Wednesday, August 11, 2021

The Selling of a Country Club Part 2


A previous post detailed how an HOA painted an optimistic picture of the future financial position of a country club in a sales brochure entitled Better Together (BT).  Homeowners were asked to vote (i.e., give their proxy to the Board) before the sales agreement was finalized.  That was an error in judgment made by many members because the sales agreement and proposed changes in the CC&Rs contain provisions detrimental to the bests interest of golf members.  If these provisions had been aired and debated before the vote, would it have affected the outcome?   Probably not.   The acquisition decision was framed as “good versus evil.”  For most homeowners, this made the choice simple. The major differences between BT and reality are detailed below so their impact on the club can be measured over time.      

1.       BT does not specify that the golf club members will be responsible for the golf course even though they have no control over its management.   The golf club will be required to be self-supporting as shown in the proposed new CC&R:

Section 18.1 (B) The expenses incurred by the Master Association in the operation and maintenance of the Golf Facilities SHALL NOT be included in the Common Expenses and Regular Assessment levied pursuant to Article 5, Section5.3 of the Declaration.  All such expenses shall be paid from income received from the operation of the Golf Facilities, including without limitation the Golf Membership fees and dues.

The proposed CC&Rs put the golf club in the same precarious position other clubs have faced. Morningside Country Club and Indian Ridge Country Club, both owned by the golf members, had to negotiate with their respective Homeowner’s Association (HOA) for financial support to put them on a sound financial position. At this Club, the HOA has stipulated no support is forthcoming. BT did not spell out the golf members obligation which could turn out to be onerous.

2.      BT presents a superficial estimate of the financial future of the club.  It does not present a separate analysis of the viability of the golf club.   For example, BT does not contain any audited records of the costs and revenues or pro forma income and cash flow statements of the golf club.    Many golf members believe the golf club is on strong financial footing based on the numbers presented in BT.  That analysis, however, is highly suspect as shown in “The Sale of a Country Club Part 1,” June 7, 2021,

An approximate divisional accounting is provided in BT (p. 10). BT shows the golf operation is near breakeven. It is probable the golf course operates at a loss, but the Club makes a profit because of the Racquet Club Assessment ($330/month/homeowner). In a Board produced brochure, Racquet Club dues are projected at the same $330 per month or $3.52 million per year. BT estimates the operating cost of the Racquet Club is only $721,000. What will the Board do with the excess funds? It is only clear from the proposed CC&Rs that the Golf Club will not receive any funds from this account.

3.       BT stated ”To manage the diverse interests of the Racquet Club and the Golf Club, divisional accounting will be used to capture the actual costs and revenues of each facility.”   This statement implied golfers would pay for golf and racquet players would pay for racquet sports.  This statement was either misleading or an example of “bait and switch marketing.”   A homeowner cannot opt out of the Racquet Club.  According to Section 5.3 (E), expenses incurred in the operation and maintenance, and/or improvement of the Racquet Club and Related Facilities are a part of the Common Expenses for the Master Association and will be billed to each Owner as part of the Regular Assessment. 

4.      Over the past year the Developer has been selling what are called Premier Memberships. A Premier Member pays his/her dues for one year upfront.  To entice more members, the Developer has increased the length of the Premier Membership by several months. In real estate transactions it is customary to pro-rate pre-paid revenues (e.g., rent) between buyer and seller.  The sales agreement, however, lets the seller (Developer) keep all of the Premier Membership fees.  This amounts to $1,214,880 in revenue (12/31/2020 to 8/17/2021) which will not be shared with the HOA.  As of the closing date, 68 Premier members will not be paying golf club dues at least until 2022.  The Golf Club is obligated to provide 468 months of membership to these Premier Members while receiving no dues.  At the current dues level of $1,495 per month this amounts to $700,000 in foregone revenue.

At the end of one year, a Premier member can convert to a full golf membership. BT indicates the conversion price would be $39,500 though this is not explicit. In practice, Premier members have been given a $10,000 discount and only pay $29,500.

The short-term fate of the Golf Club is dependent on how many Premier members convert and at what price. A high conversion rate would be a shot in the arm to the Golf Club and provide it with needed reserves. This financial windfall is not likely to be repeated in future years since the low sales inventory in housing reduces the pool of potential golf members.  BT does not mention the Premier Member program even though the decisions made by the 68 participating members are vital to the financial viability of the club. Why was such an import fact left out of BT?

