Money Management In Today’s Golf Marketplace

1. Money Management In Today’s Golf Marketplace How $$$$ Savvy Are YOU?

2. How is Your Business Impacted by Today’s Economy? • Less Investment in New Courses & New Equipment • Reduced Renovations • More “Band Aid” Projects • Smaller Profit Margins just to get bid approval?

3. New Ways to Fund Capital Improvements and Mortgage Buyouts

4. Today’s Banking Climate • Limited Funds Available • Low Appraisals on Existing Property create a debt to equity problem • Loans at 6-7% for Commercial Notes • Short Terms with Balloon payments due at maturity • Loan Covenants very restrictive depending upon financial institution • Unknown Rates at Maturity

5. How do You create your own future? If you work with Clubs: • Assessments are NOT welcome in this economy • Clubs cannot chance losing members • Provide a funding plan that is painless and affordable. • Become the bank … • Make money on the job and on the loan with no risk

6. How is this Possible? • The median age of members at most clubs is above 50 years old. Due to approaching retirement, most will diversify their investments to secure vehicles…Roth IRA’s, bonds, money markets, etc. • These investments are returning 1-2 % • You can guarantee these members a rate of return of 2-4% based on the length on the subscription and the clubs ability to fund.

7. What Does This Mean? • If a club requires $1 million dollars to renovate its golf course it will set up a 10 year loan. Principle available for investment semi -annually is $50,000. • If each Investor invests $10,000 at 2% for the first 36 months, they will receive an interest check for $200 each six months and the $10,000 at maturity. The longer term investors can invest at 3-4% • Each maturity date allows five investors or 5 increments

8. What Is Required? • For Each Project, The club or the builder or club must file a simple LLC to set up for investment • The documents filed guarantee that the investors funds are secured by the value of the property. They become a mortgagee of the property behind any primary mortgage that may exist or the primary mortgage can be bought out with the new loan • The investment should be amortized over a period that is affordable to the club and attractive to investors( =<15 years)

10. What Does This Look Like In Savings? • On Average, 1 million dollars from a commercial bank at 6% simple Interest over 10 years is $332,000 in interest plus the principle…if you can get it! • The self funded investment just paid out a little over $157,000 in interest for the same period. • The entity that manages the LLC will add 2% closing costs plus a monthly processing fee of $300. Total per customer in additional profit- $56,000 plus float interest. WHAT?

11. What Is Floating Interest??? • The Club makes its payment to the LLC monthly. • The LLC pays out interest and principle semi annually. • For Five Months, the LLC holds the payments in short term markets or sweep accounts and all interest earned is the profit of the LLC. • The interest earned by the LLC will be approximately $40,000 over the life of the loan at today’s rates. This brings the profit per million dollars to $96,000, however, the club just saved a minimum of $175,000 in interest. Everybody wins

12. Reasons to Self-Fund Improvements • Fixed Interest Rates over the life of the Loan • Those who Invest can earn higher returns • Graduated Payment Options( interest only options) • Supplemental Borrowing Options • One Loan/One Lender • No prepayment penalties • You are paying back your own members with exceptional interest.

13. Summary • If a business does not maintain its product, it will cease to attract new customers and will not maintain its existing customers. • A golf course is the club’s greatest asset. It must remain in exceptional condition. • Given the correct opportunities, businesses will make the choice to initiate improvements