Shortland Waters Golf Club appears destined to be taken over by another club after going into voluntary administration midway through a major reconstruction project.
Several other Newcastle golf clubs, including Belmont, are crunching the numbers on taking over the former Steelworks course, where disruption from two years of building work has created cash-flow problems.
Aged care company Aveo is building a 300-lot retirement village in the middle of the course and paying for six new holes and a clubhouse.
None of these construction projects is under threat, but the redevelopment has left the course with temporary holes, a clubhouse under construction and parking issues.
Golfers have been avoiding Shortland Waters – membership has fallen about 20 per cent, to 534, in the past two years – leaving it with no choice but to go into administration.
Treasurer Kerry Duggan said on Tuesday that he was confident the club would thrive when its new holes opened next year, but it would not survive until then without help.
“The club has expended its cash reserves trying to run normal business, but the attraction to the golf course is not there at the moment, so we’re suffering from cash-flow problems,” Mr Duggan said.
“But the project is continuing on. Administration was protection for the directors because we were heading into the stage where we were trading insolvent, because we didn’t have enough cash for day-to-day operations. We saw that as a way of keeping the club going.”
Golf industry in decline
Shortland Waters’ financial problems reflect a widespread decline in the golf industry, which has increasingly struggled to attract time-poor customers.
Many other Hunter clubs, including Merewether, Newcastle, Waratah and Belmont, are examining redevelopment opportunities to boost flagging income.
Cessnock Golf Club went into vuluntary administration in May with debts of more than $11 million, 13 years after entering into a joint venture with Daracon Group for a $30 million redevelopment.
Mr Duggan said he had no regrets about the Aveo deal, which had saved Shortland Waters from oblivion two years ago, and the club had no major debts.
“The only problem with that is the length of time the development has impacted on the course. The club itself, prior to the development, was basically heading out of business,” he said.
“You drive in and all you can see is wire fences everywhere. I call it the Hunter Street syndrome.
“I’m certain that with the new golf holes being ready for play early in the new year, all the work surrounding the new clubhouse completed in the next month or two, we’ll have a brand new product to get to the market place.”
Club members bought the Steelworks course off BHP in 2000 and renamed it Shortland Waters.
Without a merger, the club will have to seek a line of credit to pay staff and other operating costs.
‘Use it or lose it’
Mr Duggan said Aveo was not interested in taking over the course.
“At the end of the day, what people have to realise is whether we maintain a community asset in community hands or whether it eventually cedes to becoming a piece of real estate. That’s the different picture.
“It’s the old case of use it lose it. If you can’t maintain it as a community golf course – if it’s not a financially viable proposition – the land gets liquidated, a developer comes in and buys it and turns it into a housing estate.”
Aveo said in June that it had sold all 50 houses in the $25 million first stage of the $220 million Shortland Waters development and was breaking ground on the 45 villas in stage two.
The Newcastle Herald approached Aveo for comment.