5.       BT and an associated Frequently Asked Questions imply the Board cannot impose an assessment with the homeowner’s approval.  This is false.    Neither homeowner nor golf membership approval would be necessary.  Section 18.1 (B) states “nothing in this Section shall prohibit the imposition of a Special Assessment pursuant to Article 5, Section 5.4 of the Declaration to the extent that any such Special Assessment is necessary to defray in whole or in part, the cost of any capital improvement to the Golf Facilities…”  Section 5.4 states that no Special Assessments shall exceed five percent (5%) of the budgeted gross expenses of the Master Association for that fiscal year.  The budget for the Master Association is approximately $9.2 million so the Special Assessment is capped at $460,00 per year. If the capital improvements are for the golf facilities, the Master Association can elect to impose the Special Assessment on only those members who hold golf memberships.  Assuming there are 325 golf members, the Master Association can impose a Special Assessment of approximately $1,400 a year without a vote.

If golf members wanted to finance a capital expenditure larger than the Special Assessment procedure allows, there does not appear to be a mechanism for it.  Section 5.4 only specifies a vote of all members (i.e., homeowners) for major assessments.  The new Article 18 is silent on this type of assessment.

6.      BT argued the Developer could raise golf club dues at will.  BT did not say the HOA will have the same ability. The Developer, however, was able to moderate increases in golf dues by either using reserves or allocating Racquet Club dues to golf course related expenses.  The new golf club, however, will be formed without reserves and is barred from using Racquet Club dues.  Golf Club dues will be the cost of operations plus capital expenditures minus miscellaneous income (e.g., membership fees, guest fees) divided by the number of members.  The level of dues will be a function of the number of members.  If a golf member is replaced by a pickleball enthusiast, golf dues must increase.  If this cycle is repeated enough times, the golf club could enter a death spiral.

7.      Legally the HOA is responsible the liability of the member deposits. In actuality, it is the golf members who are responsible.  This is not made clear in BT.  The Board’s operating plan assumes member initiation fees exceed deposits refunds from 2020 to 2031.  In this case, the extra revenue is allocated to the Golf Club.  What if deposit refunds exceed new member fees?  The proposed CC&Rs are not clear on this matter.  From the tenor of the CC&Rs, the HOA could lend the Golf Club account funds to cover the deficit.  This loan, however, would have to paid back at some time by the Golf Club.

8.      In the Sales Agreement, the HOA gives an Honorary Corporate Membership to the Developer Group. This gift is not mentioned in BT.   The Developer can name the six members, but they can be changed with certain limitations.  This Honorary membership is given in perpetuity.  This represents a yearly gift to the Developer $99,240 at the present dues rate and trail fee.  Golf club members had no input in granting this membership but must bear the costs it will impose.  The CC&Rs do not provide a mechanism for the HOA to reimburse the Golf Club.  BT does not mention the honorary memberships.

9.      The Sales Agreement acknowledges the Developer will remove approximately 30 golf cart parking spaces that service the Racquet Club.  The Developer is obligated to provide parking at an alternative location on the property.  The sales agreement does not give the Board any approval authority on the location and size of any new parking area.  BT does not mention the inconvenience the elimination of the present golf cart parking area will cause.  Why was this very important provision omitted from the BT?

Perhaps the biggest fault with BT is that assumes a linear world. Membership and operating costs increases at the same percentage each year. The golf industry does not behave that way. There can be large swings in the financial viability of a club. The number of clubs that have been closed attest to that. To survive rough periods a club must have substantial reserves. This Club will not have substantial reserves. It will rely on the HOA increasing Golf Club dues to meet financial contingencies. Higher dues can mean the Club is less competitive in attracting new homeowners and golf members. Time will tell if this comes to pass.

Tuesday, June 8, 2021

The Selling of a Country Club Part 1

Preface -  Developers often build golf courses to attract home buyers.  Once a development is completed,  the Developer is faced with choices about the golf course: 1) Maintain ownership, 2) Sell to a golf course company, 3) Sell to the golf members, and 4) Sell to the Homeowner's Association (HOA). This post, and possibly others, will detail an example of a HOA attempting to acquire a Club. The first step in the acquisition is convincing a majority of homeowner's to agree to the purchase. One strategy for achieving a majority is to oversell by presenting only a best case scenario to the homeowners.  That appears to be the case examined below.  The HOA is being offered the Club for $1, but it must assume a $10 million liability for returning deposits when a member leaves.  The HOA distributed a brochure (Better Together) to convince homeowners to vote "yes" on the club acquisition.  How will everything work out?  Who knows? But it will be interesting to follow. 


