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Castlewood members considering offer from Bay Club

Uploaded: Jan 15, 2019
Castlewood Country Club members will be making a major decision on the future of the club in the next few weeks.
Members will consider options at the club’s annual meeting on Jan. 19 when the Board of Directors and senior staff will lay out various choices and their costs for tackling the Americans with Disabilities Act shortcomings of the clubhouse. The club has held three town hall meetings (Nov. 29, Jan. 5 and Jan. 10) to layout options, answer members’ questions and receive comments.
The board has been exploring improvements for the clubhouse, which was built back in the 1970s after the original clubhouse burned to the ground in 1972. The challenge is the Americans with Disability Act that President George H.W. Bush signed in 1990. The clubhouse doesn’t come close to meeting the standards. The board has used an outside consultant to identify the issues and then contractors to develop costs.
Options for members include:
• Doing only ADA-required updates to the clubhouse would cost members an additional $100/month for 15 years.
• Doing those updates plus other improvements to the clubhouse and swimming pool would cost $200/month for 15 years.
• Razing the clubhouse and building a new one would be a $600/month increase.
• Merging the club into the Bay Club.
The Bay Club made headlines late last year when it purchased the ClubSport portfolio of clubs, including the original club in Pleasanton as well as the Fremont, Danville and Walnut Creek sites.
The proposal calls for Castlewood equity members to receive the $30,000 sapphire membership, which has monthly dues of $900 for an individual and $1,050 for a family. There’s no food and beverage requirement (a change from the current club). With that level of membership, Castlewood members could use any of the Bay Club locations, including the nearby Pleasanton site.
Currently, Castlewood member pays about $810 monthly plus facilities capital fees of another $100 with a $400 per quarter food and beverage minimum.
Bay Club would invest $15 million to upgrade the clubhouse and other facilities and reportedly will maintain both golf courses. The Bay Club has been acquiring new properties since it was purchased by international investment firm, KKR. The club was founded in 1997 and grew to more than 50,000 members before the ClubSport deal that added thousands more members.
The proposal from the Bay Club is the major change since I reported last May that Castlewood was considering a joint venture with Ponderosa Homes to develop homes on the valley course. That option faced some huge hurdles, needing to be annexed to the city of Pleasanton for sewer plus the railroad tracks that run right through it and three holes are bordered by the Arroyo de la Laguna.
In addition, the valley course, because it is relatively flat and walkable, gets about 60 percent of the members’ play. You’ve got to be in excellent physical condition to walk the hill course.
Castlewood, as well as many other country clubs across the country, have been hit by a couple of trends. Topping the list is an aging and declining membership. For a country club with two golf courses, 800 families is a good target. Castlewood’s golf membership now hovers above 600 and has been steadily shrinking. In addition, sources report that the list of memberships for sale is long. The asking price is $15,000 for an equity membership. For a sale, club rules guarantee the club $10,000 of the proceeds, regardless of what it sells for. So, if a membership is sold for $6,000, the former member still owes the club $10,000. The Bay Club deal allows the selling member to keep 70 percent of the purchase price.
Two years ago, the Castlewood club president at the time told members of the homeowners’ association (a separate non-profit organization) that membership in the club had dropped to about 50 percent of the homeowners when historically it was three-quarters or more. For residents with homes along the golf course, their views and expanded backyards were maintained by the club.
Should the club cease to exist, that lovely green space could go away and take a substantial chunk of their homes’ value with it. It’s happened in a modest community like Springtown in Livermore where the city-owned course was closed and has been designated as open space. The city is still working to fund improvements to the area after removing the large pond.
It’s a national issue that the Wall Street Journal spotlighted in its “Mansion” section on Jan. 11. The Journal reported that one consultant said home prices can plummet as much as 50 percent if there’s a legal battle around the course closing.
Sadly, courses are closing because memberships are falling and, in some cases such as in San Diego, because of the cost of irrigation water is soaring. The National Golf Foundation reported that more than 200 courses closed in 2017 with just 15 opening. Some of this resulted from the over-supply of golf course communities built in the 1990s. For instance, in Brentwood/Antioch, there were three golf communities within five miles—now just one club exists, and two golf courses have closed.
The second issue is what potential members want in a club also has shifted from a golf course, clubhouse, swimming pool and tennis to a place for the entire family.
The Ruby Hill Country Club, which was not an equity club, was sold by founder Jim Ghielmetti to Arcis Golf in 2015. Arcis is a rapidly growing company founded in 2015 that runs everything from municipal courses to daily fee and country clubs. The firm rebranded it as The Club at Ruby Hill and remodeled the clubhouse to improve member dining options.
Last year, the Blackhawk Country Club, which boasts two 18-hole courses with one large clubhouse/banquet facility on the Lakeside course, opened a 9,400-square-foot fitness center in its sports complex with tennis courts, pickle ball courts, bocce ball lanes and a bar and grill. That speaks to the interest in family-oriented country club offerings.
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