone that does.
post #18 of 20

What a cluster ****.

CC perks (dining room, pool, tennis courts and all the rest) are there at the pleasure of the members.

The management is happy if they just break even.

You noted there were three and this one went bust.

For some reason all the deep pockets went with the other two and Mr 51 bought the last one at fire sale rates.

A club cannot survive without members and to build one up from ground zero is nearly impossible in this economy.

I am glad you dodged the bullet and wish great things for you in the future!

 

mimi

post #19 of 20
post #20 of 20
Thread Starter 
I've went in on other business ventures in the past, and have done well in the past. I was more cautious and courious at the same time.
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