The Better Together brochure and “Frequently Asked Questions for the Club Purchase” (FAQ) present the case for the HOA acquiring the golf and racquet club from the Developer.  The two documents do not constitute a prospectus where potential investors are informed of potential risks.  Instead, they are a sales pitch that envisions a rosy future where dues increases are tied closely to the Consumer Price Index, no assessments without the consent of the governed, and a constant flow of new members to liquidate the member deposit liability.  A closer examination shows these conclusions are based on specious reasoning, questionable assumptions, and errors of commission and omission.  This post is not an argument against acquiring the club.  Its intent is to determine if the HOA has presented a realistic assessment of the costs and benefits of the acquisition.  Below, statements from the two documents (shown in italics) are examined to make that determination.         

  • Now that less than half the members have a Deposit, the amount refunded each year is expected to be equal or less than the revenue collected from new NRG (Non-Refundable Golf) members.  (p .9)

The forecast in the ten-year projection never mentions how many NRG members are projected to join each year.  If the projected revenue from NRG members ($750,500) is divided by the initiation fee ($39,500), the consultant must assume 19 new NRG members per year.  Later in the section on Net Capital Available, the projection is for only 15 new members (p. 11). This indicates the brochure was not put together with much care.

The brochure only presents an optimistic case and does not perform any sensitivity analysis (i.e., best and worst case).  It is assumed the club will gain 209 new golf members in the period 2021-2031.  It also assumes only 130 deposit members will exit, increasing the total membership by 79 less any NRG members who quit.  The financial viability of the club should have undergone a stress test to examine what happens if the consultant’s projections are not met. This is important since the “club” will be formed without reserves.[1] 

 It is not clear why the consultant did not prepare a ten-year cash flow analysis or ever mention the relationship between financial viability and the number of total members. The number of golf members in any year is never mentioned in the brochure.

·       The gross value (of member deposits) is $11,173,500 (as of September 30, 2020).  However, a review of the member census indicates no member will reach the 30-year term until at least 2025, and only 10% is ever likely to reach full maturity.  Assuming 90% resign prior to the 30-year term, the deposit liability is more likely to be $9,497,475. (p. 8)

The Better Together brochure assumes 10% will reach full 30-year maturity (i.e., get the full deposit refunded).  It further assumes 90% will resign prior to the 30-year term and receive 75% of their deposit.  As shown in Table 1 below, this should lead to a liability of $8,659,463.  The brochure states the liability to be $9,497,475 --strangely that is exactly 85% of the gross liability.  To get the brochure's estimate, it must be assumed the 30-year member gets 175% of his deposit returned.         

Table 1

Assumed Liability for Member Deposit

Member Type 

Liability Calculation 



$11,173,500 x 10% 


Less than 30-year 

$11,173,500 x 90% x 75% 






The brochure states no member will reach the 30-year term until 2025.  The table (pp. 8-9), however, shows no member lives long enough to collect 100% of his deposit (i.e., everyone gets 75%) through 2031.  The inconsistency between the text and the table casts doubt on the credibility of the projections.

  •   For 2018-2019 period, the Club averaged $595,000 per year in NRG initiation fees.  The plan assumes $600,000/year in the Projected 2020 and 2021 models.  These funds will be used to repay Refundable Deposits to Golf Members. (p.13)

The plan did not assume $600,000 a year in projected NRG initiation fees for 2021.  The Table on p. 9 shows the initiation fee was estimated to be $750,500.  Had the $600,000 estimate been used over the ten-year planning period, Golf Membership Revenue (Initiation fees minus refunds) would have produced a negative cash flow of approximately $250,000 and not the positive cash flow predicted of  $1.1 million cited on p. 9.  Why was $750,500 eventually used instead $600,000?  Perhaps because the former number works, and the latter does not.

The Club average of $595,000 in initiation fees comes out to 15 new members in 2018-2019 (p. 11).  The consultant projects 19 new members for each year (2012-2031) or a 27 percent increase in the rate of new members.  There is no explanation of why this occurs. 

In the past, an NRG member would sign up for a Premier Membership since it was cheaper than paying the dues and trail fee he would pay as a regular member.  He would then be allowed a discount, which lately has been $10,000, on his initiation fee.  The current membership plan does not mention the $10,000 discount.  What effect will this have on new member sales?  The brochure is silent on this question.

  •   The NRG initiation fee is low in comparison to peer communities. A 50% increase, which seems closer to the market, would generate about $250,000 per year. (p. 7)

The consultant provides no data to back-up this claim. It appears the claim is not valid.  Comparable clubs in the area have NRGs ranging from $20,000 to $39,500.  

A 50 percent increase in the current NRG ($39,500) would be $19,750 and bring the total cost to $59,250.  Assume the new fee was implemented and NRGs generated $1 million ($750,00 plus the additional $250,000) a year.  This would mean there are 17 NRGs willing to pay $59,250, but 19 NRGs willing to pay $39,500.  The consultant is assuming, based on no evidence, a 50 percent increase in price only reduces demand by 10 percent.  This seems unlikely.     

  •    …the Club will be absorbed into the HOA making it a non-taxable entity.  This reduces expenses (property taxes) by $241,000 per year.  (p. 11).

The brochure asserts the HOA can buy the Club and therefore be exempt from $241,000 in yearly property taxes.  Typically, common property owned by the HOA is not taxed in California because it is assumed to be embedded in the assessments of the homes.  The logical extension of this theory would mean if the HOA acquired all real property in the County, total property tax collections would be zero.  This is not reasonable.  The local Assessor was asked the following question:

  • “If a privately owned golf course is bought by an HOA, does the property tax disappear or is it allocated to homeowners?"  

The following answer was provided by the Supervising Appraiser, Total Property & Exemptions in the Office of the  County Assessor-County Clerk-Recorder in an email dated 5/3/2021:

  • “In response to your general question…, the property tax does not disappear, the property is still taxable to the HOA.”

The Board President was asked if the consultant verified the brochure’s claim about the property tax exemption with the Assessor or reference the treatment of other HOA owned courses in the Valley? In an email dated 4/25/2021 the President responded:


“Yes, both were done. We also checked with the HOA owned courses that were part of DRM (Desert Resort Management) as the management company. There were 2 DRM managed HOA’s that owned clubs and both are tax free…”


When asked if the Board had any documentation from the Assessor affirming the exemption from property tax (email dated 5/7/2021), the Board President failed to respond.  The clear inference is the Assessor did not give the Board any assurance about a possible exemption.


DRM’s experience may be with clubs that were always owned by the HOA.  In that event, the value of the common property would have been embedded in the price of housing and the HOA would not be subject to property tax.  This scenario was affirmed the appraiser in another email dated 5/3/2021.  That is not the case at the Club.  The $241,000 yearly saving is clearly in doubt and should be verified.[2]

The consultant also does not address why more clubs have not adopted HOA ownership structure if it can yield significant savings.   Either the saving does not exist, or many higher-end golf clubs do not want to cede control to the HOA Board.  Under the acquisition plan, the golf members may not be in control of the golf club.  Dues levels, capital improvements, and the amount of outside play, for example, will be determined by the HOA Board.  Since golf members make-up a minority of Club homeowners, their control of the Board is not certain.  This lack of control could explain why many clubs are owned by the golf members and not the HOA.   

  •  Any special assessment or significant borrowing would require approval of the homeowners. (FAQ)

The assertion about the requirement for voter approval is not correct.  The Board of Directors can increase the regular assessment by twenty percent (20%) without the approval of the homeowners (CC&Rs, Sec. 5.3B).  This would be an increase in revenue of approximately $164,00 per month.[3]  This could fully amortize a $9 million loan over 5 years at 4% interest.  This is significant borrowing that would not require the approval of the homeowners.  

The Board of Directors can also levy a special assessment that does not exceed an amount equal to five percent (5%) of the budgeted gross expenses of the Master Association for that fiscal year without the approval of the homeowners (CC&Rs, Sec. 5.4).   This limits the levy to approximately $550 per homeowner.  If this does not produce sufficient revenue the Board can simply levy a special assessment in the following years.  

The brochure implies the Board will not fund capital expenditures with the mechanisms described above. The diverse interests of homeowners (e.g., golf, racquet sports) and the cumbersome voting process would make it difficult to fashion a majority to pass any large assessment.  Net membership deposits (NRG payments less deposit refunds) are projected to provide only $1.2 million over the next 10 years.  Therefore, any large capital project will have to be funded from operations.  As discussed next, operations may not yield the projected net income leaving the club with few resources for capital improvements   

  • …(projections) show the HOA Club operation generating net operating income of $1,690,000…which as a non-profit entity will become Net Available Capital for Reinvestment. (p. 13)

The consultant presents a Business Model (p.10)[4] which is based on several questionable assumptions.   The baseline for projecting costs is the average cost experienced in 2018 and 2019.  This does not seem reasonable.  For example, golf operating expenses in 2018 were 5.84 million and 6.05 million in 2019.  The consultant then uses the average expense of $5.95 million as the baseline.  It is more likely that 2019 reflects the best estimate of current costs and should be used as the starting point.  Table 2 shows how this more realistic assumption raises projected costs by $388,626 and reduces the projected 2021 operating results from $559,781 to $171,155.

Table 2

Effect of Baseline Assumption of 2021 Projected Costs


Cost Category

Baseline Assumption

2018-2019 Average


Cost of Sales



Operating Expenses






To estimate Net Operating Income, a line-item termed Net Developer Allocations in the amount of $162,427 is added to the Operating Results.  What is this line item, and why should it be added to operating income?  When queried, the Board President wrote (email, dated 4/25/2021) “This is inter-company allocations between the Developer's various businesses. They have allocations “in” and “out” hence the word Net.”  The Board needs to provide a better explanation of why this line-item will accrue to the benefit of the HOA Club.

The consultant adjusts the projected Net Operating Income to estimate the amount that would be available for capital improvements.  The adjustment of $639,000 for Capital Expense in Operating Budget is questionable.  The consultant makes a judgment call on what is a capital expenditure and what is an operating expense.   The consultant notes the Club has been spending on average $639,000 on facility maintenance.  This would argue it takes this amount of spending to maintain the facilities and the $639,000 should not be seen as part of a discretionary capital budget.

If the $639,000 adjustment is eliminated, the property tax saving not realized, and the 2019 cost baseline used, the Net Available Capital would be reduced to $0.37 million and not the $1.69 million projected in the brochure.    

  • The Developer sets all dues and fees for the clubs and per the agreement established many years ago, they can increase Racquet Club fees each year up to a maximum of 20%... (FAQ)

This is correct but it is interesting to look at the history of how such a one-sided contract came to be.  When the maximum increase was being debated, The Developer suggested 20% since that was the same percentage the Master Association could raise the regular assessment on homeowners.  The Board apparently did not appreciate the difference between the HOA and the Developer.  If the homeowners did not like the increase in the regular assessment, they had the power to elect a new Board.  The homeowners, however, were made defenseless by this agreement against increases from the Developer.  (Note: The Master Association also provides services to the Developer.  The maximum percentage increase that can be charged to the Developer is tied to the Consumer Price Index.[5]  This agreement is so one-sided it could be considered unenforceable.  The present Board, however, has not objected to the Agreement, but seemingly embraced it.  As discussed below, the Agreement has led to the financial viability of the Club and made it more attractive to acquire.

  • To manage the diverse interests of the Racquet Club and the Golf Club, divisional accounting will be used to capture the actual costs and revenue of each facility…Dues and assessments will be determined by division.  (p. 14)

An approximate divisional accounting is provided in the brochure (p. 10). Table 3 below shows the golf operation is near breakeven while the racquet club generates $2.91 million per year.  Without the racquet club assessment there would not be sufficient funds to cover overhead and the loss in the food and beverage department.  This brings up the issue that has plagued other clubs in the area.  How much should non-golfing homeowners be charged for the upkeep of the golf course?  Whether the present apportionment of costs among different groups of homeowners is fair will be a discussion at future HOA meetings for years to come.

Table 3

2021 Projected Contribution to Overhead ($Millions) 


Golf Club

Racquet Club

Misc. Income






Operating Expenses



Contribution to Overhead



  • In the next ten years the Golf Membership will bring in $1,102,688 in net cash flow for reserves… (p. 9)

Table 3 presents the projected cash flow from Deposits for the next 10 years (2021-2030).  The number in the table ($1,253,798) does not agree with the text number ($1,102,688).  The FAQ states “we expect…in ten years the membership agreement brings in $7.5 million while paying out $6.3 million.”  The FAQ is consistent with the yearly estimates shown in Table 4 while the brochure is not.  The difference is not significant, but again indicates a lack of attention to detail.  Even if the projection is accurate, $1.2 million after ten years will not be sufficient to fully fund any major capital project.  

Table 4

Projected Cash Flow from Member Deposits 


Cash Flow
























  •  The HOA is in mediation with the Developer on the condition of Racquet Club amenities. (p. 14)

Homeowners were led to believe mediation included issues with the golf club, and the HOA was claiming the Developer would need to invest untold millions to bring facilities up to the standards the HOA was promised. The need for an investment of this size is not mentioned in the Better Together brochureThe exact amount the HOA is claiming is uncertain since the details of the mediation have not been made available to homeowners.

  • There are many examples of third parties acquiring clubs in gated communities only to push rezoning and redevelopment programs that are at odds with community interests and property values. (p. 3)

Most of those examples cited (but not identified) by the consultant occurred when the surrounding residential community did not support the golf operation. There are other cases where a third party has acquired a golf course and operated it responsibly. The Developer has received a signed letter of intent from a potential acquirer in 2020 (see FAQ). The Board claims “It is only because of our contract dispute that this sale did not go forward.” Who was this third party? What is its track record with other clubs? What was it proposing for the Club?

Did the Board seek the advice of homeowners before sabotaging the negotiations?  Is it possible the Developer is selling because it is tired of the litigious nature of the HOA?  With the sale, the Developer will be relieved of an approximately $10 million deposit liability and the burden of operating the club within a hostile environment created by the HOA.  The Developer may also be given eight memberships so the Club can be enjoyed without the hassle of ownership.[7]

The Club could be better off with HOA ownership than with a third-party.  Homeowners should have been given that choice, but they were not. Now it is either accept the HOA’s ownership plan or face the grim future painted by the Board’s consultant. 

  • There are still two years of increases coming from the minimum wage changes in California. (FAQ)

There is only one year left, not two, for companies with over 25 employees.  According to the California Department of Industrial Relations, the last increase to $15/hour is scheduled for January 1, 2022.


In summary, the documents provided by the Board are heavily biased toward an HOA acquisition and not an independent analysis of the choice facing the homeowner.   It would have been more helpful to the homeowners if the Board made a realistic assessment of potential risks.  The lack of a detailed operating plan is a major deficiency.  The Better Together brochure’s misleading and possibly false statement create a potential liability for the Board if things do not go well.  Historically, bureaucracies tend to oversell.  If a big program budget can be had, it will only increase its power.  If things go badly, bureaucracies can argue it would be worse without its program.  This may be the case here, but only time will tell.

As for the above “All information is deemed reliable, but not guaranteed.” 

[1] The HOA also has currently underfunded reserves.  According to the latest reserve study by the reserve consultant.: “The current deficiency (January 1, 2021) in reserve funding expressed on a per unit basis is $1,843.26. This is calculated by subtracting the ending balance ($397,500) from the 100% funded figure ($2,038,001.00), then divided by the number of ownership interests (890).”

[2] The payment 0f $241,000 in property tax by the Developer implies the Club is assessed at around $20 million.  A sale to the HOA would prompt a reassessment.  The HOA could argue the market value is much less than $20 million.  Based on the optimistic income projections in the Better Together brochure, the Assessor could conclude the Club is worth more than $20 million.

[3] The regular assessment is $920/month x 890 Homeowners x .2 = $163,760.

[4] Calling the table data on page 10 a “model” is hyperbole.  The consultant simply assumed revenue (except for dues) would rise by 2% and costs would rise by 4% for the years 2020 and 2021.  Making that same assumption for the next ten years would have revenues rising 22% and costs rising 48% which would lead to a $2.26 million operating loss in 2031. The source of the data and whether it was drawn from audited financial statements is not disclosed.

[5] The Developer pays the HOA approximately $300,000 a year for shared costs.  The brochure tacitly assumes this payment is part of the operating costs of the Club. The new HOA Club could make a transfer payment of this amount to the HOA resulting in no net loss of revenue to the HOA.   

[6] Total dues are projected to be $9.18 million.  Racquet Club dues are $330/month x 12 months x 890 homeowners or $3.52 million.  This means golf dues must be $5.66 million.  

[7]  The number of memberships given to the Developer is a matter of rumor.  If true and these members do not pay dues, this would be a yearly gift of $143,520 to the Developer.  The possibility of this gift is not disclosed in the Better Together brochure. 

Wednesday, April 14, 2021

The End of Stableford Scoring

The Stableford Scoring System assigns points for various scores in relation to par.  It is a popular form of scoring throughout the world but has had limited acceptance in the United States.  Its main attraction to golfers is that it limits the score on a hole.  Once a player has had strokes equal to a net double bogey (bogey plus any handicap strokes he has earned through poor play), he gives himself zero points for the hole and moves on.  This speeds up play and limits embarrassment.  Both attributes contribute to the popularity of Stableford Scoring.

Before the introduction of the World Handicap System (WHS) in 2020, however, Stableford scoring was not consistent with the United States Golf Association’s Handicap System.  For example, Table 1 below shows the maximum score a player could take on a par 3 hole under Stableford and the USGA’s Equitable Stroke control.  A player is often allowed more strokes, and sometimes less, for handicap purposes under the USGA system than under Stableford Scoring. 



USGA Equitable Stroke Control


No Handicap Stroke

1 Handicap Stroke

No Handicap Stroke

1 Handicap Stroke
















The WHS eliminated this discrepancy by decreeing a maximum hole score for handicap purposes equal to a net double bogey—the same maximum used in the Stableford System.   By making this change, the WHS has eliminated the need for Stableford Scoring.  A player’s adjusted score under the WHS will be:

     1)  Adjusted Score = Course Par + Course Handicap – (Stableford Points – 36)

The player’s adjusted net score will be:

     2) Adjusted Net Score = Adjusted Score – Course Handicap = Course Par – (Stableford Points -36)

A player’s adjusted net score will be perfectly correlated with his Stableford Points.  The order of finish in any competition will be the same whether adjusted net score or Stableford Points are used.

The only reason to use Stableford Scoring is tradition.  This is not a strong reason in the United States where there is no tradition of Stableford Scoring.  Weighing against the use of Stableford Scoring is the non-zero probability of errors in converting hole scores to Stableford Points, the additional step of converting Stableford scores to Adjusted Scores for posting, and the confusion (admittedly small) caused by ”high scores win” which is different than every other form of golf competition.

If Stableford is to be assigned to history’s trash can, what do we name a system based on adjusted net scores?   It could be named after a great player of the past who would have won majors if only adjusted scoring had been used.  That idea was rejected since players should be remembered for their career excellence and not for one bad hole.  The next possibility was to name the system after a hallowed golf journalist who could promote the new system.  A logical candidate would be George Peper, the brilliant writer and editor of Links Magazine.  I consider Peper to be the Hugh Hefner of golf publishing.  Peper’s magazine has featured pictures of exotic courses you will never play and can only fantasize about.  For his public service in providing hours of solitary pleasure to golfers all over the world, the new system could be named “Peper” scoring.  That name might upset rival golf magazines, however, whose support would also be needed to popularize the new scoring system.  In the end, inspiration for the name comes from an apocryphal story told about how Frank Sinatra saved a stranger’s life.  On leaving a casino, a patron was attacked by thugs who were beating him mercilessly.   Frank walked by and said, “That’s enough” and the man was spared.  Hit two balls out-of-bounds, splash three balls into a penalty area (nee water hazard) or make like a burrowing animal in a bunker and adjusted hole scoring is saying “That’s enough.”  Therefore, the proposed name for the scoring system is the "That’s Enough Scoring System" or TESS.

Using TESS eliminates translating a hole score into points.  For example, if a player has a “4” on a par four and does not get a handicap stroke, he must convert the “4” into two Stableford points.  Under TESS, he simply writes down “4” as his hole score.  Under both Stableford and TESS, the player must realize his maximum score on any hole is a net double bogey.  At the completion of the round the player using TESS sums his holes scores to find his adjusted score for posting.  His net score is his adjusted score minus his handicap.  In a net tournament, a player’s Stableford score is his net score.  He, or a computer, must find his adjusted score for posting using eq. 1 above.  TESS is simpler than Stableford, but it remains to be seen if players can be weaned from the more familiar.